Blockchain and other Disruptive Technologies Shaping the Metaverse
Do you remember playing online video games during your childhood or teenage years? The insatiable desire to go home as quickly as possible to log online and explore a digital world. Most millennials and Gen Z have already experienced the “Metaverse”, or a simpler version of it from online video games. If you haven’t had these experiences, maybe you’ve unknowingly had other metaversal experiences. Blockchain and disruptive technologies are not only shaping the metaverse, but also our every day lives.
What is the metaverse?
From a fundamental perspective, a “metaverse” can be any form of online engagement, like having a Zoom meeting call or commenting on a social media post, that enables people to have presence, identity, and engagement within a digital or virtual space. Therefore, due to the advent of the digital age, the majority of the world should be familiar with an online presence (e.g. being online via a WiFi connection), online profiles (e.g. having an username to login a website), and online activities (e.g. browsing YouTube). In that context, one could argue that we already have plenty of experience with variations of “metaverses.”
The major difference is that today technology has significantly advanced to a point where metaverses have more capabilities than ever before. Before we dive deeper into the metaverse, we must first look at the potential impact of blockchain–one of the most important underlying technologies behind the metaverse–in addition to other related disruptive technologies like crypto payments and artificial intelligence.
Blockchain, crypto assets, AI, in addition to both augmented (AR) and virtual reality (VR), have profoundly influenced the recent notion of the ever-evolving metaverse as adopted by the tech and gaming world. Features such as the exchange of real-world value facilitated by the broader cryptocurrency economy and provenance, decentralized user governance, and highly engaging video games with VR and/or AR capabilities and interactive social networks, have designed these “crypto metaverses” to be immersive virtual worlds.
Why is the metaverse a trending topic recently?
The prevalence of blockchain and disruptive technologies in mainstream media during the past decade has contributed to the recent popularity of the metaverse. It is common to see science fiction themes, such as virtual reality and AI, in Hollywood films like Ready Player One and TV series like HBO’s Westworld. Mainstream media has slowly conditioned us into becoming more comfortable with science fiction themes. Additionally, influential Fortune 500 companies like Facebook and Square have changed their names to Meta and Block, respectively. They have embraced the metaverse and blockchain, and altered their company vision and goals to align with these new technologies.
Disruptive technologies shaping the metaverse
Blockchain is a decentralized, distributed, and incorruptible digital ledger used to record immutable transactions across its network of computers. Additionally, blockchain is the underlying technology behind cryptocurrencies like bitcoin (BTC) and ether (ETH) and non-fungible tokens (NFTs). The key word here is incorruptible: as with any activity online, security and trust are of the utmost importance. If there is any hope of mainstream adoption for metaverses, it is vital that people know their transactions are secure. In an increasingly centralized Web 2.0, decentralization is an important concept because it brings the internet back to the people. Through decentralization, blockchain addresses key issues of Web 2.0 like interoperability, user empowerment and privacy, and security.
In addition to other disruptive technologies, blockchain technology and the supporting decentralized applications (dApps) running on the blockchain network are essentially constructing the metaverse. They are the core components for the infrastructure that will enable the metaverse–a significant aspect of Web 3.0.
2. Crypto payments
Crypto payments are the key to unlocking the full potential of the metaverse. The blockchain technology behind crypto payments can assure people that their virtual transactions will be swift, incorruptible, and cryptographically secured. The efficiency of crypto payments can address issues pertaining to the current state of digital payments (e.g. wire transfers), such as high costs and lack of transparency. Crypto payments can also enable the decentralized ownership of digital assets, which subsequently motivates people to invest. Ultimately, cryptocurrencies and related transactions will become the economic backbone of the metaverse.
3. Artificial intelligence
Artificial intelligence (AI) is another disruptive technology that can make an impact on the metaverse, especially in conjunction with blockchain. AI technology is fundamentally centralized, whereas blockchain is decentralized. A central authority collects and manages the data, making it more susceptible to data manipulation. Blockchain is a solution for those weaknesses of AI technology because it addresses data privacy, transparency, and immutability. Data analysis and decisions stemming from a collaboration between blockchain and AI technology are more efficient and trustable.
This is perfect for applications like high quality learning data on the metaverse that store and use tons of data. This AI-collected data can be utilized to create a virtual news announcer within the metaverse. The data collected will be from top-notch real world announcers, which can also be stored on the blockchain. Due to the transparent quality of blockchain, the data will be deemed reliable for future implementations of metaverse news announcers.
The crypto metaverse
Quickly think back to those games you used to play as a kid. Now, imagine yourself immersed in one of those vast gaming worlds. An avatar represents you with in-game assets which can be traded for crypto tokens–and converted into real money (play-to-earn). Using those crypto tokens, you can buy and sell virtual real estate and ownership would be recorded on the blockchain. The ability to convert into real money gives these virtual assets real-world market value. Crypto metaverses are not only the next level of gaming, but also a lucrative opportunity for various industries. Some current examples of crypto metaverses include, but not limited to, Decentraland, The Sandbox, and Axie Infinity.
