Between 2008-2014, we thought we witnessed the most significant transfer of wealth in the last 200 years. During the housing bust, those with assets and cash could buy homes for pennies on the dollar. People who were financially and educationally positioned took a once-in-a-lifetime opportunity to build more wealth.
Then in 2020, the pandemic hit, and we had another chance to grab wealth for cheap. In March 2020, you could buy stocks and crypto for pennies on the dollar. The following two years would give you more equity than you could imagine if you owned a home.
Welcome back to the Metaverse 101 series (101, 102, 103, 104, 105, 106, 107, 108, 109, 110) where we focus on the digital future and Web 3.0.
4 Years of College vs. 4 Years of Content Creation
It’s not just for the rich. These wealth transfers aren’t just for the rich; they are for those who educate themselves. It’s not about how much money you put into the markets because it is all relative to your situation.
You may have invested $10,000 into the markets in March 2020 and turned that into $30,000. If you believed that oil prices could recover, you could have bought Exxon Mobil and been sitting pretty in February 2022.
Understanding investing, leverage, debt, taxes, commodities, and the boom/bust cycle is critical. If you take the time to study these pillars of the economy, you will have some luck during the right moments.
The next transfer of wealth. The next transfer of wealth is upon us, and it’s not a calamity, recession, or pandemic. The subsequent wealth transfer will happen in the metaverse, and it will be a silent transfer.
Saving vs. Investing
Nobody will see it coming and hear about it on the news. It is a slow burn and will take the general public by storm. We saw a small preview of it with meme crypto coins like Dogecoin and meme stocks like AMC.
The next wealth transfer will be the digital transfer of cash from the general public to content creators in the metaverse. The fact that an individual can create an NFT or digital item for $5 and sell it for $100,000 will change the world forever. Let’s explore the transition to digital media for a minute.
It’s all digital. The move to digital goods was slow and effective. It helped us hoard more digital goods (pictures, emails, videos) than ever before. I grew up with VHS cassettes, and they were a pain to collect.
Then I moved to CDs, along with the rest of the world. As iTunes became more prominent, I bought an iPod in 2005 (I believe). Then we started to upload our photos to the cloud. We no longer had them printed at the photo store (remember that?).
Dividends vs. Royalties 3
I just bought the new James Bond movie, “No Time to Die,” via a digital store. I paid $20 and got my money’s worth, while it cost the studio at least $200 million to make this film.
Society conditioned us to accept digital goods as equal to physical goods. I bought the latest Pokemon game, Pokemon Legends Arceus, as a $60 digital download. I can buy the physical game cartridge for the same $60. Again, it cost Nintendo millions of dollars to produce this game.
The bait & switch. Now, the real bait & switch is coming to a metaverse near you. We already spend a crap-ton of money on things we don’t need or wear. Let’s take Jordan basketball shoes, for example.
We buy Jordans as collector’s items. I have a Marine at work who didn’t even know you were supposed to wear them. Nike pays money to engineer and test the shoes and then produce and ship them.
Now, moving into the Metaverse Age, they can digitally engineer them. Nike can add some form of rarity or limit the amount of a particular release. This creates scarcity (a form of advertising) which goes hand-in-hand with Non-Fungible tokens (NFTs).
Let’s say it takes Nike $100,000 to produce a digital form of Jordan 2022. They can then auction them off in the metaverse for 50X times this amount, if not more. If they limit the batch to 1,000 digital shoes, people will be bidding for these shoes like no tomorrow.
10,000 Hours to Build an Income Stream
Even scarier, they can set a royalty modifier on each shoe. This means that every time these shoes transfer hands on the blockchain, they can receive a royalty payment of 2-15% or more.
So, now, even large corporations will be receiving passive income from NFTs and the metaverse.
How the transfer of wealth starts. We saw it with Dogecoin. People buy into Dogecoin at $0.0001 and become millionaires when it hits $0.70.
These stories ripple through the everyday grinders who have no plan to build wealth slowly. They feel it’s better to gamble with their money with meme coins and stocks. We saw the same thing with AMC stock.
I just finished the book “How to NFT,” and these stories of everyday people striking it rich are becoming more prevalent. The digital world wants you to believe that your digital Jordans will be worth more in the future—that’s how they get you.
