If it had been the late 1990s, just when the dot com bubble was about to burst, the concept of a virtual world would have been laughed at. Fast forward to the 2020s, a virtual universe existing within a computer-generated space is what most of the company is trying to crack. Hence the birth of Metaverse! It just took a few years for this concept to evolve so much so that each day we are seeing new integrations. That being said, it is safe to say that the involvement of Cryptocurrency in Metaverse is already on the cards.
Before we delve into the integration and all the nitty gritty, it is important to understand what the buzz for Metaverse is all about. What started as a simple term for a virtual world has opened up to be much larger. At its core, Metaverse is nothing but an expansive virtual world wherein people can interact with others despite being distant in real life. For instance, I can party with my friends in Brazil and Australia at a virtual club in London! Needless to say, the Metaverse took off during the COVID times. While people were asked to quarantine, the virtual world helped people to interact.
Potency of Metaverse
Just like how the Internet redefined commerce and social interaction back in the 1990s, moving forward it would be Metaverse. Much to my surprise, Metaverse’s involvement in commerce is already underway. Akin to an open-world game, people can own a piece of land in Metaverse. This is termed virtual real estate, and just like any property, the prices go up in the metaverse too. Not just virtual properties, users can create virtual goods, avatars and even drawings. Mind you, all this is while the concept is still getting perfected! Imagine how much more it could do if it reaches 100%.
A brief look into Cryptocurrency
For the uninitiated, Cryptocurrency is a form of decentralized digital currency that is not controlled by any central authority. There are no intermediaries in this form of currency, making it more secure and quicker when it comes to carrying out a transaction. As of now, there are countless Cryptocurrencies. Bitcoin, introduced in 2009, is the first and most well-known digital currency in this space.
Cryptocurrency in Metaverse
A digital currency fits best for a virtual world, and that’s where Cryptocurrency comes into the picture! There are plenty of use cases for Crypto, some of which are mentioned below:
1. A new virtual currency
The scope of new currency just for Metaverse is justifiable and relevant. Users should be allowed to purchase this new currency using traditional currency. Once a user gets hold of it, this new currency can be used to buy virtual goods, virtual land, avatars etc. Since this is a virtual world, there is a pressing need for a system like crypto – with no intermediary. Not only would this make the transactions quicker, but it would also avoid the need for multiple documentation and verification.
2. Trading digital assets
Buying digital assets is one thing, and trading them is another. For making the trade look seamless, digital currency is crucial. Once a buyer owns a piece of virtual land, they can choose to trade or not trade, similar to any physical asset. Crypto can help in getting the trade to go through. In addition to this, blockchain technology can be employed to make a document of ownership/trade. This way, the documentation can’t be altered or tampered with.
3. REIT – Real Estate Investment Trusts
In addition to the trading of virtual assets, Crypto can take virtual space ownership to a whole new level using Real Estate Investment Trusts, or REITs, in short. Once a trust is created, investors can pool the resources for investing in more virtual real estate properties.
Gaming and Betting are two of the most popular activities within Metaverse. Decentralized gaming can be the next big thing in Metaverse – making people compete with each other for cryptocurrency as a reward in exchange. Betting can also be redefined using Cryptocurrency, wherein users can bet on events – paving way for a whole new sector of virtual gambling.
Fraud and Scams
Cryptocurrency does offer a lot of depth in terms of what it could do for Metaverse. However, there are a few challenges associated with it. One of the biggest challenges is the potential for fraudsters and scamsters. Once you are scammed, with decentralization in place, it would be very difficult to recover your losses.
Interoperability between different worlds.
We are only seeing half(or a quarter, even) of Metaverse. As it expands, there is a high possibility for different worlds to emerge – creating numerous subsets. Think of it like a multiverse, and us being in Milky Way. Once such a thing materializes, there is a huge chance for multiple virtual currencies. The system must have robust technology in place that would seamlessly ensure transactions between different worlds.