When Satoshi Nakamoto published the blockchain technology through Bitcoin in 2008, it is fair to say that he unleashed a future with nearly endless possibilities. Even though the cryptocurrency has been there for more than 14 years, it was explored by the masses quite recently and yet remains an unexplored realm for many.
Therefore, let's find out how does the metaverse affect cryptocurrency and in turn how can our investments shape around these developments -
What is the Metaverse?
Talking about the Metaverse, we all have heard about the concept either during the Facebook rebranding or the spiderman movie. Even though we may have explored some aspects of Metaverse, the concept remains fairly new to us. So let's first take a look at the formal definition of ‘Metaverse’.
According to reports, the Metaverse is defined as “a simulated digital environment that uses augmented reality (AR), virtual reality (VR), and blockchain, along with concepts from social media, to create spaces for rich user interaction mimicking the real world.”
Matthew Ball, who is a venture capitalist and essayist, wrote that the metaverse will become “the gateway to most digital experiences, a key component of all physical ones, and the next great labor platform.”
In layman's language, it's a world in itself but without the reality of the matter. It is free from the laws of physics, chemistry, or biology. It is run and carried by supercomputers and servers similar to those of the internet.
The extent of evolution in the Metaverse depends on the creativity of an individual. Hence, the sky is the limit for the possibilities of what the Metaverse can be in the future.
In addition, the Metaverse isn’t being built by any one group or company. Different groups will build different virtual worlds, and in the future, these worlds will be interoperable – forming the metaverse.
This can also be observed in the movie ‘Ready Player One’ which was set in the future revolving around the concept of the Metaverse and the possibilities around it. Mathew Ball also believes it will be the driving force in creating a new generation of companies, similar to what happened with the popularization of the internet.
How the Metaverse affects Cryptocurrency
The Metaverse has become more relevant after the Facebook rebranding. And the most important thing is that the currency used in the Metaverse is completely digital, primarily cryptocurrency.
Due to this, there was a spike observed in the prices of Crypto tokens and non-fungible tokens (NFTs) during the rebranding of Facebook. Nonfungible items mean they are unique and not replaceable. They are the opposite of fungible items like the currency of any nation. For example, the price of the Decentraland token MANA shot up almost 5X its price following the day of the Meta announcement.
Another example can also be seen as digital pets. The crypto-gaming pioneer, Axie Infinity, witnessed a substantial increase in the sale of their native tokens during this period as well.
As the transactions in the Metaverse can only be carried out through digital currencies, it encourages individuals towards buying these financial instruments like NFTs, cryptocurrencies, and other digital assets. Therefore, the Metaverse has increased the market for cryptocurrency in a way.
Shopping in the Metaverse
The Metaverse is not just a world of gaming. Rather it is a world of digital consumerism. Every diverse individual who calls themselves “a techno-grandparent” also has a place in this Metaverse. How? This is how -
The Metaverse includes digital assets like movies, music, graphics, NFTs, applications, etc. These assets aren't particularly tangible in nature. Which means that they may not have a physical form. Rather, they are stored in the cloud and the rights or ownership are given to the individual or company.
Talking about this, we all are a part of the entertainment industry one way or the other. We download songs, movies, pictures, videos, etc. Sometimes we also buy or rent films on platforms like YouTube, BookMyShow, etc. And similar to these transactions are the transactions in the Metaverse.
The Metaverse would also become a shopping arena for various digital assets like these. The only difference is that a nation’s currency or hard cash won't be accepted here. Instead, individuals would have to deal in digital tokens like Cryptocurrency to buy or sell assets.
Major brands are also getting into the NFT mix, including Dolce & Gabbana, Coca-Cola, Adidas, and Nike. In the future, when you buy a physical world item from a company, you might also gain ownership of a linked NFT in the Metaverse.
For example, when you buy a particular branded outfit to wear to a real-world dance club, you might also become the owner of the crypto version of the outfit that your avatar can wear to the virtual Ariana Grande concert. And just as you could sell the physical outfit secondhand, you could also sell the NFT version for someone else’s avatar to wear.
Basically, you would be carrying a crypto wallet around. Your crypto wallet will also hold your Metaverse-only digital goods, such as your avatars, avatar clothing, avatar animations, virtual decorations, and weapons. And just like it happens today in real life, these avatar clothing, decorations, etc would be traded with one another.
Generation of Income in the Metaverse
The Metaverse is not just a place for consumers and gamers, but also for earning money. It is obvious that if someone is buying something then someone is selling it and making a profit. This also means that the Metaverse is going to be generating new careers for the coming generations. Playing games and earning money sounds like a dream, but it is going to be a reality now.
In fact, the example of the Metaverse generating good sources of income can be seen in the country of Ghana. The company Axie Infinity which is a crypto-gaming pioneer company as mentioned before has generated higher income than the minimum wages for the people of Ghana just by playing games.
The Metaverse is the future of gaming, trading, shopping along with so much more and there is no doubt that it is here to stay. Cryptocurrency already existed pretty much on its own too, but with the new use of it in the Metaverse, the masses would be inclined towards holding digital assets and also having day-to-day transactions in digital tokens. Therefore, the Metaverse can affect cryptocurrency by increasing the demand for it.
There is also a possibility that people may start trading in crypto for the transparency that it offers. Public blockchains, like Bitcoin and Ethereum, are also transparent. This means that all transactions are available for anyone on the internet to see, in contrast to traditional banking books. This also eliminates the risk of cybercrimes to negligible.
Apart from this, the Metaverse would also generate income for individuals and pay them in the form of digital currency like NFTs, crypto, etc. So, when the income itself is crypto, people would also spend this crypto in Metaverse.
With this, we have discussed only a few possibilities that we can think of today but in reality, they are endless. The Metaverse and Cryptocurrency are the concepts under Futurism, therefore, they have a vast scope of what they may grow into.
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