Why You Need a Job
As more stories of people selling NFTs for large amounts of money abound, the general population feeds into the narrative. Before you know it, everyone has 100s of NFTs, and the price of each plummets or stays the same.
Unlike physical goods, NFTs won’t become more scarce over the years. They may become rarer, but they will always exist in the metaverse.
I have a ton of Gamecube games I bought in 2002. If my house gets hit by a hurricane, it will wipe them off the map—gone forever. That’s why physical goods retain value and increase throughout the years—they get lost in translation.
Future unknown. We don’t know how NFTs and digital goods in the metaverse will hold up over the years. I know that content creators and corporations are looking forward to the immediate gold rush—as they should.
Never has there been this large of separation between content creators and consumers. The world has always distinguished between producers and consumers, but now the transfer of wealth will reach new heights.
Selling Covered Calls for Passive Income
Before, producers needed to spend millions of dollars to get in front of consumers with a product that cost millions of dollars to produce. Producers paid for research & development, shipping, testing, and advertising.
Today, a young producer can create a digital T-shirt (for only the cost of his time) and sell it for $1,000—all in two hours. We need to be aware of this phenomenon and make grounded buying decisions.
What to do moving forward. First, figure out a way to control your collecting and spending habits. The book “The Life-Changing Magic of Tidying Up” gives us a way to organize our physical homes. Let’s start there.
Next, we need to organize our digital homes. Most of us don’t have a home in the metaverse or an avatar, so we have the chance to control our spending from the start. Ask yourself, “How much stuff do I truly need?”
Finally, understand that FOMO, or Fear of Missing Out, drives the NFT craze. You have to defeat the urge to involve yourself in these shenanigans.
Don’t Gamble with Retirement 4
Sure, as an investor, we can allocate a small percentage (2-5%) of our wealth to speculation plays—there is some fun in “gambling.” However, if you are an average joe with no investments, avoid buying fancy digital shoes.
Conclusion. The ability to create things cheaply and quickly sell them for lots of money will help increase the transfer of wealth. Mainstreet consumers will buy into the hype and FOMO of meme NFTs and get left with the bag. Please reference Dogecoin for a recap of how this looks in real life.
I am 100% excited for the metaverse, but I am going into it with my eyes wide open. I like digital goods, but only the ones that add value. I am not opposed to buying a $5 Pokemon shirt in the metaverse, but you probably won’t see me buying a $50,000 one.
- PDF of the Month: Your Retirement Planning Guide 2 (Free 255-Page PDF)
- Free PDF Downloads: Download FREE PDF books here
- Financial Mindset: Become CEO of Yourself 2 (Free 196-Page PDF)
- Retirement Planning: Don’t Gamble with Retirement 5 (Free 431-Page PDF)
- Investing: How We Plan to Retire on Dividends 2 (165-Page Free PDF)
- Cryptocurrencies: The Magic of Cryptocurrencies (Free PDF)
- Real Estate: Financial Independence through Real Estate 2 (Free 123-Page PDF)
- Business: Retire Rich, Retire Comfortable with a Business 2 (Free 185-Page PDF)
- Everything!: The Biggest Book on Passive Income Ever! (book)(Web Edition)(Art Edition)
- I bought a Kindle Oasis: Check it out Amazon
- Read My Books for Free: Free Kindle Books Schedule
- Crypto Exchange: My Favorite Crypto Exchange VOYAGER (Join Voyager)
- Kindle Unlimited: Why I Finally Subscribed Kindle Unlimited (learn more)
- Book Reviews: 54 Takeaways from 54 Books (book)
- Want to Build Passive Income from Books and Affiliate Marketing? (Learn here)
- Writing: Can Grammarly Make You a Better Writer? (direct)
- My Favorite Chromebook: The Ultimate Chromebook (direct)
- Follow us: On our Facebook Page and Join our Facebook Group
- Amazon Author Page: Check out my author page on Amazon
- Monthly Dividend Planner: Check it out on Etsy
New Year’s Passive Income Resolution 2022: Article (Amazon Book)
New Year’s Passive Income Resolution 2022: Blank-Lined Notebook (Amazon)
Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
Leave a Reply