• This gaming company is transitioning to Web 3.0…
  • Get your travel visa in the metaverse…
  • Private capital is flooding into blockchain tech…

Dear Reader,

On stage at its annual I/O conference in May 2018, Google demonstrated a new technology called Duplex.

Its latest software was based on artificial intelligence (AI) and capable of conversational commerce. In this case, the AI demonstrated its ability to make reservations at a restaurant.

I remember the moment well. It was impressive, to say the least.

It wasn’t the fact that the AI could make the reservation by itself that surprised me. The fact that it could do this and sound “human” was notable. Even better, by mimicking human speech patterns, the humans taking the reservations couldn’t tell they were speaking with an AI.

And that’s what was incredible. The advancements in natural language processing and speech recognition had advanced to the stage where technology like that was possible.

More than three years have passed since that first demonstration. Google Duplex is now available in every U.S. state except for Louisiana. It has also expanded to New Zealand, Australia, Canada, and the U.K.

The breakthroughs haven’t stopped there. This year has been monumental with the release of Open AI’s GPT-3, which is an AI built on a massive language model capable of writing software code, composing articles, and writing emails all at the press of a button.

GPT-3 was tightly controlled this year, but Open AI finally made the technology generally available for use a few days ago.

And while Microsoft “bought” an exclusive license to the software code, other companies can still plug into GPT-3 using APIs and leverage the technology. More than 300 companies have already integrated their software applications with the AI. Droves will follow next year.

Given what has happened this year with natural language processing, there is a mad rush for venture capital (VC) firms to invest in conversational AI companies.

Everyone knows what’s possible now, and they are racing to improve upon the tech. The adoption of this technology will spread like wildfire next year.

It might be a surprise that conversational AI is already responsible for about $41 billion of commerce this year. That includes everything from the commerce generated through Google Assistant or Amazon’s Alexa to order goods, to AI chatbots or voice assistants at businesses which can take orders adeptly.

The technology has gotten so good, most people don’t realize that they are communicating with something artificial…

The utility of this tech will only improve. An AI effectively has instant recall of every customer that it interacts with. It doesn’t even have to “think.”

By instantly understanding every product and service that we’ve ordered in the past, it will know our regular patterns and be able to present the things that we need and like. It will even know what we’ll like before we know it ourselves.

Conversational AI will expand rapidly to where it is needed the most. The labor shortage is exacerbating that need. Restaurants, drive thru windows, tele sales offices, customer service, help kiosks, and other similar venues will adopt this tech quickly as a result.

By 2025, conversational AI will account for more than $300 billion in sales. And by then, we won’t be able to tell who, or what, we’re talking to.

Another big gaming company is embracing the metaverse…

A telling acquisition in the gaming space just caught my eye.

Unity, which produces one of the two most prominent gaming engines in the world, just acquired an early stage company called Weta Digital. We won’t see this in the headlines, but this is 100% a metaverse play.

Weta Digital’s chairman and cofounder is Peter Jackson. That’s the same Peter Jackson who produced blockbuster movies like the Lord of the Rings trilogy and Planet of the Apes.

And as we may expect given Jackson’s skill set, Weta Digital’s platform specializes in visual effects and animation for computer graphics. And the company boasts 275 engineers who specialize in this kind of 3D content.

On the surface, this may seem like an odd fit for a gaming company like Unity. After all, Weta Digital is largely geared toward movies and television shows.

But Unity knows what it is doing here. No doubt the company realized that Weta Digital’s technology can be applied to the creation of new metaverses as well. That’s the driver behind the acquisition.

As I mentioned above, Unity already has its core gaming engine, which is used widely in the industry. It rivals Epic Games’ Unreal Engine.

As a reminder, these gaming engines are the software upon which computer and console games are built. And like Epic Games, Unity licenses out its engine to developers looking to make new games.

