The metaverse is without a doubt one of the most talked about technology topics in 2021. Quite unusual, because this topic only became popular in the last months of this year. It had everything to do with Facebook changing its name to Meta to focus entirely on the metaverse. It attracted a lot of media attention, making everyone want to know more about this technology.
We also saw the influence of all the media attention in the crypto and blockchain world. The prices of projects linked to the metaverse skyrocketed. After reading this article, you will understand why this happened, as we are going to tell you why the metaverse can change the crypto industry.
- 1 What is the metaverse?
- 2 The history of the metaverse
- 3 What does the metaverse have to do with blockkhain?
- 4 Why can the metaverse change the crypto industry?
- 5 What is the potential of metaverse?
- 6 The best metaverse crypto projects!
- 7 What are the pros and cons of the metaverse?
- 8 Conclusion
What is the metaverse?
For many people, the metaverse is the most significant digital revolution of the past decade. But what exactly is the metaverse?
The metaverse marks the transition from Web 2.0 to Web 3.0 . Web 1.0 provided access to information. Web 2.0, the age of social networks, brought interaction. The metaverse brings an extra dimension to an environment in which one feels fully present. The metaverse is an emerging real economy based on exchanges in cryptocurrencies.
The word metaverse literally means ‘beyond’ (meta) the universe (verse). The term covers all virtual universes. The metaverse is a parallel, interactive, immersive 3D world in which users can experience things through an avatar (virtual character).
The concept applies to 3D video games, as well as to new types of metaverse built on the blockchain , such as Decentraland or The Sandbox (more on these projects later). The blockchain brings a decentralized nature to these worlds. The metaverse thus becomes an open and independent ecosystem in which everyone can participate for free, build elements and even spend and earn money.
The history of the metaverse
While the metaverse has been in the news since November 2021, the concept isn’t new. The word originated from Neal Stephenson’s book Snow Crash, published in 1992. It was popularized by the science fiction movie Ready Player One, released in 2018.
The first metaverse dates from 2003, with the video game Second Life. It is still available and running in 2021. Second Life users can play as virtual characters and design the game’s content. The idea was there, but the technology wasn’t ready in the early 2000s to make Second Life truly democratic and sustainable for users and brands.
Second Life continues to pioneer the metaverse. Many brands and celebrities have launched marketing campaigns there, such as Nike and American Apparel, which have opened virtual stores. Budweiser hostesses and Scion (Toyota) cars have also been seen there.
Second Life also played an important role in Bitcoin ‘s development . Second Life’s cryptocurrency, the Linen Dollar (L$), which can be exchanged for fiat currency, has provided a gateway for Bitcoin owners long before the exchange platforms. Thus, the cryptocurrency only became convertible into dollars in 2011.
Over the past 10 years, next-generation metavers have emerged, most notably The Sandbox, founded in 2011, and Decentraland, founded in 2015.
Metaverses really gained momentum in 2021 due to the development of new augmented reality (AR) and virtual reality (VR) technologies, but also thanks to the development of blockchain, cryptocurrencies and especially NFTs.
An important date to remember is October 28, 2021, with Mark Zuckerberg’s announcement to rebrand the Facebook group as Meta and massively invest in the metaverse. The general public then became aware of the potential of metaverse, and the prices of cryptocurrencies and related fields skyrocketed in the days following the Facebook CEO’s speech.
What does the metaverse have to do with blockkhain?
Just like in real life, metavers are the place for commercial exchanges. Transactions are made in cryptocurrencies.
Each metaverse has its own cryptocurrency: MANA for Decentraland, SAND for The Sandbox and soon Diem for Meta. Meta is the metaverse developed by Facebook.
In a metaverse it is possible to add land, buildings, clothes for an avatar, etc . to buy and sell. These virtual products take the form of money, which can be used to buy or sell goods. These virtual products take the form of non-fungible tokens (NFTs).
Thus, NFTs are an essential part of metaverse. They represent all goods that can be kept or earned on the metaverse: 3D constructs, accessories for avatars, digital artworks displayed in museums, or proof of attendance protocol (POAP) to collect.
Blockchain and NFT technologies have enabled the development of interoperability between these different worlds. Since NFTs are titles of ownership that are registered on the blockchain, ownership of a digital asset is not limited to the boundaries of any particular platform or game. Technically, it is standards such as ERC-721 that allow an NFT to be used in various applications and metaverse.
A pair of virtual sneakers in the form of NFTs can be worn by an avatar on Decentraland, but also in another virtual universe, and partly in the real world where they will be seen through augmented reality (AR) glasses. Hence the growing interest of brands such as Adidas or Nike in metaverse.
From a technical point of view, this is only possible with open and decentralized metaverses based on the same blockchain. Such interoperability is not yet possible on most existing metaverses, but it is an option that is gaining traction.
The main NFTs in the metaverse are virtual real estate, whose prices are constantly breaking records. Some are reaching new heights, such as this virtual land that sold for $2.43 million on Decentraland. How about an Axie Infinity lot that sold for $2.48 million.
Why can the metaverse change the crypto industry?
