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The metaverse

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  • Digital innovation is happening quickly, as ideas like crypto, NFTs, and the metaverse grow.
  • Global X recently released a report citing reasons why they’re bullish on these concepts. 
  • They shared seven examples of firms leading innovation in these spaces.

All of it can be difficult to wrap your mind around — digital innovation is growing at seemingly supersonic speed, and it’s not easy to keep up.

Blockchain. Metaverse. NFTs. Smart contracts. And much more.

Perhaps some of it seems like nonsense, like the joke coins in crypto. Surely, some of it is. But it’s impossible to tell just yet how large some of these new digital projects will grow. Many in the mid-1990s doubted the role the Internet would play in today’s world.

Among those bullish on things like blockchain and the digital economy is asset management firm Global X, which manages $35 billion. 

In a recent note to clients about disruption across a number of industries, researchers at the firm and outside experts broke down the fundamental reasons why they’re bullish on blockchain and the digital economy, including the very recent flare-ups like the metaverse. They said the new spaces are creating “unprecedented opportunities” for investors.

The team, led by Head of Research and Strategy Jay Jacobs, defined the digital economy as several sub-sectors. These include: cybersecurity, fintech, e-commerce, cloud computing, social media, and video games.  

“The rise of the digital economy is likely to bring upon us a new era of productivity growth and consumer surplus,” the report said. “New ways of shopping, socializing, and gaming leverage the latest technologies to create exciting new experiences.”

The team cited a number of bullish growth metrics such as e-commerce penetration.

e-commerce growth

Global X

They also flagged the metaverse’s potential: many more people can attend an immersive virtual concert than a live one.

concert attendance

Global X

“A fully developed metaverse has a functioning economy where users can earn and spend in digital or fiat currencies,” the report said. “Developers and creators can earn by building engaging experiences and compelling items that users want to purchase, such as Avatars, digital spaces, art, and more.”

And then there’s blockchain and what it means for the business world, from finance to supply chains. Blockchain refers to the network technology that cryptocurrencies are built on top of.

The team cited the growing amount of institutional money flowing into the asset class as a bullish indicator. 

institutional money in crypto

Global X

They added that we’re likely in the “early adopters” stage of crypto’s adoption curve, and that its total market cap could more than triple to $10 trillion in under a decade.

Crypto adoption

Global X

“Cryptocurrencies account for 1.2% of global financial wealth today,” the team wrote. “We expect this to grow as more institutional investors incorporate cryptocurrencies into their asset allocation frameworks to take advantage of the uncorrelated nature of the asset class.”

In the report, the team included several companies leading the rise of blockchain and/or the digital economy, and their notable recent developments. During a call with Insider, Jacobs stressed that the firms should not necessarily be taken as investment recommendations. In addition to macro fundamentals, investors should also take into account factors like valuation. 

The team said these firms are a way to gain exposure to the crypto space without investing in the coins themselves, which tend to be volatile.

“While many investors may be reluctant to invest in cryptocurrencies directly, a growing industry of publicly traded companies that are contributing to the development of blockchain technology and digital assets provide an alternative method to gain exposure to the space,” they wrote.

The seven firms they cite as leading the rise in each space are listed below.

1. Unity Technologies

U

Markets Insider

Ticker: U

Market cap: $44.1 billion

Categorization: Digital Economy

Recent developments: 

– “In 2020, 2.5 billion monthly active users consumed content created or operated with Unity solutions.”

– “Q2 2021 results indicated 71% share of the top 1,000 games in mobile.”

Sources: Global X, Markets Insider

2. Shopify

SHOP

Markets Insider

Ticker: SHOP

Market cap: $191.3 billion

Categorization: Digital Economy

Recent developments: 

– “Shopify is firmly positioned in third place, attaining 10.98% of the e-commerce market share as of April 2021.”

– “Took 15 years for the company to get to $200 billion in total cumulative GMV — and then just 16 months to double that.”

Sources: Global X, Markets Insider

3. SentinelOne

S

Markets Insider

Ticker: S

Market cap: $12.9 billion

Categorization: Digital Economy

Recent developments: 

– “As of Q2 2021, IoT, cloud, and data solutions grew by six times year-over-year and now represent over 10% of new business.”

– “Ranked #14 among Forbes’ AI 50 companies using machine learning within their business models.”

Sources: Global X, Markets Insider

4. Coinbase

COIN

Markets Insider

Ticker: COIN

Market cap: $60.7 billion

Categorization: Digital Economy, Blockchain

Recent developments: 

– “As of Q2 2021, crypto assets on the platform represented 11.2% of the total market capitalization of crypto.”

– “Customers in the United States able to deposit their paycheck into Coinbase assets.”

– “In Q2, users generated $462 billion of trading volume and subscription and services revenue totaled $103 million.”

– “Pro service opened inbound transfers for AVAX to its trading platform.”

– “Launched price auction for healthier price discovery on its exchange.”

Sources: Global X, Markets Insider

5. Marathon Digital

MARA

Markets Insider

Ticker: MARA

Market cap: $4.8 billion

Categorization: Blockchain

Recent developments: 

– “Purchased $150 million in bitcoin towards becoming pure-play bitcoin investment option.”

‒ “Produced 1,252.4 new minted bitcoins during Q3 2021, increasing production by 91% quarter-over-quarter.”

‒ “Announced collaboration with NYDIG to provide members of MaraPool, with access to NYDIG’s services.”

Sources: Global X, Markets Insider

6. Canaan

CAN

Markets Insider

Ticker: CAN

Market cap: $0.95 billion

Categorization: Blockchain

Recent developments: 

– “Q2 total computing power sold was 5.9 million Thash/s, up 126.9% from 2.6 million Thash/s in the same period of 2020.”

– “Partnership with Genesis Digital Assets to sell 20,000 bitcoin mining machine with an additional purchase option.”

– “Enhancing AI efforts by investing in visual solution provider.”

Sources: Global X, Markets Insider

7. Northern Data

NDTAF

Markets Insider

Ticker: NDTAF

Market cap: $1.7 billion

Categorization: Blockchain

Recent developments: 

– “Acquired bitcoin miner Bitfield in a step towards becoming an industry leader.”

– “Corporate strategy presentation highlighted energy efficiency and renewable energy efforts.”

– “Acquired server systems with 223,000 GPUs from Block.one.”

Sources: Global X, Markets Insider

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