The Era of Decentralized Metaverses
In May 2021, China announced a nationwide crackdown on cryptocurrency operations within financial institutions and services. This ban stopped banks, processing platforms, and other financial institutions from rendering any service that involved decentralized digital currencies.
Financial experts are of the opinion that the ban does not affect the market that much. After all, attempts to ban crypto in China have been in motion since 2013, and the crypto spheres have only blossomed ever since.
Regardless, while the crypto market has been in the clutch of regulations and bans in the past, the evolution of the metaverse industry continues to prove that this might be the first industry completely free from punitive or ad hoc regulations like China’s.
What Are Metaverses?
Metaverse is a juxtaposition of two words – “Meta”, a prefix for beyond, and Verse, a word stemming from the universe. The term was coined from Neal Stephenson’s classic novel, Snow Crash, in 1992 as a reference to a 3D virtual world with avatars representing actual people.
The metaverse is often described as an upgrade from the current version of the internet as we know it. If you think of the internet as a 2-dimensional space of information, think of the metaverse as 3D.
Huge players in the tech space have taken significant interest in the metaverse industry, investing millions of dollars in the past years. Facebook, one of the biggest players with the largest stakes describes the metaverse as:
“A set of virtual spaces where you can create and explore with other people who aren’t in the same physical space as you.”
Last year, during the heights of the covid-19 pandemic, Grade A celebrity and rapper, Travis Scott performed to more than 21 million players in Fortnite. This event served as the first public prelude to what a globally accepted metaverse could feel like.
Possibilities for the metaverse are endless. And with continued progress in virtual reality, augmented reality, and blockchain technology, there are chances that we might live our whole lives in virtual universes, go to work in virtual universes, and be a part of a new digital economy that is a major industry by itself.
Metaverses are not limited to a platform; instead, they have continuity in activities both in the digital world and the real world.
As technology keeps evolving, we also keep adapting to trends such as working, buying things, and interacting with others online. Many games have expanded the scope to build models and simulated environments in which players pick up avatars and engage in activities through VR equipment. Think Fortnite and Second Life. However, metaverses broaden the horizon beyond these limited features to include an environment that connects our digital space to our real world.
How do Metaverses Work?
Blockchain is the technology upon which decentralized metaverses are built because it makes the metaverse accessible to everybody from anywhere.
A metaverse is built on a network of decentralized nodes which means no single server or entity holds rights of access or control over transactions that occur in a metaverse.
Different companies and creators are building metaverses and the technology for it, but eventually users will determine what they want to make out of it. Blockchain allows all the content in the metaverse to be moved seamlessly across other platforms and applications. This means assets in the metaverse can be interacted with at any time and in any location, even outside the original platform it was created on.
The blockchain allows users and members of the community to collaborate in different ways and build a metaverse as a system in which all activities and assets are recorded, and transactions are irreversible.
Blockchain is also a building block for the interoperability required by the metaverse to maintain a connection from the parent node on one platform to different nodes on other platforms.
A decentralized metaverse is designed to bypass the regulations and inflexibility that is common to many current structures of and allows users to interact without restrictions from any entity. A country that holds dearly to the tenets of centralization would definitely be against such ecosystems thriving outside their control.
How Metaverses Influence Cryptos and NFTs
Metaverses make cryptos more valuable as they are the medium of exchange on these platforms. The metaverses that already exist have in place functional economies that ensure transactions are processed just as in the real world.
However, financial transactions in the real world come with their challenges, like high processing fees especially for international transactions, and lag in transaction validation. Add that to the problem of transactional errors and you have a highly inefficient payment system.
Cryptocurrencies have proven useful in solving problems in the real world, and adopting them for use in the metaverse is a no-brainer, especially considering how seamless they are with virtual environments built on a blockchain. And of course the basic principles which drive both, which is decentralization.
Metaverses often employ crypto tokens as native currencies, which means a digital currency can thrive, and of course consequently attract investors. The prospect of a metaverse utility token appreciating is of course a major attraction for many investors.
New virtual metaverses are also shaping to provide buyers and enthusiasts the perfect “NFT experience.” Since the metaverse is a 3D space, it offers perspective to NFT arts in ways that are not possible on the internet.
NFTs, also called Non-fungible tokens, are cryptographic tokens attached to digital assets as proof of authenticity and ownership on the blockchain. Apart from digital artworks, non-fungible tokens can be representations of domain names, tweets, physical items, unique fashion pieces, or even virtual lands.
Metaverses as digital spaces are modeled to include NFTs which have, in fact, become a motivation for people with a vested interest in metaverses to own digital assets.
