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This article was contributed by Brad Yasar, founder and CEO of EQIFI.
Innovation related to the metaverse has brought with it some expected criticism and skepticism. Like any fast-growing, emerging technology, the parameters for its operation have yet to be fully established. This means, essentially, that those who hope to glean financial returns from interacting with the metaverse do not know what investment looks like. Is it VR headsets, digital land, or a pair of Gucci sneakers wearable only with AR? Some might argue that the metaverse is a dystopian fantasy conjured up by gaming fanatics and tech titans. Facebook’s transformation to a metaverse-centric social media company only heightens this dominant apprehension.
With Facebook’s Meta rebrand costing the company an estimated $60 million, it seems Mark Zuckerberg may be onto something. Given that Instagram boasts one billion monthly users, it would be wise to assume that the metaverse may impact our lives significantly in the near future, much like social media does. Much like the early days of social media, the metaverse’s impact is limited by its rate of progression. Soon, however, this progression will bring about a transformative era of industry, influenced by a variety of decentralized tools like DeFi, cryptocurrencies, NFTs, and Web3. Once the power of these technologies is fully realized, life as we know it will have changed forever.
What is a metaverse?
The 2nd Annual GamesBeat and Facebook Gaming Summit and GamesBeat: Into the Metaverse 2
The word “metaverse” was coined in Snow Crash, a 1992 novel by Neal Stephenson. In his depiction, users could immerse themselves in a digital world through the use of headphones and specially designed glasses. This digital world created a space for users to engage with one another, exchange goods, and essentially live a double life through VR. Predictions about the metaverse of the 21st-century detail absolute similarities with Stephenson’s imagined reality. The main difference is that the many infrastructural shortcomings associated with the metaverse in the fictional world have been addressed by using blockchain technology as a means to engage and interact in this new virtual world.
Since Snow Crash’s release over 30 years ago, the largest technology providers in the world, like Facebook, have dominated the technology industry insurmountably. Google’s recent acquisition of Canadian company North to adopt a more modern approach to AR hardware and software could point towards the company’s plans for metaverse involvement. Similarly, Apple, the most valuable company in the world with a valuation of over $2.5 trillion, is producing a currently unconfirmed and unnamed headset designed to act as an entryway to the metaverse’s digital realm. Organizations such as these are not accustomed to discarding funds into projects without a future.
The advent of NFTs delivers a secure method of transferring digital assets from one party to another in a secure manner. Web3 delivers decentralized interaction and connectivity between separate entities, underpinning the decentralization of the metaverse. Cryptocurrencies and stablecoins provide the financial infrastructure befitting a decentralized marketplace. DeFi possesses the ability to bring fully realized financial decentralization to the process of transferring funds and assets in the metaverse. This would round up the network’s infrastructure, facilitating an expansive digital universe unhindered by centralized middlemen.
It is clear to see that the variety of businesses, individuals, and entities that could potentially operate in the metaverse is vast. The widespread use and acceptance of decentralization through the growth of crypto, NFTs, and DeFi point to a fully-realized future operating outside of the parameters of today’s established markets.
Evidently, therefore, the metaverse is not a sci-fi fantasy conjured up in a dystopian novel, but a more tangible and natural progression for the current structuring of the internet. The founding principles of the metaverse have already been introduced in many ways. Now its development centers on blockchain technology and DeFi to propel it from the conceptual stage towards the implementation phase. This development will allow us to firmly realize the true extent that the metaverse will impact our lives.
The gaming industry is one such sector that stands to benefit greatly from developments arising in the metaverse. Gaming skins, which are in-game avatar outfits, are expected to trade at a level of $40 billion every year. Eighty-one percent of players aware of these skins want to trade them for real-world money, according to a report from DMarket. Currently, there is no method of transferring skins across gaming universes or trading them for currency. In the metaverse, however, as every separate gaming universe is connected through a decentralized economy, this would be possible. The use of metaverse-based banks would also enable transactions like these.
Like in the gaming industry, many sectors and industries will benefit from metaverse-related funding and asset transfers. Much like the bankless barter system that precludes our current financial structure, the metaverse stands to reach maximum potential, alongside fully operational and functioning digital banks. This is now possible through the advent and expansion of decentralized finance (DeFi). As the current banking infrastructure separates further and further from cash and brick and mortar establishments, DeFi will be the financial model that facilitates financing across the metaverse.
To operate effectively in the metaverse, and offer a standard practice for the transfer of digital assets, banks will need to be decentralized. As continued innovations are made and more industries shift their operations to the metaverse, the likelihood of DeFi enabled banks becomes a compelling growth development. Centralized banking systems simply cannot operate on the metaverse, meaning the expansion and increased sophistication of industries like gaming will fuel the push towards DeFi enabled banking, which will underpin the financial structure of the metaverse.
This will open a multitude of benefits for industries, technologists, and digital enthusiasts as innovation is led through the metaverse. In gaming, for example, play to earn becomes a viable and attractive prospect for users and gaming companies alike. The introduction of the metaverse provides a concentrated arena where altcoins can be exchanged for playtime. NFTs can be used to exchange in-game assets, facilitating a whole new era of gaming, and operating efficiently with DeFi enabled banks. This again works to illustrate how blockchain-based emerging technologies will be used to facilitate user interactions across different industries.
Dystopia or utopia?
It is not just gaming and entertainment that stands to transform and expand with the onset of the metaverse. Synchrony, a fully functioning economy, and the interoperability of digital assets, information, and consumers means industries like supply chain management, property sales, and even office workflows stand to benefit from developments related to the metaverse. As a concept and technological innovation fueled by the decentralization of blockchain technology, the future is in the hands of these industries, without the stringent parameters of centralized control.
Given the issues that have arisen from unregulated innovations like social media, the likelihood of focused and coherent regulation influencing the future of the metaverse is likely. The OASIS Consortium, for example, pulls together leaders from industries like gaming, dating apps, and immersive tech platforms to address safety and privacy in Web3. Developments like these are favorable, given that the metaverse’s regulatory parameters are being developed by those invested in its growth and expansion in a positive light for the end-user.
It is clear that the correlating growth of cryptocurrency, NFTs, DeFi, VR, and AR will eventually collide to create the metaverse. Will this look exactly like the depiction in Snow Crash, a dystopian online universe where reality is no longer the central connector for civilization? Or, could the metaverse serve to disenfranchise the dominant financial structures of today’s economy, pulling power from the intermediaries that caused multiple financial crises? Nobody really knows. One thing however is certain: The metaverse is coming, and it will change how we look at money, entertainment, and society forever.
Brad Yasar is the founder and CEO of EQIFI.