The Metaverse is an online virtual world that is predicted to have a total addressable market of between $8 trillion to $13 trillion by 2030, according to a Citi report. In this virtual world, citizens will use digital assets to conduct business, trade, and interact with each other.
Non-Fungible Tokens (NFTs) will play a crucial role in the economy of the Metaverse, shaping the way digital assets are owned and used.
Let’s explore how NFT will shape the economy of the Metaverse and how they can benefit businesses and individuals alike.
What is NFT?
Non-fungible tokens (NFT) is a representation of unique digital assets. Each NFT is a standalone unit with its own unique properties and characteristics.
In the context of the metaverse, NFT technology will be used to represent ownership of digital assets. They can represent anything from digital artwork to virtual land, virtual cars to pets and beyond. Each individual NFT is unique, can be transferred or traded but is indivisible. Like in the physical world, ownership will be crucial to the functioning of the metaverse economy.
NFTs are stored on blockchain ledgers and can be verified for authenticity. This makes them perfect for use in digital economies, where trust and verification are essential. Because NFTs are digital, they can be easily used in a variety of online platforms and games. This opens up a vast world of possibilities.
What is the Metaverse?
The Metaverse is a virtual world that is a replica of the real physical world. In the Metaverse, people can access 3D digital objects and experiences that are stored on a shared server. Because the Metaverse is a digital world, it offers users limitless possibilities for creativity and expression.
The initial definition of the metaverse was coined by Neal Stephenson in his 1992 novel Snow Crash, a science fiction novel about a 21st century dystopia.
It’s important to appreciate that the Metaverse has actually existed before albeit quietly for some time now in the form of virtual games and early platforms like Second Life. But it’s now coming to the mainstream. Soon, a normal day in the Metaverse might be a replica of a normal day in real life.
You will make friends, walk across town, wave to neighbors, check into an airport, exchange contacts, and more virtual stuff – thanks to virtual reality technologies in top gear and smart developers pushing the limits. No longer a preserve of gamers, the Metaverse economy is now open and NFT is playing an important role here as we’ll find out next.
What is the Role of NFT in the Economy of the Metaverse?
Simply put, NFT makes ownership and identity possible in the metaverse. Any society needs a functional economy, and so does the Metaverse. This is where NFTs come in.
You see, identity and ownership of assets in the Metaverse like in real life, has got to be enabled through authentic, verifiable records. Experts in this field like Metaverse speaker Mario Nawfal says the Metaverse cannot exist without ownership, and this ownership is powered by the NFT technology.
How does it work? The same way you register ownership of say property like land in the real world by means of a title deed, you also need a record that registers you as the authentic owner of whatever important item in the Metaverse. The same way you have a unique record that is used to identify you in the real world, is the same way you need to be identified in the Metaverse.
So then, how do you authenticate ownership and identity in the Metaverse? By using an NFT. It serves as a unique digital record of ownership and identity. This record is stored in a blockchain. As you can now see, this is a very instrumental technology -the foundation upon which the Metaverse economy functions. It will power the authentication of ownership as well as identity.
NFT is secure
An NFT is secured by means of a crypto key and therefore cannot be destroyed, manipulated, deleted or copied. This is important because it means one’s virtual identity and possessions can be verified in a decentralized way.
This single capability is what facilitates the Metaverse society to do things in a functional economy. In other words thanks to NFT, genuine human activities can take shape in the Metaverse: interactions, ownership, travel, etc.
NFTs have the potential to shape the economy of the Metaverse in more ways. They could be used as a medium of exchange—much like traditional currency. This would provide a much-needed liquidity to the virtual world, allowing users to buy and sell goods and services with ease
They could be used to create digital collectibles. This would give rise to a whole new industry of virtual merchandising, which could potentially rival the gaming industry in terms of size and revenue.
What will an NFT-enabled Metaverse economy look like?
A good example of what a Metaverse society will look like is Decentraland. Take a stroll and you will be amazed to see all manner of virtual human activities: people interacting, boutiques with shoppers inside, people exercising, etc.
These activities are possible because people have bought virtual land in the Metaverse and developed them to accommodate social experiences. The land transactions are enabled by NFT.
Luxury fashion brands are already deep in the NFT powered Metaverse economy. Some are designing virtual sneakers and posting millions in sales. Others are selling party bags.
As established companies rush to secure a place on the right side of the Metaverse rise, new startups are being created entirely for the Metaverse. It’s a new economy all the way and NFT has its rightful place here – a significant one.
What are the Implications of NFT in the Metaverse?
The use of NFT in the Metaverse will have far-reaching implications for the economy. For one, the ability to trade NFTs will create a more efficient and liquid market for digital assets in the Metaverse. This will make it easier for people to buy and sell items, and could potentially lead to the development of new economies in virtual worlds.
Additionally, NFTs can be used to represent real-world assets, such as property or stocks. This could provide a more seamless way to transfer ownership of assets between different Metaverse worlds. The use of NFT is still in its early stages though, but it’s clear that it has the potential to revolutionize the economy of the Metaverse.
NFT is a game-changing technology that has the potential to shape the economy of the Metaverse. It’s unique in the sense that the technology is not subject to the same constraints as traditional currency, and this could have a major impact on how transactions are conducted in the Metaverse.
The NFT technology could revolutionize the way we think about ownership and could have a significant impact on a wide range of industries.