Metaverses are sure to disrupt the digital economy. They offer new experiences to users of digital instruments. Augmented reality, virtual reality and volumetric video technologies that are rapidly evolving and gaining popularity will make these experiences more and more immersive.
Users can visit shops and museums or attend concerts. They can interact with each other, but also with products. They may also work, attend meetings or trade shows, or study. There is even a university under development in Decentraland.
You have to imagine the metaverse as a parallel world. Artists can perform on virtual stages with an avatar or in real life, with a hologram. Consumers will be able to chat with a salesperson and test drive a car. Major retailers will have their digital twins there (such as Adidas on Sandbox). Public services will also be available on the metaverse in the future. For example, the city hall of Seoul, the capital of South Korea, is currently developing a virtual version.
Metaverses will become real places to live, communicate and consume. They offer advertisers immense communication and marketing opportunities. Users can also monetize it, such as with Axie Infinity, a blockchain play-to-Earn game, which we discussed in a previous article on GameFi .
With GameFi it is a lot clearer how important the metaverse can be for the crypto world. GameFi is a combination of ‘Game’ and ‘Finance’. It means that players can earn money by playing a game. In many games on the metaverse there are items to earn that can become a lot of money. Think, for example, of a special weapon or piece of clothing.
When such a garment is available in limited edition, this item can become worth a lot of money. This is especially the case when a large and well-known brand decides to release the item. Think for example of Nike, Adidas, Louis Vuitton or Gucci.
The latter two brands in particular issue limited edition products. This ensures that the value of these products is very high. People are no doubt willing to spend a lot of money on the metaverse. In the past, objects (NFTs) have already been sold for millions of euros.
The moment someone expects that an item will become even more valuable in the future, it is always wise to buy such an item. In fact, it doesn’t matter how expensive the item is, because (if it goes according to plan) it will increase in value.
The crypto world will see more and more projects that focus on the metaverse, which also ensures that more and more cryptocurrencies and tokens will be for sale within this playing field. The metaverse industry is still very young, and there is still a lot of growth potential. This means a new playing field full of possibilities.
What is the potential of metaverse?
According to a report by Bloomberg Intelligence, the annual metaverse market could be worth about $800 billion by 2024. Parallel to this, the American bank Morgan Stanley speaks of a market of 8,000 billion dollars. By comparison, the video game market will be worth approximately $180 billion by 2021.
The growth potential of augmented and virtual reality technologies is also exponential. PWC predicts a growth of 39.6 billion euros in 2019 to 1,280 billion euros in 2030 (+3,000%).
This growth is separate from the growth within the crypto industry. More and more people are using cryptocurrencies, which also means that the blockchain is used more and more. As a result, this market will in any case increase in value over the coming years, which will have a positive effect on the metaverse.
When there is more money in the crypto world, projects also have more and more money to invest in the metaverse. These projects can raise money from the general public through IGOs (Initial Game Offerings). Do you want to know more about IGOs? We previously wrote an article about Seedify , which you can read here [LINK].
The best metaverse crypto projects!
There are already many metaverse projects, the most important of which are Decentraland, The Sandbox, Cryptovoxels, and SomniumPlace. Of course this number is increasing, which is why there is a good chance that this list will look very different in a year.
A plethora of other metaverses are in development. In fact, most video game, social networking and e-commerce players are planning to launch their metavers like Epic Games ( game creator Fortnite), Roblox, Alibaba, TikTok, Reddit, VR Chat, and even Microsoft . The latter is well positioned to become an industry leader, as it owns the famous game Minecraft and the professional social network LinkedIn.
Apple is also expected to be in the spotlight because, according to the American investment bank Morgan Stanley, it holds the key to the mass adoption of augmented and virtual reality technologies, and thus to the metaverse.
We have already mentioned Decentraland several times in this article. It is a decentralized, online virtual world similar to Second Life. The big difference is that Decentraland runs on the blockchain. It is powered by Ethereum and was created to support the creation, development, hosting and sale of virtual properties.
Decentraland allows its users to purchase virtual properties and then develop them as an online virtual business. Various buildings or attractions can be built on the virtual land plots, which can then be monetized or simply sold to others for a profit.
The project was conceived and developed by the two blockchain experts Ari Meilich and Esteban Ordano. They have spent several years developing the blockchain and smart contracts that make Decentraland work. They were able to launch the core network in 2020 and then both withdrew into advisory roles, enabling the Decentraland Foundation and the Decentralized Autonomous Organization (DAO) to lead the way forward for Decentraland.
On the visible level, Decentraland works by allowing players to interact with non-fungible assets (NFTs) known as LAND on the platform. These land plots, of which there are 90,000 in total, can be bought and sold. More importantly, landowners can build on it. They can be used as containers for games, applications, betting services, creative 3D scenes, information sites, etc.
In addition to limiting the number of LAND units to 90,000, each has a fixed size of 33 feet by 33 feet. Interestingly, while the length and width of each LAND are limited, there is no limit to the height of a LAND, so an owner can theoretically continue to build in height indefinitely.
