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How cryptocurrency & the metaverse are joined at the hip

Blockchain-based cryptocurrencies can open up possibilities of commerce in the metaverse

September 07, 2022 / 01:09 PM IST
The video game industry currently dominates the metaverse. Many of these games and services allow users to purchase digital products  (Illustration by Suneesh K.)

The video game industry currently dominates the metaverse. Many of these games and services allow users to purchase digital products (Illustration by Suneesh K.)

Bitcoin, Web3, and the metaverse: other than the fact that they are all contemporary technology buzzwords, what do these three have in common?

Many technology investors and engineers are involved in metaverse and cryptocurrency projects, which will be part of Web3, a decentralised internet run by users rather than big businesses. Cryptocurrency and the metaverse are quite different from one another, yet as they develop, they may depend on one another more and more.

Blockchain's function in the metaverse and cryptocurrencies

A public digital ledger that records transactions is called a blockchain. Blockchain is a crucial piece of technology that drives the metaverse and cryptocurrencies alike. Blockchain-based peer-to-peer transactions can cut out middlemen such as banks and IT firms. Along with other advantages, this can reduce costs and speed up transaction times.

Blockchain and digital currencies based on it were developed to facilitate commerce in a digital setting. However, online transactions continue to be conducted using traditional fiat currencies in their digital forms.

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According to some, blockchain technology is used by the metaverse, with its immersive services and 3D virtual worlds, to enable permission-free interactions between internet users.

Transacting in the metaverse

Many 3D immersive worlds are now accessible, including video games with live player interaction. Some contend that these 3D worlds cannot legitimately be regarded as part of the metaverse until they have a fully developed digital economy.

The video game industry currently dominates the metaverse. Many of these games and services allow users to purchase digital products. For example, to improve your performance or customise your look in a game, you may purchase clothing and accessories. The majority of serious video gamers purchase such items.

There may also be real-world uses for shopping in the metaverse. Customers may try on clothes virtually before making a purchase in the real world.

Cryptos and NFTs

Blockchain-based cryptocurrencies can open up possibilities of commerce in the metaverse. Cryptocurrencies promise instant and direct peer-to-peer transactions over the internet at zero cost.

One can use NFTs to corroborate ownership of items in the digital or physical world. A pair of Nike sneakers that you wear in the metaverse can be an example of a digital reproduction of a real-world purchase. NFTs can also be works of art, digital collectibles, etc.

Volatility in the crypto market in the first half of 2022 has prompted concerns about the viability of the metaverse as a full-fledged digital economy.

The metaverse will likely have an impact on daily tasks that are pretty much regular fare today, but its effects on society and how people interact with one another will be far-reaching. Compared to what the internet has so far achieved, it promises to be more immersive, interactive, and collaborative.

But like with any ecosystem, how well the Metaverse works will rely on how simple it is for individuals to do transactions there. This is where cryptocurrencies come in.
Murtuza Merchant is a senior journalist and an avid follower of blockchain and cryptocurrencies.
first published: Sep 7, 2022 01:09 pm
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