Here’s how the Metaverse and its future citizens will be empowered by blockchain.
Blockchain, NFTs, and cryptocurrencies are frequently discussed topics in the Web3 era, where they are increasingly intertwined with the metaverse. NFTs, which are assigned to a blockchain for identification purposes, have seen a significant increase in awareness among US citizens. A Security.org survey revealed that only 7% were unaware of NFTs in 2022, compared to two-thirds in the previous year. Despite the low NFT ownership rate among US adults, participation doubled in 2022, and 7% of non-owners expressed interest in purchasing them over the next year. 15% of respondents considered NFTs to be valuable investments. According to another survey by Deloitte, 76% of respondents believe that digital assets like cryptocurrencies could replace fiat currencies within the next ten years.
Blockchain and the Metaverse: A Regulatory Framework?
Interest in the Metaverse has surged following Facebook’s rebranding to Meta Platforms at the Connect 2021 event in October 2021. Decentraland, the Sandbox, Somnium Space, and other platforms have also experienced significant growth in public interest. Alongside this, organizations have been creating standards and more use cases for the blockchain. These efforts are being led by groups such as the Blockchain Association, XR Association, and various governments, aiming to establish ethical standards and frameworks for blockchain use. The increasing popularity of digital Web3 assets is expected to transform the global immersive industry, even amidst the volatility of cryptocurrencies. Although some platform exchanges have filed for bankruptcy due to fraud and unstable markets, the rise of digital assets is predicted to continue.
What is Blockchain?
The number of use cases for the blockchain has been rapidly expanding since its debut in October 2008. The technology is a distributed ledger that utilizes cryptographic techniques to link a growing list of records (blocks) with encrypted data, allowing for seamless record-keeping for both digital and real-world assets.
These records can include a variety of data sets such as name, date, modification, transactions, or any information necessary to identify an item. The key advantage of the technology is its immutability and resistance to fraud, thanks to its end-to-end encryption, transparency, and peer-to-peer (P2P) network characteristics.
Blockchain can be used for an infinite number of purposes, including healthcare, logistics, finance, music royalties, and other data sets. However, it is primarily associated with cryptocurrencies, or decentralized digital currencies that are linked to the blockchain and traded online.
Some of the most prominent cryptocurrencies include Bitcoin (BNB), Ether (ETH), and Decentraland’s native token, MANA.
The Blockchain and the Metaverse
The Metaverse is the next step in computing, merging the Internet and spatial computing for users to interact in virtual environments with digital assets. It will be persistent, real-time, interoperable, and decentralised, with cryptocurrencies potentially enabling monetisation of digital assets, NFTs, and other interoperable items across platforms.
The decentralised Metaverse will prevent any individual or group from owning or controlling the platform, with protocols, technologies, and global standards ensuring decentralisation. Augmented and mixed reality (AR/MR) technologies such as headsets, tablets, and smartphones will extend the Metaverse to the physical world. The blockchain will provide countless combinations for interchangeable physical and digital (phygital) content.
The metaverse presents numerous opportunities for blockchain technology, including the following use cases.
Immutable In-Game Assets
Users are able to earn cryptocurrencies, NFTs, and other digital assets on play-to-earn (P2E) gaming platforms by buying, selling, and trading. Coins earned on the platform can be converted to fiat currencies, and vice versa. Players can also transfer their digital assets to other platforms, which allows for a transition from custodial (centralized) assets to self-custodial (owned by the users) ones. Gaming communities worldwide are already being served by platforms such as Decentraland, Timberland’s Fortnite metaverse, Izumi World, Niantic’s Pokemon Go and Safari Par-Tee, and many others.
The blockchain has been used by several metaverse platforms to authenticate user information when accessing essential infrastructure. Dubai’s Ministry of Health and Prevention, as well as cities in South Korea and China, have already used NFTs and the blockchain to monitor citizen records, gain access to medical data, and offer secure services. Interpol has also utilised comparable technologies to develop training and learning metaverses for their personnel. In the future, individuals might access their distinct digital footprints using blockchain data associated with interoperable avatars. This will be critical for establishing a Metaverse that can carry out real-world transactions.
Metaverse Real Estate
The idea of virtual land ownership has gained momentum in the immersive industry, with the blockchain being used by individuals interested in building and owning prime Metaverse properties. Decentraland, The Sandbox, and other platforms enable virtual real estate transactions in the Metaverse.
Furthermore, many property investors now allow decentralised autonomous organisations (DAOs) to purchase properties, enabling individuals to own fractional shares of a DAO that funds global properties on the blockchain.
Companies like BRIKN and DAMAC Properties have launched their blockchain-powered DAOs to participate in the crypto investment property sector. Additionally, the Dancing Seahorse DAO offers its NFT holders exclusive access to its chain of nightclubs across various locations, demonstrating new use cases for NFTs such as community-building.
The use of blockchain technologies for buying and selling artwork is currently incentivizing creatives to broaden their product outreach on NFT platforms worldwide. While many are familiar with the Bored Ape Yacht Club (BAYC) and other NFT collectives, the global market for creative products could see a surge. This could result in a new range of creative content for collectors, educational firms, and upcoming gaming platforms. Crypto and blockchain technologies could also aid in disputes over asset creation to combat fraud and plagiarism, necessitating a developed metaverse law industry as Web3 becomes more popular.