The Metaverse: A new reality

The Metaverse, in the digital investments space, is a topical concept that has created excitement around the leverage of blockchain technology and tokenised economies. In this article, we aim to unpack what a metaverse is and why it is important in the context of the blockchain and crypto industry. Although this may seem far-fetched and something that has only been spoken of in movies and books, fast-tracked by the Covid pandemic, this reality is closer than you think. The market, interest, and demand for the functionalities that a metaverse offers are significantly higher than one would inherently believe.

To put this into perspective, we are in the infancy of this market’s life cycle and in 2021 the global metaverse market size was valued at roughly USD 64 Billion. The trajectory of this is expected to be exponential over the next 10 years. This shows us that this is no longer a sci-fi or futuristic topic illustrated in books and movies but rather that this is a development of a new industry that holds an exciting opportunity.

Reiterating the point above, here are some of the companies that are exploring this market already:

• Facebook: concepts such as 3D workrooms, and virtual offices amongst many others are being investigated.
• Nike: have built “Nikeland”, where people can access games and use Nike apparel in these games. Nike is exploring and creating digital accessories for avatars, sneakers being one example, where users can purchase and customise their digital representation.
• JP Morgan: has opened “Onyx lounge” in Decentraland (a metaverse), the bank’s suite of permissioned Ethereum-based services.

In addition to these listed above, the likes of Tinder, Tencent, Apple, Microsoft, and many more are exploring and investing in these new virtual reality spaces.

What is a Metaverse?

The current definition of a metaverse is “a virtual-reality space in which users can interact with a computer-generated environment and other users”. Conceptually, it describes a future internet of persistent, shared, 3D virtual spaces linked into a perceived virtual universe.

Basically, it is a digital reality that is accessed via the internet, which combines aspects of social media, online gaming, virtual reality, augmented reality, and cryptocurrencies to allow users to interact virtually. Representing the next generation of connecting in the virtual world, in a common space where individuals can interact in real-time to trade, socialise, game, entertain, or replicate almost any activity that is currently done in the real world.

These shared virtual world environments create life-like online environments that create multi-dimensional digital connections as if you were right next to them.

Remember the game, The Sims? Think of it as more real-life integration of this game enabling all types of commerce and interactions.

How does a Metaverse work?

There is no single way that the metaverse works, it is a compilation of different technologies and approaches. Bringing together things like virtual reality, augmented reality, blockchain, NFTs (non-fungible tokens), and many more.

• Virtual reality: a more commonly understood technology. This allows an individual to be present in a virtual space, where one can physically move and interact with elements as though they were real. This is typically done through VR headsets or glasses. As shown below: [Source: VR Scout]

• Augmented reality: this is a technology that blends the digital world and the physical elements to create an artificial environment. An example of this is Pokémon GO, where users must go an explore real locations and use their devices to find Pokémon characters. Essentially, this happens when the real world is layered with computer-generated elements making it seem as though they exist in reality. The world becomes the framework in which artificial scenes and objects are placed. ?As illustrated below: [Source: iMore]

Avatars (3D) will be a new form in which people can represent themselves digitally in the metaverse, just how currently people represent themselves through different platforms. For example, one may use a professional photo for their LinkedIn profile but a more social or relaxed picture for their profile on Instagram. In the metaverse, you will be able to adapt and customise your avatar according to the metaverse setting you are in – whether it’s a business meeting held or social interactions. You will have options in terms of accessories, and outfits enabling you to maintain your virtual identity across the different settings in the metaverse as we do today across various platforms.

What does this mean for blockchain, digital assets, and crypto?

In blockchain-based metaverses, cryptocurrency will be the universally accepted form of payment. These metaverses use crypto for a wide array of transactions such as purchasing digital equipment, virtual land, personalising your avatar as well as accessing virtual environments and games.

Non-fungible Tokens (NFTs) are unique digital assets that cannot be duplicated or replaced, once an individual purchases an NFT they are the sole owners of the original asset. These can be in the form of art, clothes, real estate, and many more. In relatable terms, these will act equivalently to capital owned in the physical world. A person’s NFT will hold the same value across all metaverses, similar to owning a car or house in real life.?

There are many use cases for the metaverse, virtual conferences, meetings, concerts, and showrooms are all but a few of the current ideas that are being explored.

The emergence of metaverses creates a new tokenised economy in which we will see digital assets and cryptocurrencies play a fundamental role in the operations of monetising and facilitating the activities undertaken in these virtual spaces.

Keep following these weekly articles as we aim to educate and guide you in closing the knowledge gap in this industry and please feel free to contact me if you have any queries in the space.?