To explore the crypto metaverse, consumer hardware, such as smartphones, VR headsets, and haptic accessories, is necessary to access features. The enterprise-level hardware to create and operate the virtual worlds, such as graphics cards and servers will also be essential. For example, metaverses like Decentraland currently only require users to have a computer and internet connection to play. In the future, when Decentraland is compatible with VR, you can use a VR headset for a more immersive experience.
Industries collaborating with the metaverse
Gaming is only one of many industries trying to incorporate blockchain and enter the metaverse. The art, fashion, and real estate industries are all seeking new opportunities through blockchain and the metaverse. The economic backlash suffered from the COVID-19 pandemic has forced industries to adapt and create more opportunities online.
These high-profile collaborations show the immense potential for businesses who want to invest in the metaverse. The global gaming market (currently the industry working most closely with the metaverse) alone is worth close to USD$200 billion (Statista 2021)–and growing–making it the largest media category by revenue. As the metaverse space continues to evolve and gain investments from various industries, there will be increasingly more lucrative opportunities.
Blockchain is revolutionizing the digital art industry and improving the marketplace because it provides a more beneficial structure for artists to buy and sell their artwork. Artists (sellers) can now trade their artwork as NFTs, which removes third parties. Artists can receive fair compensation and thus empowered. NFTs are unique digital assets with certificates of authenticity that create real-world scarcity. Art collectors (buyers) can verify the authenticity and ownership of the minted NFT artwork on the blockchain. In the art space, NFTs have increasingly become another popular medium for artists to sell their artwork on marketplaces in exchange for crypto tokens–the most common token being ether (ETH)–which can be sold for real money. For example, artist Beeple recently sold his artwork “Everydays – The First 5000 Days” for USD$69 million to a buyer who hopes that the value will increase as the NFT space further evolves.
Digital art sales can also be transacted within the metaverse. As NFTs, virtual items have value. They can be in-game rewards or used to represent their physical counterparts. For example, due to the COVID-19 outbreak, auction house Sotheby’s implemented blockchain into their business model. Sotheby’s allows crypto payments and holds NFT art auctions within Decentraland.
In the fashion industry, blockchain technology has enabled the development of “digi-physical” clothing, shoes, accessories, and other items. Represented as NFTs, these pieces are digital fashion with various functions. These include wearing pieces at virtual fashion shows, clothing avatars within gaming ecosystems, and buying pieces as speculative investments. The owner can also physically wear the pieces because they come with a physical copy. In this regard, there is a possibility that digital wallets in the fashion industry will resemble virtual closets.
Many mainstream brands are already entering the metaverse. For instance, luxury brand Dolce & Gabbana recently launched their “D&G Family” campaign. This campaign involves community-based fashion NFT drops on their curated marketplace UNXD. Consumers who purchase the NFT have exclusive access to the physical apparel associated with the drop. Lastly, whereas the gaming industry has play-to-earn, the fashion industry will also collaborate with the gaming companies to have wear-to-earn opportunities within gaming ecosystems.
In the metaverse, one can purchase virtual real estate. One can purchase and build on entire plots of virtual land, and even host events like virtual art exhibits. There are already various platforms hosting virtual real estate and events.
Crypto metaverses like Decentraland allow its users to purchase property as NFTs, explore, and socialize with other people via their avatars. Moreover, one can purchase Decentraland’s native cryptocurrency MANA on crypto exchanges and use MANA to make purchases on Decentraland. Recently, crypto investors Tokens.com purchased one plot of land on Decentraland for a record price of USD$2.4 million worth of MANA tokens and will be used to host virtual fashion events. Additionally, blockchain company Boson Protocol also purchased a plot of land of Decentraland with plans to develop an immersive virtual shopping center, where users can explore with their avatars and purchase wearable digi-physical items represented as NFTs.
Another popular crypto metaverse is The Sandbox, which is a blockchain gaming platform that integrates three products: Voxel Editor, Marketplace, and Game Maker. A major difference between Decentraland and Sandbox is that Sandbox users can also play games, complete quests, and earn rewards, in addition to purchasing land. Furthermore, Decentraland only uses MANA token as the primary asset. Sandbox utilizes several crypto assets, such as the SAND token (basis for all transactions on the ecosystem), LAND (digital real estate represented as an NFT), and ASSETS (an user-created utility token that can be used as in-game creation elements).
Popular games like Epic Game’s Fortnite and Roblox have also collaborated with celebrities and brands who want to enter the metaverse. For example, in April 2020 during the COVID pandemic, artist Travis Scott hosted a massive virtual concert within Fortnite that had over 12 million players who watched his concert. Similar to the impact of NFTs, it was unprecedented and revolutionized the way fans could interact with their favorite entertainers. Another example is Nike’s collaboration with Roblox that involves the creation of a virtual space called Nikeland within the Roblox metaverse. In this space, users (primarily kids and teenagers) can play minigames and engage not only with each other, but also with the Nike brand. Nike can use this space as another marketing tool, creating another funnel for potential customers.
In summary, blockchain, in addition to other disruptive technologies, and the metaverse are all inextricably connected in the ongoing convergence of the physical and digital worlds. Not only is blockchain one of the fundamental technologies behind the metaverse, but both are also at the forefront of the shift to a decentralized Web 3.0.