THE METAVERSE AND CRYPTO

The metaverse, virtual currencies, and Web3 are all examples. What do all three things have in common besides that they are now popular buzzwords in the IT industry? The metaverse and cryptocurrency are inextricably linked in the eyes of many IT developers and investors, and both will figure prominently in Web3 (a decentralized internet governed by individual users rather than by large corporations).

Even while the metaverse (essentially three-dimensional immersive virtual realities) and cryptocurrencies (with Bitcoin (CRYPTO: BTC) being the initial of thousands of cryptos) are two quite distinct entities, they may come to depend on each other as they continue to evolve strongly.

The technology behind blockchain and the way it drives the metaverse and cryptocurrencies.

Let's begin with a basic piece of technology that serves as the backbone of both cryptocurrencies and the metaverse: the blockchain. Blockchain is a public digital ledger that stores transaction data. Blockchain was first established by Satoshi Nakamoto, the founder of Bitcoin, and is currently utilized by other major cryptocurrencies such as Ethereum (CRYPTO: ETH). The usage of a blockchain network enables the possibility of peer-to-peer transactions, which eliminates the need for mediators in user interactions (such as a financial institution or a technology business). This has the potential to, among other things, lower costs and shortens the amount of time it takes for transactions to take place.

Traditional fiat currencies, converted into digital equivalents, are still widely used to do business on the internet. Blockchain technology and the cryptocurrencies that are based on it were created as a natively digital method of doing commerce in an online environment. Some people believe that metaverses, with their 3D virtual worlds and immersive services, are employing blockchain technology as a mechanism to enable permission-less interactions between users of the internet. This view is shared by others.

Metaverse Shopping

There are many other immersive 3D worlds available today, such as those seen in video games, in which players are able to communicate with one another in real time. However, according to certain definitions, these three-dimensional worlds do not officially become a part of the metaverse until they have a digital economy that is completely functional.

The ability to buy virtual goods is built into a good number of these games and services. This is a routine activity for those who play video games often. You may boost your character's performance or personalize their appearance in-game by purchasing different outfits and accessories. Services that are built on cloud computing adopt a similar principle, which enables a free-to-use or inexpensive initial package while enforcing payment for premium or add-on capabilities and hiding them behind a barrier.

Does that seem a bit meaningless and out there to you? It's possible that the idea of shopping in metaverses might have applications in the actual world as well. Before making a purchase, consumers might try on a digital representation of an item of clothing inside the metaverse. The Chief Executive Officer of Nvidia (NASDAQ:NVDA), Jensen Huang, often discusses "digital twins" of real-world locales. This concept has a significant amount of promise for organizations when it comes to designing and constructing buildings as well as planning industrial operations. The same thing is true for people who may examine a preview of a home redesign or try out a product, like furniture, in a digital copy of their own house.

Metaverse, cryptocurrency, and non-fungible tokens (NFTs)

Cryptocurrencies and apps that are based on a blockchain are able to reach the market at this point because of the possibilities for e-commerce and social engagement. Direct peer-to-peer exchanges over the internet carry the promise of immediate settlement of cash and costs that are close to being nonexistent. An NFT, also known as a "non-fungible token," is a type of cryptocurrency that can be used to prove ownership of an item. An NFT might be in the form of a work of art, a digital collectible item, or a digital representation of a physical good, such as a pair of Nike (NYSE:NKE) sneakers that can be worn in both the real world and the metaverse.

However, for the time being, the video game industry and other creative start-ups make up a significant portion of the metaverse's user base. It is important to note that the volatility that has been occurring in the crypto sector throughout the first half of 2022 has also put a shadow over the metaverse and its viability as a fully fledged digital economy. This is something that should be taken into consideration. Despite this, the following are some early-stage initiatives that are worth keeping an eye on since they are working to bridge the gap between cryptocurrencies and the metaverse.

1. The Playing Field

The Sandbox, often known as CRYPTO:SAND, is a user-created digital environment inside the game in which players may make and sell their own original digital material. Built on the Ethereum blockchain network, the in-game token known as SAND serves the function of a currency and can be exchanged for real-world currencies. On a variety of cryptocurrency exchanges, you are able to buy and sell these tokens back and forth. SAND may be used to acquire non-fictional things (NFTs), such as virtual land, buildings, accessories, and so on.

2. Decentralized region

Another kind of metaverse experience that runs on the Ethereum network is called Decentraland (CRYPTO:MANA). Participants are able to acquire virtual land with the native token MANA and develop that property for usage in games and other activities, as well as for avatars and digital accessories. The Decentraland DAO is in charge of running everything on Decentraland (decentralized autonomous organization). Participants in the Decentralized Autonomous Organization (DAO) may vote on new projects and ideas if they own MANA or virtual property in Decentraland.

3. Axie Infinity

Consider Axie Infinity (CRYPTO:AXS) to be the Ethereum blockchain-based equivalent of the Pokémon franchise owned and operated by Nintendo (OTC:NTDOY). Players battle against other teams using imaginary creatures known as Axies, which they train and care for. Axie Infinity is a "play-to-earn" game, which means that the user has the opportunity to earn AXS tokens just by engaging in the game. The tokens may be used to purchase new Axies, who trade as NFTs; current Axies can be trained to enhance their qualities; and the soon-to-be-released virtual land inside the Axie Infinity realm can be purchased with the tokens. The record for the most costly Axie ever sold was for the equivalent of 820 thousand dollars in Ethereum (at the then-market price).

4. Crypto Coffee Merchants

The goal of the non-fungible token (NFT) initiative known as Crypto Baristas is to create a bridge between the real and virtual worlds. Those who own a Crypto Barista NFT persona have access to a metaverse where they may socialize with other people who share their passion for coffee. However, you won't only be able to get a cup of virtual coffee at this establishment. Additionally, the initiative is being utilized to finance the opening of a real-life coffee shop in New York City known as Coffee Bros., which will collaborate with coffee producers from all around the globe (the first being an established farmer in Honduras). This is a fairly new project that has only just just produced a white paper on how its tokens would operate, but it serves as an example of how metaverses may also have applications in the real world. At this time, there hasn't even been any public discussion about the project.

Opportunities For Both Consumers and Potential Investors

In recent years, the prices of some native tokens that are utilized inside a metaverse have risen, gaining a lot of interest from investors. Be mindful, however, that investing in cryptocurrencies and tokens developed on a blockchain network is fraught with significant levels of risk, and this is not just due to the fact that they are relatively new technology.

The digital currencies and tokens utilized in the metaverse do not constitute a commercial enterprise that brings in money and makes a profit. Instead, they are a kind of virtual cash that can be used in a metaverse to either take part in its activities or make purchases there. As a result, their valuations are largely dependent on personal opinion and are prone to erratic shifts in cost. Individual stocks issued by companies are quite volatile as well; but, investors may evaluate the value of these stocks based on revenue and profit data, while investors in cryptocurrencies do not have access to these criteria. Because of this issue, there has been a significant amount of high volatility in the cryptocurrency market as a whole in 2022.

Despite this, even the earliest iterations of the metaverse show a great deal of potential, particularly for those who are interested in taking part in them. The ownership of some cryptocurrencies gives the holder a say in a decentralized autonomous organization (DAO) or other kind of virtual enterprise, and it also provides artists and other types of digital producers with a new outlet for their businesses.

When it comes to making investments in this sector, you should proceed with caution since it is evolving rapidly and is still in the early stages of growth. However, in the next years, it will be important to keep a close watch on how cryptocurrencies and the metaverse interact with one another.