Visual Summary / DVFZ Books
Learn the market before you spend a cent in it
A 2022 guide to what the metaverse sells, how people lost money in it, and the pace the book says to keep.
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01 The ground
The metaverse is the layer that gives the other pieces a use
Blockchain, cryptocurrency, NFTs and Web3 all arrived separately. The book's argument is that the metaverse is what ties them together, because each one becomes more useful inside a shared virtual space than outside it.
A blockchain is a public ledger copied across many computers, and the book stresses that whatever is written on it cannot be altered afterwards. An NFT is a record on that ledger showing who owns something, real or virtual. Cryptocurrency is how value moves. Web3 is the version of the web built on the same ledger.
Payne suggests picturing the whole thing as a digital universe with galaxies (gaming, art, fashion, virtual land) and separate worlds inside each one. The categories matter, because most worlds run their own token and a token earned in one has no value in another. She uses SAND, the token of the Sandbox world, which she says has no relative value in Decentraland.
02 Two ways in
You can invest from inside the metaverse or from outside it
The book sorts every opportunity into two routes. Direct investors go in as an avatar and buy land, NFTs or play-to-earn positions. Indirect investors never log in, and buy into the companies building the place instead.
The direct route carries a hardware bill before anything else. Payne calls these pre-metaverse investments: a computer strong enough not to lag, and a virtual reality headset. If that is out of range, the book suggests starting with a top-tier smartphone paired with a budget headset. It also counts costs that are not financial: it expects headsets with eye-tracking to tell advertisers where you looked and for how long, it names virtual reality hangovers and addiction as real effects, and it warns that an avatar can be hacked and used to impersonate you in both worlds.
The indirect route needs no equipment. The companies the book names as metaverse-exposed include Fastly, Nvidia, Meta, Roblox, Autodesk and Unity, alongside bundled products such as the Index Coop Metaverse Index. It gives three screening tests for any of them: the profit trend over recent years, competitive strength against peers, and the debt-to-equity ratio, which it says should sit no higher than 0.3 even for an investor with an appetite for risk.
The notion is that you will someday use your avatar to meet with others in a virtual place that simulates the experience of being in a real room with them.Bill Gates, quoted in the book
03 Virtual land
A plot is worth what someone can do with it, not only where it sits
Real estate gets the book's longest chapter. Land in Sandbox, Cryptovoxels, Somnium Place and Decentraland is bought as a token, and Payne says it can be built on, rented out or resold in much the same way as land in the physical world.
On what actually sets the price, the book reports a real disagreement. The old rule borrowed from physical property is location, so a plot near a crowd is worth more. Janine Yorio, chief executive of Republic Realm, argues the opposite: use matters more than location, because an avatar can teleport and is therefore never far from anything.
The sums it records run in both directions. The Metaverse Group paid $2.43 million for 116 parcels in Decentraland's Fashion Street District. A firm paid $4.3 million in Sandbox for land it planned to develop as Fantasy Island, where ninety islands sold for around $15,000 each in a single day and some were later re-listed above $100,000. Someone paid $450,000 for the plot next to Snoop Dogg's. The book also cites the investment firm Grayscale forecasting that metaverse real estate will grow into a $1 trillion market, and prints it as a forecast rather than a fact.
Payne gives three questions before any plot: can you pay for it without touching money you need, will the computer or headset you already own actually run that world, and would you want to spend time there anyway? A plot that fails one of the three is the wrong plot, whatever the price.
04 Custody
Whoever holds the private key holds the investment
The book treats storage as part of the investment rather than an afterthought. A private key is the access code to everything you own on the chain. Payne is direct about it: there is no way of proving, and so no way of reaching, your investments without it.
Hot storage means a company you trust keeps the key for you. The book lists MetaMask, Coinbase Wallet and Math Wallet, and notes that Coinbase was among the first to insure its servers, so it will refund users if it is breached. Cold storage means you keep the key yourself, usually on a hardware device such as a Ledger Nano X, a Trezor Model T or an Ellipal Titan. Cold storage costs more and puts the whole burden on you.
The difference is not theoretical. When the Japanese exchange Bitpoint was attacked in July 2019 and lost around $32 million of customer funds, the book records that its cold storage was never compromised. Only the hot storage was emptied.
