Today Citi released a new report Metaverse and Money: Decrypting the Future. The bank believes that the metaverse may be the next generation of the internet and that it could present a global revenue opportunity of between $8 trillion and $13 trillion by 2030.
It expects the metaverse to combine the physical and digital worlds with a growing number of use cases, including gaming, media and entertainment, art, manufacturing and enterprise, commerce, education, and health care.
“We estimate, in the report, the target addressable market (TAM) for the Metaverse economy to be in the range of $10 trillion plus,” said Ronit Ghose, Global Head of Banking, FinTech & Digital Assets at Citi Global Insights, and co-author of the report. “Expert contributors to the report indicate a range of users of up to 5 billion, depending on whether we take a broad definition (mobile phone user base) or just one billion based on a narrower definition (VR/AR device user base) — we adopt the former”.
It’s expected that only a subset of participants will make use of virtual or augmented reality devices, with most users accessing the metaverse via mobile phones.
The bank also predicts that cryptocurrencies will dominate as money in the metaverse, but they will coexist with fiat currencies, in-game tokens, stablecoins, and central bank digital currencies (CBDCs).
To accommodate the massive expected growth in the metaverse ecosystem, there will need to be significant technology investment. Citi believes that the current internet infrastructure is unsuitable for building a fully immersive and seamless metaverse experience and that a 1,000x improvement in computational efficiency will be required.
As the metaverse grows, it will attract greater attention from global regulators and policymakers. As we’ve seen with web2.0, there will be challenges around content moderation, free speech, and privacy. The legal frameworks developing around cryptocurrencies and decentralized finance (DeFi) will also be relevant to the metaverse.
Meanwhile, three weeks ago, the co-heads of Citi’s newly formed digital assets division, Greg Girasole and Alex Kriete, both announced that they were departing from the bank to start a new venture. The bank first started building a team in May 2021, with a major expansion in November.
Citi has been active in the wider blockchain sphere for several years. One of its current high profile initiatives is the Regulated Liability Network, an enterprise blockchain network spanning central banks, banks, and other institutions to fight the “digital money format war”. It’s also been involved with blockchain initiatives for FX settlement, tokenized bonds, and multiple CBDC trials.