On October 28th, 2021, Facebook rebranded itself as ‘Meta’ alongside their new department ‘Reality Labs’ aimed at developing their iteration of the metaverse. This announcement of the ‘meta-project’ has catalyzed a rat race between tech companies to either start integrating their products into the metaverse or develop their iteration. As a result, several businesses have jump-started their R&D to integrate their platforms, products, and services to enter this potential multi-billion dollar industry. A report published by Grayscale Investments LLC reported that the revenue from blockchain metaverse games alone is forecasted to grow from USD 180 billion in 2020 to 400 billion by 2025.
What is the Metaverse?
The metaverse is an open-world ecosystem that uses VR peripherals, augmented reality, and audio to create a virtual space with infinite possibilities. Users can create custom avatars and landscapes, virtually blending natural world aspects with the online world.
Business metaverse applications that are currently under development from companies such as Meta, Roblox, and Microsoft, could potentially change the way businesses operate in the future. Potentially, companies can showcase their products or services, allowing consumers to view them virtually and make purchases. This metaverse store model can substantially reduce business operational costs and increase customer acquisition. Global fast-food chain McDonald’s has already stepped up the competition by filing trademarks to be the first virtual restaurant within the metaverse. Other industries are beginning to follow suit to integrate their products into this ecosystem.
The biggest winner in the metaverse ecosystem is arguably, cryptocurrencies. Several tech giants have realized that crypto’s key characteristics are best suited to fuel transactions in the metaverse.
Exploring crypto and the Metaverse
Metaverse cryptocurrency is a vital application of blockchain technology, a decentralized information recording system that acts as a digital ledger for transactions. Let’s explore what makes blockchain-powered crypto largely successful
Digital proof of ownership
When you use cryptocurrency to purchase an actual world product on any Metaverse store, the product itself cannot be stored digitally. However, proof of purchase in product serial numbers and buyer credentials is stored securely on crypto wallets such as Metamask that can be verified against the blockchain by ownership verification tools.
Blockchain is an ever-evolving decentralized network consisting of several moving parts and features adaptable to user requirements and control. Blockchain cryptocurrencies need to have a suitable form of governance to enable stakeholders to discuss and make decisions about their evolution. Crypto widely follows two types of control: off-chain and on-chain governance.
- The off-chain governance model is an older method brought forth by pioneers in cryptocurrency, Bitcoin, and Ethereum. Off-chain blockchain governance is by a small group of stakeholders that control the future of the entire blockchain. This type of governance poses its perceivable risks as it is more centralized to a small group of stakeholders who influence the progress of the blockchain and its investors.
- On-chain is a newer governance framework where users or token holders are given more control through a democratic voting system. This method gives voting rights to all token owners to determine the future of the blockchain, and new cryptocurrencies follow it.
Axieinfinity integrated NFTs and cryptocurrencies into its metaverse as virtual land, unique characters, and accessories. Users can buy, sell, and trade these NFTs with their native cryptocurrency tokens AXS or SOL. On July 30th, 2021 Coca Cola entered the metaverse with four new NFTs in the form of collectible loot boxes sold on auction at a value of USD 575,883. Users can purchase these loot boxes with cryptocurrencies available on platforms such as Open Sea.
Interoperability is the mechanism for two or more blockchains of cryptocurrencies to communicate and share information. Several crypto projects are in development to implement this feature to increase the communication rate of their tokens. Cryptocurrencies that are in the works to integrate interoperability are VerusCoin, Darwinia, Quan, and more.
Metaverse in Action
An early entrant into the metaverse was Epic Games, with their popular metaverse game titled ‘Fortnite’. On February 2nd, 2019, Fortnite held an in-game music concert by celebrity DJ Marshmello performing to an attendance record of 10.7 million players. In this situation, Fortnite acted more like a Metaverse concert venue for its players rather than a game.
Decentraland is another metaverse project with an open ecosystem where users play to earn an in-game token currency called Mana. This token can further purchase in-game NFT collectibles and virtual land. Most platforms such as this also allow users to create NFTs, giving them real-world interoperability for the value of their time spent in-game.
In May 2021, Luxury fashion brand Gucci partnered with metaverse game Roblox to host a metaverse show for their new fashion line. They virtually designed a real-life Italian Gucci store in the Roblox metaverse, and visitors were allowed to view, try on, and purchase clothing within the simulated environment. Roblox is an example of how metaverse business applications enhance customer experience, blending the natural and virtual worlds.
Axie Infinity is continuing to be a key metaverse player. According to its company website, players using its crypto tokens, Axie Infinity Shards (AXS) and Smooth Love Potions (SLP), traded in-game assets in its marketplace to the amount of US$3.6 billion to date. Additionally, in recession-torn Venezuela, Yahoo Finance said that Axie Infinity had been an income source for people to avoid financial hardships and low-paying jobs.
Future of Metaverse
The future of the metaverse could be a significant financial opportunity for businesses and stakeholders. Enterprises are starting metaverse stores to reduce brick-and-mortar store costs. Bloomberg Wealth newsletter reported that virtual real estate is booming, and development is underway for metaverse hotels, businesses, and stores. The metaverse has made way for potential financial opportunities for entrepreneurs and companies. However, the returns on investments are not guaranteed as they depend on the long-term success or failure of the metaverse.
The metaverse marketplaces could potentially retire the current Web 2.0 eCommerce platforms. Newschannel CNBC has reported that Walmart is developing a metaverse marketplace, cryptocurrency token, and NFTs. This move by the big-box retail chain will have a rippling effect on the retail industry. Using blockchain and Web 3.0, several businesses worldwide are developing their marketplaces where users can buy, sell, and trade native metaverse digital assets and tokens.
As more businesses begin to move to the metaverse, there may be a need for a proper virtually collaborative office environment. These virtual business platforms will benefit companies with many remote employees as well. Meta is utilizing a big chunk of its R&D resources to reimagine and reengineer the virtual office experience. Microsoft is developing a digital office platform by integrating its VR/AR platform Mesh and business communication platform Teams packed with a hybrid of all the capabilities that both platforms possess.
Moving forward, enterprises with virtual stores, digital collaborative offices, and integrated cryptocurrency systems may drive the future of the metaverse. Although we may be far from establishing a single unified metaverse, we are developing metaverses that offer alternative ways to live, work, and play.