Buy or download the wallet, run it, set up the account and store the twelve-word recovery phrase somewhere safe, then deposit. On hardware, Payne adds one hard rule: never buy a used Ledger Nano X, because the previous owner knows the seed that resets it, and buy from the maker rather than a resale marketplace.
05 Where it goes wrong
Every step of a purchase is somewhere a scam can sit
A full chapter is given to losses already on record, and the book does not soften them. Poly Network lost $610 million in August 2021. Compound Finance lost $147 million, Cream Finance $130 million, Paid Network $127 million and Badgerdao $120 million. Binance lost bitcoin worth $41 million in 2019.
What happened afterwards varied. Poly Network's funds were returned. Binance covered its users from an emergency pool it calls the Safe Asset Fund. Badgerdao's users may not be covered at all, because its insurer only covered smart contract hacks and that attack went at the user interface instead.
The marketplace scams are smaller and much closer to the individual buyer. Payne names five: cloned NFT stores, artist impersonation, fake bidding, typosquatting and insider trading. Each one waits at a different point of the same ordinary purchase.
Read the marketplace address letter by letter before you connect a wallet, because one misplaced character is the entire trick. And check which currency a bid is actually in: the book describes bidders paying in USDC, worth about one dollar, while showing a WETH picture, worth about three thousand.
06 Who covers you
There is no broker to blame when it goes wrong
This is the book's hardest point, and it makes it more than once. A market with no central authority is also a market with nobody whose job it is to make you whole.
Regulation is arriving unevenly. Canada regulates the exchanges operating inside its borders and uses Know Your Customer checks. The United States treats cryptocurrency as securities, so trading requires registration with the Securities and Exchange Commission, and the book quotes the Internal Revenue Service position that virtual currency transactions are taxed by law, just like transactions in any other property. South Korea prohibits initial coin offerings outright, while the United States and Japan leave them in a grey area.
Ordinary law still reaches inside a virtual world: the book lists copyright, intellectual property, contract, tort and defamation, and walks through court cases including the New York Attorney General's investigation of Bitfinex and Oracle's trademark suit against CryptoOracle. What it offers as practical recourse is modest. Marketplaces and exchanges let you report cybercrime on the platform, and Payne says to find that route, and the body behind it, before you need it.
There is no blaming a broker or any other third-party since they are pretty scarce within metaverse investments.Selynna Payne
07 The pace
The book's answer to volatility is a slower clock
The closing chapter is a list of habits, and nearly all of them are about slowing down. The headline number is five per cent: invest around 5% or less of your disposable income, and treat that ceiling as a necessity rather than a preference. Volatility is the reason: the book lists it among four drawbacks of cryptocurrency trading, next to patchy acceptance, tax, and the cover that anonymous transfers give to crime.
The rest follows from it. Split the plan into small fixed monthly amounts, a dollar-cost average, so no single decision carries much weight. Read the whitepaper and the initial coin offering material, and walk away from a badly written one or an offer that sounds too good to be true. Avoid trends, which the book says are often disguised rug pulls started by self-proclaimed experts.
On timing it is specific. If something checks out, monitor it actively for at least a month before buying in. On exits it gives two triggers: leave when a future loss is certain, and consider leaving when an asset has reached its capacity. It also warns against selling at a low simply because it is a low, without first finding out why the price fell.
If there is anything that metaverse investing is not, it is a platform for gambling.Selynna Payne
5% or less of disposable income, paid in monthly instalments, into something you have already watched for a month. Payne's test is not what you are willing to lose. It is what you can lose and still support yourself and anyone who depends on you.
08 The whole book
Choose it, store it, pace it
The catalogue is wide: land, coins, NFTs, marketplaces, stocks, venture funds, Web3 and 5G. Underneath it, the same three demands come back on every page.
Only what you can carry
Affordable, runnable on the equipment you already own, and in a world you would visit anyway. Three gates in series, and an asset has to pass all three.
The key is the asset
Hot storage lends the private key to a company. Cold storage leaves it with you. Bitpoint's cold storage survived the attack that emptied its hot wallets.
Five per cent, one month
A capped share of disposable income, paid monthly, into something watched for at least a month first. No trends, and no rush.
Payne's closing line is that the book itself is the first investment, and that the market it describes changes daily. Every figure on this page is her 2022 reading, and the reading is what dates first. The habits are what do not.
Adapted from Practical Metaverse Investing Essentials
Selynna Payne · © 2022 DVFZ Training Consultancy Services · 63 cited sources in the source edition