There has been a lot of discussion about non-fungible tokens (NFTs) and the Metaverse in the last year. Few realize, however, that the Metaverse is a promising use case for NFTs, and that NFTs and the Metaverse may become inextricably linked in the near future. But aren’t NFTs just digital art tokens? How will NFTs assist us in gaining access to the Metaverse?
What are NFTs and the Metaverse?
Simply put, NFTs are tokens that exist on a blockchain, most commonly the Ethereum blockchain. As a result, they can be used to establish ownership of an asset. Each NFT has a unique identification code and metadata that allows it to be distinguished from other NFTs and data on the blockchain.
NFTs are not replicable. Real, tangible assets can be bought and sold more efficiently while reducing the risk of fraud by tokenizing them. NFTs, like bitcoin and other cryptocurrencies, contain ownership information for easy identification and transfer.
The metaverse, on the other hand, denotes a network of virtual and augmented reality, a virtual world in which everyone can participate – the next level of the Internet. Instead of simply Googling a search term, you can enter the Metaverse and experience what you’re looking for in a virtual 3D environment.
Characteristics of The Metaverse
The metaverse is defined as “an integrated network of three-dimensional virtual worlds.” A virtual reality headset is used to access these worlds. Some characteristics that are unique about the metaverse:
It is endless: The metaverse is not “paused,” “reset,” or “terminated.” Instead, it persists continuously.
Live and synchronous: Similar to “real life,” the metaverse is a synchronous living experience for all, adaptable, and exists in real time.
Overlapping experience: it includes both digital and physical worlds that enable public or private experiences. Physically persistent virtual spaces are merged with augmented reality (AR) that overlays and augments the real world.
Multiple contributors: Content and experiences will be developed by many contributors. Some creators will be self-employed, and commercial companies will employ others.
Experience as an individual and simultaneously with others: The metaverse is closed to no one and allows people to participate in events, places, or activities with others.
Interoperability: content, data, digital elements and assets and more should be interoperable between experiences in the metaverse.
Functional economy: goods, intangibles, and experiences can all be created, owned, and exchanged by individuals and businesses using recognized value.
Role of Cryptocurrencies
As the metaverse evolves, many wonder what role cryptocurrencies will play. In the metaverse, crypto acts as currency and NFTs as assets of the digital economy. Because the metaverse is online, the unique attributes of cryptocurrency make it ideal for a virtual world. Crypto is verifiable and immutable, enables “high-speed exchanges,” and provides equal access to all regardless of location.
Meanwhile, NFTs enable a digital representation of scarcity and effectively enable real estate transactions within the virtual world. Similar to the real world, scarcity in the metaverse causes property values to rise and fall, reflecting supply and demand. “NFTs also demonstrate indisputable ownership of property rights.”
As the metaverse and the number of people involved in it grow, the technology primed to support its massive growth is the metaverse blockchain infrastructure. Eventually, it will be possible to exchange virtual goods on various interoperable marketplaces using cryptocurrencies. While NFTs could represent all intangibles and virtual metaverse objects, from fashion to virtual real estate, cryptocurrencies are a likely candidate for everyday transactions.