Accountants at a leading Midlands practice have insisted on caution about investing in the metaverse ahead of the cost-of-living crisis.
Morgan Davies, director at Prime Accountants Group, which has offices in Solihull, Coventry and Birmingham, has urged businesses to hold off investing in NFTs and the metaverse during the cost-of-living crisis as they are yet to prove they can survive the economic decline taking place across the UK.
The metaverse is a complex world, where laws, money and relationships take place in simulated scenarios; a world that tech moguls are calling the future. Existing for decades and created primarily for gaming activities in which users had limited rights on platforms, as it evolved, the metaverse is said to be one of the hottest business opportunities, if people are brave enough to invest.
Why it will be important…but not yet
The metaverse is still in its infancy, but it has already started making waves in relation to a world where users can interact with holographic images of their colleagues as if they were in the same room.
More and more people are investing, or using the metaverse and the subsequent growing phenomenon of cryptocurrencies and non-fungible tokens (NFTs) in their everyday lives. Generation Z (people born between 1997 and 2012) make up around 60 per cent of users in the metaverse, spending approximately eight or more hours a day online, and is more immersed in digital culture than any other generation.
Morgan said: “As the first generation born a true digital native, ‘Gen Z’ has some of the most tech-adept individuals on the planet, who spend twice as much time socially interacting in the metaverse than they do in real life.
“As they enter the workplace and start their own businesses, having a presence within the metaverse will be key for networking and reaching this tech-savvy generation.
“Client work isn’t the only way I see accounting utilising the metaverse. It could play a key role in trade shows and even revolutionising the ‘working day’ by marrying together the benefits of in-person and remote communication, removing the issue of limited office resources and allowing each avatar access to tools that optimise what they are saying or presenting.”
Morgan said having a trade show within the metaverse will not only enable businesses to speak with their target audience directly through their avatar, but also opens the opportunity for tours of factories and workplaces. He added that it also can remove the ‘pot luck’ experience many businesses have at trade shows, wondering whether they are speaking to the right people.
“However, due to the sensitivity surrounding money, the relationship between accountant and client cannot solely exist online. Accounting relies heavily on trust, a feeling which is best built through face-to-face meetings,” he added.
“When working for a client, accountants gain full access to their financials and, whether personal or business-related, it is a private part of someone’s life. Very few will be comfortable passing on this information unless the person’s identity can be confirmed and verified; an area still in its infancy for many metaverses.
“The unpredictability of these markets indicates why curious investors should pause before investment, and why they should think twice before handing over their financial statements and money/NFTs to accountants they meet exclusively in the metaverse.”
Why should we wait?
Morgan said in order to stay ahead of the curve, businesses across the world are buying prime retail space, also known as digital land, within metaverse platforms such as Decentraland and The Sandbox.
However, he said it could be too soon to invest. As the economic state of the UK continues on its downward trajectory, we don’t know how these platforms or digital tokens like NFTs or cryptocurrencies work alongside inflation, interest rate rises and a possible recession. None of these things have been stress tested against these digital tokens. Morgan said it would be wise to ride the recession wave before investing in something that is yet to prove its success and longevity.
He added: “Not only do we need to find out if these virtual worlds and currencies can survive the next 10 years, but laws and regulations within the virtual worlds must undergo further development before it is wise to invest.
“It’s easy for people to forget that individuals and businesses will still be taxed in the metaverse, a situation which could be chaotic and complex as nations across the globe come together into one virtual world where tax, law and regulations will differ from avatar to avatar.”
“While it is exciting that the world is changing and developing, we would always recommend businesses invest using a regulated financial advisor, whose identity can be verified and who can help them navigate the precarious and often risky areas of investments.”
