Crypto trading has taken the back seat in the digital economy in 2022, with the market remaining under the bears' control for most of the year. Furthermore, traders have seen their faith rocked by the consecutive failures of centralized exchanges. These intermediary marketplaces have been the powerhouse of the industry since its humble beginnings. Now, they seem to crumble under mounting allegations of scams, lawsuits, and solvency concerns. Meanwhile, they make a convincing case for the imminent decentralization of crypto…
The metaverse was once nothing more than a futuristic concept. However, it is now taking shape, and cryptocurrency and blockchain technologies have an integral role in its development.
“The metaverse will be the gateway to most digital experiences, a key component of all physical ones, and the next great labor platform,” says Matthew Ball, a renowned venture capitalist. This statement defines the metaverse quite well in a nutshell. However, we still have a lot more to learn about the next big thing.
So, what is the metaverse, and how do blockchain and cryptocurrencies fit in? Here is a comprehensive guide to help you connect the dots!
What is the Metaverse?
Many popular and acceptable definitions of the metaverse exist. One of the most famous describes it as a digital world where anything you can imagine can exist. This goes to show just how vast and versatile the metaverse could become.
A more straightforward definition of the metaverse is a virtual 3D universe that incorporates different virtual spaces. Furthermore, it enables users on other platforms to interact seamlessly. That’s because it is based on Virtual Reality (VR) and Augmented Reality (AR).
People exist in this universe through digital avatars designed to serve varying purposes, from gaming to work. To put this into perspective, you could hop from a platform designed for professional collaboration to another one for socializing. Meanwhile, you can use the same avatar on one large platform, the metaverse.
But that’s not all.
The metaverse has numerous applications, including communication, video games, social interactions, and work collaborations. Furthermore, it could affect the real world as much as the internet already does. To this end, many have described it as a successor to the internet.
The Current State of the Metaverse
The metaverse currently exists only in bits and pieces. Good examples of these pieces include Decentraland and The Sandbox. These decentralized virtual platforms allow users to create anything they can imagine, from theme parks to money-making virtual casinos.
However, the different bits and pieces of the metaverse are coming together quickly. And, this complete virtual universe could be here sooner than we expected. Tech giants such as Facebook, Google, and Microsoft, have a lot to do with this rapid development.
Facebook is spearheading the development of the metaverse. Mark Zuckerberg recently told his employees that the company would take more action to bring the metaverse to life. In this regard, the company has created a special team comprising some of its top executives to lead the project. Notably, the company’s investments in VR technology via Oculus and Quest VR headsets are already showing the way ahead.
Other tech giants are also making significant investments and developments in the metaverse. Some of the most notable names in this race include Microsoft, Google, Sony, and Samsung. These companies are collaborating with Facebook to form the XR Association. Its main goal will be to shape the future of experiential reality.
The Role of Blockchain & Cryptocurrencies
Cryptocurrency and blockchain technologies are playing a significant role in the growth of virtual technologies and solutions. Essentially, the metaverse couldn’t operate smoothly without the use of blockchain technology and cryptocurrencies.
Cryptocurrency’s Role in the the New Universe
Consider a scenario in the metaverse whereby a virtual casino offers monetized digital casino games. The virtual casino and its customers need a currency. So, cryptocurrency becomes the ideal solution in a virtual universe. This is the most basic example of how cryptocurrency fits into the metaverse.
Another more complex example includes the wildly popular game Fortnite. This multiplayer gameworld deals in digital assets worth more than $1 billion. On the other hand, the digital items market is worth more than $10 billion. Currently, Fortnite’s digital items do not have any worth on Fortnite. Furthermore, the $1 billion would disappear if the Fortnite platform collapsed.
Fortnite is one of the pieces of the developing metaverse. For example, you may think of it as an ordinary company in the ordinary market. Ideally, its digital assets should exist independent of the company. Consequently, their value should depend on a reliable currency, such as a cryptocurrency.
The role of NFTs (non-fungible tokens) in the metaverse is also worth noting. An NFT is an incorruptible digital asset that people can trade on the open market. Consequently, NFTs can serve as proof of ownership of the digital items making up the metaverse. For example, Decentraland recently sold a 259-parcel virtual estate for more than $900,000 as an NFT.
Blockchain’s Role in the Metaverse
Blockchain is the foundation on which the metaverse currently grows. Consider a scenario whereby tech giants such as Facebook and Google want to integrate their platforms. This way, their users can interact across all barriers. The companies’ platforms’ versions and technologies are different. Also, they need an efficient solution to govern their interconnectivity on the metaverse.
So, how will they proceed?
Blockchain has emerged as a foundation on which everything on the metaverse can grow to coexist. To this end, some of the current pieces of the metaverse are running on blockchain technology. Blockchain technology will have many uses on the metaverse, including:
- Recording financial transaction
- Recording the transfer of ownership of digital items
- Enabling interoperability across different virtual platforms
- Allowing the digital collectability of assets
- Enabling digital proof of ownership
- Promoting proper governance of a vast metaverse with numerous players
Most importantly, blockchain technology is incorruptible. Ideally, the metaverse will grow big enough to host people globally. Social media platforms such as Facebook already have billions of active users worldwide.
It will pass some time before the metaverse becomes complete. Blockchain and cryptocurrency are already shaping the metaverse. Also, both will play an integral role in how everything works in this new virtual universe. For instance, the metaverse will launch and operate on blockchain technology. Lastly, you will need cryptocurrencies to buy and sell items in this universe.