A group of LANDs forms a district, which is basically a community with a similar theme (gambling, dragons, amusement park, pirates, etc.). MANA token holders will be able to vote on matters affecting these districts, as part of the project’s DAO governance. The amount of the MANA determines the value of the vote.
These MANA tokens are the engine that powers the platform. Everything is controlled by MANA, Decentraland’s own cryptocurrency. MANA is an ERC-20 token and, in addition to being used for governance, it can also be used to buy LAND or to purchase virtual assets and services within Decentraland.
Behind the scenes, Decentraland is built in a similar way to most blockchain projects. It has a protocol and that protocol has three layers. These are the consensus layer, the content layer and the real-time layer. The consensus layer is where the smart contracts that track and regulate LAND’s ownership are located.
The LAND content layer is responsible for rendering the content you see when you enter Decentraland, and the real-time layer provides the P2P connections needed for users to communicate with each other.
Sandbox is one of the blockchain-powered virtual worlds currently in development. The Sandbox’s virtual world consists of tracts of land, and voxels fill each of those lands. Visually, it will remind many players of Minecraft, as both games have a Lego-inspired look. However, players can purchase virtual tracts of land and use them to earn money. These virtual terrains can be transformed into mini-games, quests, virtual shops, extensions of real web stores, a space for social gatherings, and so on.
The Sandbox provides free tools for developers, gamers, and content creators. Creators can use VoxEdit to create objects. In addition, Game Maker allows users to create interactivity in their virtual land. Sandbox will also create a meta game experience. For example, players can do daily or weekly quests for their guild. With this, players earn ARENA, which they can sell or use to buy in-game items or virtual land.
Like Decentraland and The Sandbox, CryptoVoxels is a project that runs on the Ethereum blockchain. In this virtual world, users can buy pieces of land and then build all kinds of things on it. Think, for example, of shops and museums, but also of houses and business premises.
Players can create their own avatar and dress it up to taste. Then they can do fun things together with other players within CryptoVoxels. Think of communicating, having a party or developing a building together.
The interface of CryptoVoxels is very similar to Minecraft, which is the case with several metaverse games. It is possible to play this game in virtual reality when you will arise in many metaverses, we can imagine that not all of them will survive, like many technology companies that were very popular in the early 2000s.
First, a distinction must be made between the video game industry metaverse and the social network metaverse. The advantage of video game players is that their users are young and already familiar with the idea of consuming portable digital products. Social networks have the advantage of having billions of users (3 billion monthly users for Facebook).
It is also interesting to look at the different forms of governance and decentralization of metaverse. Decentraland, for example, is wholly owned by its users with a decentralized management system where decisions are voted by the users (Decentralized Autonomous Organization or DAO).
Facebook’s Meta will remain privately run. The Sandbox is owned by the Chinese company Animoca Brands, but also operates under a DAO system. The question is: what will the users prefer? Can CAD-based management really work in the long run? Only time will tell, and it will be interesting to follow the evolution of these two decision-making models.
Another important element that needs to be closely monitored is the level of investment in the different projects. Meta has announced a $10 billion investment for 2022. The Sandbox raised $93 million in November 2021. Decentraland had raised $26 million in 2017 and has more than $200 million in MANA.
There are other indicators to keep an eye on: the price of cryptocurrencies of course, the sales prices of land, the number of users, but also the number of brands present (165 brands for The Sandbox, including Atari, the Smurfs and Snoop Dog ).
What are the pros and cons of the metaverse?
The metaverse brings with it many advantages and disadvantages. The main advantage is that it will become easier and easier to get in touch with other people. For example, in the metaverse you can meet with people who are on the other side of the world without having to take the plane to meet them.
It will ensure that fewer and fewer flights will be flown, which will save a lot of time and emissions.
It also ensures that people are less likely to end up in social isolation. After all, they can quite easily go looking for friends in the metaverse with an alter ego.
There is also a disadvantage and danger of the metaverse here. It can cause people to lose the difference between the metaverse and real reality. It is important that this difference is there, because the metaverse should not serve as a substitute for the real world.
Another disadvantage is that blockchain technology is not yet sustainable enough to handle the high demand. By this we mean that it still takes a lot of energy to run a blockchain. When the demand for the metaverse increases, the energy consumption will also increase. Many machines within a blockchain network still run on non-renewable energy. So a lot of emissions are released when running a metaverse.
Fortunately, more and more companies and projects are working on solving this problem. They want to make blockchain technology more sustainable. One of these projects is Brokoli Network (BRKL), which we wrote an article about before. Would you like to learn more about this project? Then click here [LINK].
The metaverse thus turns out to be a major turning point for the Internet, and even represents a technological revolution comparable to the emergence of this domain, which is now entrenched in our daily lives.
While many critics warn of the risk of a virtual life, the potential for growth and innovation is immense, and metavers may soon become part of our everyday lives.
The big question remains who will take the lead, and which cryptocurrencies will become important players in this sector, in a new industry that is still quite unpredictable and promises fierce competition.
Thanh Lanh Tran(1989) is Chief Editor from BitcoinUSD.com