Now Unity is going to do the same thing for the metaverse. It will bolt Weta Digital’s technology onto its gaming engine to empower developers to create new metaverses. And of course, Unity will receive royalty payments from the successful metaverses created.

This is a smart move by Unity. It’s a way for the company to rapidly transition from a Web 2.0 to a Web 3.0 gaming company. And given how widely Unity is used in the gaming industry, this move will accelerate the adoption of its software platform.

I’m excited about this acquisition. It’s great to see a tech company be proactive to get ahead of the next generation in its industry. Unity is in for some strong growth.

That said, I don’t recommend buying Unity (U) at these levels. The company trades at an enterprise value that’s 42 times sales right now. That’s absurd. In fact, Unity could fall by 50% and still not be “cheap” in terms of its enterprise value to sales (EV/sales) valuation.

It’s still early, though. A lot of investment has to take place before metaverses become mainstream, but it’s going to happen far faster than we expect.

If you’d like to learn the metaverse plays I do recommend right now, I recently put together a presentation on this topic… You can watch that here for more information.

The first metaverse-based national embassy is under construction…

The island nation of Barbados just announced that it is building an embassy inside the metaverse. That makes Barbados the first country to establish an official virtual presence.

This is neat. And it makes perfect sense.

Smaller countries like Barbados have a limit to how many physical embassies or missions they can support in other countries.

Yet by establishing embassies in the metaverse, Barbados makes itself accessible to people in every country around the world.

Imagine being able to enter a metaverse, visit the embassy, and go through the process of obtaining a travel visa. This process would be far cheaper and far more convenient for both parties when done in the metaverse.

So this is something I expect to see more and more of as we move into 2022. It will start with other smaller countries setting up their own embassies in the metaverse. And larger nations will inevitably follow suit.

And interestingly, Barbados isn’t limiting itself to one metaverse.

The country has already started the process of building an embassy in Decentraland. It is also finalizing agreements to build an embassy in Somnium Space, SuperWorld, and several other metaverse platforms as well.

So Barbados has smartly recognized that there won’t be one metaverse to rule them all. Instead, we will have a proliferation of metaverses, each one catering to a specific audience or interest.

An avalanche of private capital is pouring into blockchain technology…

Crypto-focused VC firm Paradigm just raised a $2.5 billion fund specifically to invest in blockchain projects. That makes this the largest crypto fund in history.

It wasn’t that long ago when we talked about Andreessen Horowitz setting the record for the largest crypto fundraise at $2.2 billion back in June.

Add Paradigm’s new fund to the mix, and we have almost $5 billion in private capital set to pour into blockchain tech in a very short time span.

To start, Paradigm only set out to raise a $1.6 billion fund. But there was so much interest from limited partners to provide capital that the firm took on nearly $1 billion extra. That’s telling about how much growth we have ahead of us.

Unlike Andreessen Horowitz, which has been around since 2009, Paradigm was established just a few years ago in 2018, making the raise even more impressive.

Its rapid ascent as one of the top blockchain venture capital firms was largely built upon the credibility of its founder, Fred Ehrsam, who is also one of the founders of Coinbase.

Given Ehrsam’s background, it’s not a surprise that Paradigm will focus exclusively on Web 3.0 technologies and decentralized finance. This is a large amount of capital that needs to be deployed quickly into early stage blockchain projects, and it will clearly drive accelerated innovation and breakthroughs in the industry.

Everything, and I mean everything, is happening at an accelerated pace. Never before has so much capital been available to back fantastic people and projects.

And the venture capital industry itself is being disrupted by operating executives and builders, not by those that come up via the traditional finance path.

This is welcome news for entrepreneurs and founders who are looking for experienced operating executives to help them grow their business and sit on their boards.

We should get ready for some incredible developments in the blockchain industry in 2022. I think most of us will be surprised by how much is built next year.

And if you haven’t yet learned about my top recommendations in the Web 3.0 space, then please don’t delay any longer. Simply go right here for the details.


Jeff Brown
Editor, The Bleeding Edge

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