Crypto and Web3 metaverse are on the rise in 2022, apart from all the tech, what do they have in common? Is it worth investing in the crypto metaverse in 2022? For many tech developers and investors, the metaverse and cryptocurrency are intertwined and will become part of Web3 a decentralized internet controlled by individual users rather than large corporations.
In this article, we will discuss:
What is Metaverse?
Neal Stephenson first coined the term "Metaverse" in his 1992 science fiction book Snow Crash. The term was developed to name a computer-generated universe. It is generally understood as a highly immersive shared virtual world where people come together to play, socialize and work. O metaverse it is also related to the development of Web 3.0, which seems to be the next chapter in the existence of cyberspace.
The concept of Metaverse is not really new. In the early 2000s, there were a few pioneers in Metaverse, including Second Life (launched by Linden Lab in 2003) and Habbo Hotel, made by Sulake of Finland. Although they have lost a lot of people's attention since then, both are still on the scene: Second Life still has 200.000 daily active users.
Blockchain, Metaverse and Cryptocurrencies
Let's start with a fundamental piece of technology that is at the heart of cryptocurrency and the metaverse: blockchain. Originally designed by the creator of Bitcoin Satoshi Nakamoto and now used by other major cryptos like Ethereum (CRYPTO:ETH), blockchain is a public digital ledger that records transaction data. Transactions using a blockchain network can be peer-to-peer and remove intermediaries (such as a bank or technology company) from user interactions. This can reduce costs and speed up the time for transactions to occur, among other things.
Internet commerce is still taking place using a digital version of traditional fiat currencies. Blockchain and currencies based on it were developed as a digital native means of doing business in a digital world. Metaverses with their 3D virtual worlds and immersive services are also seen by some as using blockchain technology as a way to create permissionless interactions between Internet users.
Shopping in the metaverse
There are many immersive 3D worlds today, like video games where players can interact with each other in real time. By some definitions though, these 3D worlds don't really become part of the metaverse until they have a full digital economy.
Many of these games and services allow users to purchase digital items. For avid video gamers, this is a common practice. Clothing and accessories can be purchased to customize their in-game appearance or improve player performance. Cloud computing-based services utilize a similar concept, allowing for a free or cheap starter package, but locking in premium or add-on features behind a paywall.
Sound a little pointless and far-fetched? This metaverse shopping concept may also have real-world applications. Shoppers can try on a virtual version of clothing in the metaverse before making a purchase. Nvidia ( NASDAQ:NVDA ) CEO Jensen Huang talks a lot about “digital twins” of physical world locations, which have tremendous potential for companies when designing and building properties or planning manufacturing projects. The same can be said for individuals who were able to visualize a home renovation or try out a product, such as furniture, in a digital recreation of their home.
Metaverse, cryptocurrencies and NFTs
With the potential for e-commerce and social interaction, this is where cryptocurrencies and applications built on a blockchain come in. Direct peer-to-peer interactions on the web promise instant liquidation of funds and near-zero fees. Ownership of the item can be guaranteed using an NFT (non-fungible token), which can take the form of a work of art, a digital collectible, or a digital version of an actual purchase, such as a pair of Nike sneakers ( NYSE :NKE ) sneakers that you can also wear in the metaverse.
For now, though, the metaverse is largely the realm of the video game industry and other imaginative start-ups. It's worth noting that the turmoil in the crypto space during the first half of 2022 has also cast a shadow over the metaverse and its viability as a full-fledged digital economy. However, here are four early-stage projects to watch that are bridging the gap between cryptocurrencies and the metaverse.
The Sandbox
O Sandbox (SAND) is a user-created digital world in which users can create and sell digital content within the game. SAND is the game token that acts as a currency and is built on top of the Ethereum blockchain network. These tokens can be bought and sold on various cryptocurrency exchanges. SAND can be used to purchase virtual land, buildings, accessories and other items such as NFTs.
Decentraland
Decentraland (MANA) is another Ethereum network-based metaverse experience. Participants can use the native MANA token to purchase virtual land and develop it for games and other experiences, as well as avatars and digital accessories. Decentraland is controlled by Decentraland DAO (Decentralized Autonomous Organization). Owners of MANA or virtual property on Decentraland can participate in the DAO and vote on initiatives and new developments.
Axie Infinity
Think about Axie Infinity (AXS) as an Ethereum blockchain-based version of Nintendo's Pokémon franchise (OTC :NTDOY). Players train fantasy monsters called Axies and compete against other teams. Axie Infinity is a “play to win” game, which means participating can earn player AXS tokens. Tokens can be spent on new Axis (which are traded as NFTs), training existing Axes to improve their characteristics, and the next virtual terrain release in the Axie Infinity universe. The most expensive Axie of all time was bought for the equivalent of $820.000 worth of Ethereum (at the market price at the time).
Crypto Baristas
Crypto Baristas is an NFT project that aims to bridge the gap between the physical and virtual worlds. Owners of a Crypto Barista NFT character have access to a metaverse where other coffee enthusiasts can meet. But this is more than just a place to have a virtual coffee. The project is also being used to fund a real coffee shop in New York City called Coffee Bros., which will partner with coffee growers around the world (the first being an established farmer in Honduras). At this point, this is a very new project that recently released a white paper on how their tokens will work, but it is an example of how metaverses can have real-world applications as well.
Outlook for users and investors
The prices of some native tokens used in a metaverse have skyrocketed in recent years, attracting a lot of investor attention. However, keep in mind that investing in cryptocurrencies and tokens built on a blockchain network is highly speculative – and not just because they are new technologies.
Cryptocurrencies and tokens used in the metaverse are not businesses that generate revenue and profits. Rather, they are a type of digital currency that can be used to make purchases or participate in a metaverse. Therefore, their values are highly subjective and prone to sudden price swings. Individual company stocks are also very volatile, but investors can make assessments of their value with revenue and profit metrics that cryptocurrency investors do not have. This problem has led to extreme volatility in the broader crypto universe in 2022.
However, the first versions of the metaverse are very promising, especially for those interested in participating in them. Ownership of some cryptos gives the holder a voice in a DAO or other virtual project, and artists and other digital creators may have a new outlet for their business.
Conclusion
Tread lightly when it comes to investing in this space as it is moving fast and still developing. But it is worth keeping an eye on the intersection between cryptocurrencies and the metaverse in the coming years.
