At this point, there can’t be too many people who haven’t heard of Cryptocurrency and the metaverse. A lot of research has already been done on what they are and how they will operate. And with Facebook very actively involved with the metaverse, there will be discussions on how these concepts will evolve. That said, the science behind the metaverse suggests that it can be an integral part of moving crypto assets to the mainstream and vice versa.
Metaverse promises to provide its users with augmented reality so great that they prefer doing everything there, including work, sports, travel, interacting with other users, and much more. But, of course, this is just the beginning. But one question that is often missed from these debates is how will user information be kept secured in this digital world? If users are going to spend more and more time in the metaverse, how can they be sure their data won’t be compromised? To further add, another thing that is often missed is the impact of blockchain and crypto on the metaverse.
Simply put, the metaverse needs crypto if it will deliver on its promise. So let us take a more detailed look into these concepts and how they are related intrinsically to one another.
What is a Cryptocurrency?
Often called crypto, a cryptocurrency is any currency that exists digitally, can be used online for many different purposes, and utilizes cryptography to make these transactions secure. They are not regulated by a central authority (like a central bank) but instead use a more decentralized system for recording data and issuing more units.
Think of it as a virtual payment system that does not follow the standard banking procedures and acts independently of any regulation (for now!). To further elaborate, it is a peer-reviewed and controlled system that gives access to anyone residing anywhere in the world to send and receive payments digitally. Unlike paper money that has to be carried around physically for transactions, cryptocurrencies exist solely as virtual slots in an online database that link themselves to specific transactions.
When a cryptocurrency is exchanged, the information is recorded publicly (but digitally) in a ledger. To make it simpler, these ledgers, called blockchains, store transaction data conducted between users through their “digital wallets.” The name comes from the fact that a cryptocurrency uses advanced coding and encryption to verify transactions, store information, and transmit data between wallets. The aim is to make this process as secure and straightforward as possible.
The first Cryptocurrency was “Bitcoin,” which was launched in 2009 and is the most well-known. Much of the buzz generated around cryptocurrencies deals with trading them for profit by buying them when the prices are low and then selling them when they go up.
What is a Blockchain?
A blockchain is a digital network, an online ledger for all intents and purposes, shared amongst its users to facilitate the process of recording transactions and tracking assets. Assets can be tangible (a piece of land) or intangible such as patents. These assets are tracked and traded on a blockchain network to minimize risks (theft of property, displacement, etc.) associated with a physical ledger and reduce the costs for everyone involved.
In our fast-paced world, a blockchain enables a faster and more accurate flow of information. It provides shared and transparent data to authorized users in an immutable ledger. It can track orders, payments, accounts, production, manufacturing, distribution, etc. And since it is entirely transparent, users get total access to the entire process.
How does Cryptocurrency Work?
As mentioned before. Cryptocurrencies run on a digital ledger called blockchain which constantly updates and stores user transactions. The cryptocurrency units are created through “mining,” a process that utilizes computer power to solve complex mathematical problems, generating coins. Another way of acquiring a cryptocurrency is through brokers.
Owning a cryptocurrency means holding an intangible key that allows you to move around records and units of measure from person A to person B without involving a third party. Even though Bitcoin was introduced in 2009, these concepts are still evolving, especially in the financial sector. Likely, bonds, stocks, and other financial assets could eventually be traded as cryptocurrencies.
What are Non-Fungible Tokens (NFTs)?
An NFT, or a Non-Fungible Token, is a unique token that cannot be replaced with anything else. So, to simplify, if you trade a bitcoin for another bitcoin, you will have the same thing, making it fungible. However, a unique trading card is non-fungible because if you sell it with another card, you will have something completely different.
NFTs are a part of the Ethereum blockchain at a basic level, where Ethereum, as a cryptocurrency, supports NFTs. NFTs have some extra information differentiating them from a crypto coin (an ETH coin as an example of a bitcoin). It is worth noting that other cryptocurrencies have also implemented their own NFTs.
NFTs are entirely digital and can be anything from drawings to music, but the recent buzz around them was generated because the technology is being used to sell digital art. So the conversation has now started revolving around NFTs as an evolution of collecting fine arts virtually. You can make a copy of digital art as many times as you, with the owner getting bragging rights (a blockchain entry).
A more recent phenomenon that came into being because of NFTs is “penguin communities.” Traditional penguin communities are built by people based on the things they own. Now it is happening with the NFTs as well. For example, “Pudgy Penguins” revolves around a collection of NFTs, namely digital penguins (if it wasn’t obvious already). Other communities include “CryptoPunks” and the “The Bored Ape Yacht Club.” Each community has its own set of communal activities. For example, Pudgy Penguins compliment each other on their penguin avatar on Twitter, and the Bored Ape, seems to be sharing memes on Discord.
As an artist, NFTs give you a way to sell art that may have a limited audience and pay you a percentage every time your NFT is sold or changes hands. This ensures that you will get some of its rewards if your NFT goes up in value. Another thing to consider is that buyers usually buy NFTs to support the artists they like while getting some fundamental usage rights (like making it your profile picture). Finally, as a collector, NFTs are similar to any other speculative asset, like real estate, where the hope is that its value will go up one day.
What is the Metaverse?