Although not native to the metaverse, NFTs have begun to have more use cases in the metaverse. If the future is bright for metaverses, there is growing potential for NFTs to also become more valuable, as the two industries continue to intersperse.
The Pros of a Decentralized Metaverse
Cryptocurrency and blockchain technology gives users more control over how processes are made. They do not allow the government or any other body to interfere in these processes. It means users can acquire, re-distribute or make transactions in a fast, secure way without fear of monitoring or regulation. It is worthy to note that there are different types of metaverses.
A centralized metaverse is controlled by a body. Hybrid metaverses are partially regulated, while some parts are unregulated. Decentralized metaverses have the advantage of being beyond the control of any entity.
As a decentralized space, every user enjoys fairness and equality of rights across the metaverse. Users can also conduct business, own NFTs, and use their assets as they wish, without the interference of any party. Decentralized metaverses also reward content creators handsomely for their works and efforts.
Due to a lack of restrictions, creators in a decentralized metaverse can express themselves as they deem fit because no governmental body can limit the use and distribution of content. Original owners of content can be more assertive and express their creativity in diverse ways.
The real world is approaching its limits in certain areas such as lands and resources. Opening up a new possibility for people to own real estate assets in a digital world, for instance, are a great idea for the future of investments. Unregulated metaverses are trusted spaces because people cannot exercise authority for their selfish gains. People are more willing to be players and stakeholders in such a thriving ecosystem.
A decentralized metaverse provides an immersive experience and pleasant pathways for interaction between people, brands, and items. Decentralized metaverses are a new source of revenue generation for content creators and provide new job opportunities for people who may be unemployed in the real world. So much that entire economies are expected to spring out of the metaverse.
Cons of Metaverses
The metaverse is still at its infant stages and as such, still has the risk of unpredictability.
Although running on a technology that allows deregulation, early stakeholders and already established names in the tech space may still call the shots in the metaverse, defeating the purpose of a truly decentralized metaverse. There is a possibility of chaos since nobody regulates or attempts to change the rules of engagement or interaction.
The metaverse is also not immune to cybersecurity risks and data privacy risks that bedevil already existing media.
Immutability of data on the metaverse means that users cannot dispose of traces of their transactions and interactions from the digital space. The fact that all their actions are linked to their avatar also causes privacy concerns.
Examples of Decentralized Metaverses
Some common established names in the niche industry of the blockchain metaverse are:
Decentraland is regarded as the first operational metaverse on the blockchain. On Decentraland, users can purchase and trade virtual real estate, play games, and interact in the digital space. The platform allows users to acquire MANA, a cryptocurrency for buying virtual products and services, and LAND, the NFT that defines digital real estate on the platform.
Axie Infinity is a blockchain-based game that uses NFTs as its characters, thus adding intrinsic value to them.
Axie Infinity allows users to battle for tokens that are used to mint new characters (in this case, NFTs). The minting of unique characters on the blockchain allows Axie to check duplication of characters, making them rare, scarce, and valuable. The result is a blossoming economy built on a video game and running on the AXS token.
Cryptovoxels is a Minecraft-inspired metaverse with Origin city as the main island. This digital universe has limited real estate and players can purchase new islands and parcels created by the team to sustain the project.
Realm is a cross-chain NFT platform that revolutionizes the NFT experience for users. Through Realm, users can build metaverses of their own.
The platform itself launched Metropolis, a metaverse that allows users to host NFT exhibitions and trade their NFTs with a minimal barrier of entry.
Lands sold on Metropolis can be used for different virtual activities such as art exhibitions, virtual game arcades, event centers for different shows, workplaces, and shopping centers, and a whole lot more.
Metaverses are the frontier of Web 3.0 applications and are pointers to the new normal of a decentralized future. While China continues to exercise regulations over its citizens’ and residents’ involvement in crypto, the decentralized digital market is largely unaffected. Right under its nose is the blossoming beginning of decentralized metaverses, and the future is brighter than ever.
Investors that previously held stakes in different cryptocurrencies and blockchain projects in China have begun to consider investing in metaverses as an escape. The move still gives the entire crypto space a needed boost.
China powerhouses and giants like Tencent and Ali Baba are rumored to be at the forefront of active research into the world of metaverses, despite the country’s disposition towards the topic. It is clear major technical giants regard metaverses and NFTs as possible cogs of tomorrow’s tech evolution and are finding ways to euphemize the crypto industry to escape China’s wrath.
From investing in possible metaverse hardware (such as headsets and other VR equipment) to investing in companies that are championing different metaverse projects, Chinese tech giants’ motives remain clear. And renaming NFTs as “digital collectibles” to escape sanctions does not change this fact.
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