If we are to go by what CEOs like Mark Zuckerberg or Satya Nadella have said about the metaverse, it could be the future of the internet or a videogame. At this point, what’s certain is that talking about the metaverse is very much like the internet back in the 70s. The building blocks of an innovative form of communication were being built, but no one would know what it would look like until the 90s and beyond.
Similarly, the metaverse is “coming,” but no one knows precisely when and what form it will take, which means there is a lot of conjecture. That said, industry professionals describe the metaverse as being closely related to the term “cyberspace.” The term itself does not just refer to one specific type of technology and will most likely become antiquated by the time it becomes mainstream, in other words, the AI effect.
The technologies currently linked with the metaverse are virtual reality (virtual worlds that continue to exist even when you are not active) and augmented reality (that combine aspects of reality with virtual reality). However, it is not necessary that these worlds only get accessed through VR or AR. A virtual world could very well be metaverse. That means a digital economy complete with currency and products. Right now, most platforms have “avatars” that are linked with just one platform and aren’t interoperable. Buy a metaverse could, in theory, allow you to create a digital identity that you could take anywhere in that virtual world.
But one question that might arise is, doesn’t this exist already? After all, the world of Warcraft has such virtual worlds where players can buy and sell goods already, and Fortnite even has virtual concerts. So is that all the metaverse is?
The answer is yes and no. Limiting the metaverse to just Fortnite is like saying Google equals the internet. Even if you could, in theory, spend a majority of your time socializing and gathering things in Fortnite, it does not mean the metaverse is just that. What would be more accurate to say is that just like Google builds part of the internet, Epic Games (Fortnite’s creator) is making parts of the metaverse, along with other tech giants like Microsoft, Nvidia, Unity, Roblox, Snap, and Facebook (now officially “Meta”).
We have a vague sense of what the metaverse might be and which companies are investing their fortunes in building it, but we still don’t know what exactly it will look like as a finished product.
The Emerging Relationship between the Digital Market, Cryptocurrency, and the Metaverse
Building on previous points, the metaverse will need transactions that happen on an utterly on-demand basis. This is where blockchain and cryptocurrencies can be helpful. For a metaverse to be truly virtual and work as advertised, or even remotely close to it, transactions will need to happen securely and instantaneously.
More importantly, the people who become a part of this ecosystem will want to have transactions virtually the same way as they would in the real world. And they will enjoy the assurance that these transactions will be completed. Add the familiarity of online commerce and the need for cryptocurrencies becomes even more evident. In this virtual world, transactions will need to be secure, fast, traceable, and completely transparent.
The metaverse is still an emerging and evolving concept. However, to fully realize virtual reality, cryptocurrencies and blockchains will play an integral role. The full potential of the metaverse can never be realized without cryptocurrencies, especially in terms of transactions and human interactions.
Some popular Cryptocurrencies of the World
Cryptocurrencies are popping up by the thousands around the globe these days. But some of the most well-known are:
Bitcoin: The first of its kind, Bitcoin was founded in 2009 and is still the most recognized and most traded Cryptocurrency in the world right now. Its developer goes by the name of Satoshi Nakamoto, believed by many to be a pseudonym of a person or persons whose real identity remains unknown.
Ethereum: Ethereum is a blockchain platform that developed its Cryptocurrency in 2015. Also called Ether, it is the second-most well-known Cryptocurrency after Bitcoin.
Litecoin: Similar to Bitcoin, Litecoin has recently started developing its innovations and faster payment methods to increase transactions.
Ripple: Developed in 2012, Ripple is primarily a distributed ledger system and is often used to track different kinds of cryptocurrencies and transactions.
Dogecoin (Doge): Launched in 2013 by Jackson Palmer and Billy Markus, Dogecoin was built as a parody of cryptocurrencies but soon gained a sizeable following. With the Japanese Dog Shiba Inu’s logo, its underlying technology was made from Litecoin and had features like the Scrypt algorithm and unlimited supply.
Recent Purchasing Trends
Grimes sold his NFTs for millions of dollars, $6 million worth, to be exact. These were images and short videos set to music along with digital art. Chris Torres is selling the famous Nyan Cat as one-of-a-kind crypto art.
Jack Dorsey is selling his tweet as an NFT (the bidding has already crossed the $2 million mark). People also got in the act by selling an image for $6.6 million.
Logan Paul made a short video into an NFT and sold it for $20k. Brands like Marvel (Marvel Mighty) and Wayne Gretzky have also launched their own NFTs.
William Shatner decided to make Shatner-themed trading cards. Other celebrities like Bill Gates, Elon Musk, Nas, Mike Tyson, Snoop Dog, Jamie Foxx, Floyd Mayweather, Bjork, and Rog Ver have all been outspoken supporters, and promoters of Cryptocurrency have heavily invested in them. Elon Musk believes cryptocurrencies are “here to stay” and will be the way of the future.
Various tech giants like Microsoft are developing the metaverse, but it could be a while before we witness the finished product. However, it will need cryptocurrency and blockchain technologies to realize its full potential. An entirely virtual world of the metaverse will need to convince its users that their transactions and data are completely secure (blockchain can help in this regard), transparent, and speedy. So please think of the metaverse, Cryptocurrency, and blockchain as interrelated and not as separate entities, even though they are different technologies. It is similar to developing the internet, where various technologies were built and merged to form a compact whole. But one thing’s for sure, the future looks promising with many different opportunities, so let the exploration begin!