The Vital Role of Blockchain in Shaping the Metaverse Experience
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Chapter 1: Understanding the Metaverse
The metaverse can be envisioned as a network of interconnected virtual realms, akin to the internet but accessed through virtual reality. While this description is largely accurate, it overlooks a crucial, somewhat enigmatic element that sets the metaverse apart from our current online experience: blockchain technology.
Web 1.0 represented the initial phase of the internet, characterized by interconnected computers and servers that users could explore, typically via centralized entities like AOL, Yahoo, Microsoft, and Google. Following that, Web 2.0 emerged, defined by social networking, blogging, and the commodification of user data for advertising by centralized entities, leading to the rise of platforms like Facebook, Snapchat, Twitter, and TikTok around the turn of the millennium.
Section 1.1: The Functionality of Blockchain
Blockchain technology serves as a decentralized and public ledger that provides a permanent record of transactions. The most recognized cryptocurrency operating on blockchain is Bitcoin. For instance, when you purchase Bitcoin, the transaction is documented on the Bitcoin blockchain, disseminating the information across thousands of computers globally.
This decentralized recording system is notoriously difficult to alter or deceive. Unlike traditional banking systems, public blockchains like Bitcoin and Ethereum offer transparency, allowing anyone on the internet to view all transactions.
Ethereum functions similarly to Bitcoin but goes a step further by enabling programming through smart contracts. These are automated blockchain-based software routines that execute once specific conditions are met. For example, a smart contract could facilitate the ownership transfer of a digital asset, like artwork or music, ensuring that no one else can claim it, even if they save a copy.
Crypto assets can encompass various digital entities, including money, securities, and art. Within the blockchain, non-fungible tokens (NFTs) represent unique items like artwork and music, which cannot be exchanged for one another, unlike fungible assets such as currency.
Using smart contracts, one could declare a willingness to sell a digital artwork for $1 million in ether, the native currency of Ethereum. Upon agreement, both the artwork and the ether would automatically transfer on the blockchain, eliminating the need for banks or third-party escrow services. If disputes arise regarding the transaction amount, the public ledger provides an indisputable reference.
The first video explains the role of blockchain in the metaverse, emphasizing its importance in establishing ownership and transactions in virtual environments.
Section 1.2: Ownership and Interoperability in the Metaverse
The integration of blockchain and crypto-assets in the metaverse is paramount. Firstly, blockchain enables users to possess digital assets within virtual settings. Moreover, the metaverse is not being developed by a single entity; various organizations will create distinct virtual worlds, ultimately merging to form the metaverse.
When moving between different virtual spaces, such as Decentraland and Microsoft’s platforms, users will want to carry their digital possessions. The blockchain acts as proof of ownership for these items, ensuring accessibility across interoperable virtual environments. In essence, as long as you can access your crypto wallet, your assets will remain available to you.
Chapter 2: Digital Wallets in the Metaverse
The second video discusses how the metaverse, blockchain, and Web 3.0 can unlock business potential and shape the future, highlighting the significance of digital wallets.
Having a digital wallet is crucial in the metaverse. It is where you'll store cryptocurrencies and your metaverse-specific digital items, such as avatars, clothing, animations, and virtual decorations.
What will users do with their cryptocurrency wallets? Shopping will be a significant activity. Just like current online marketplaces, users will buy traditional digital products like music, movies, and games. Additionally, physical items can be purchased in the metaverse, where users can examine and interact with 3D representations to make informed purchasing decisions.
Moreover, just as one carries identification in a physical wallet, crypto wallets will link to real-world identities, simplifying legal transactions like purchasing a car or home. This connection means you won’t need to remember numerous login details across various platforms; a simple wallet connection will grant you access.
ID-linked wallets will also facilitate age-restricted access to certain areas of the metaverse. Furthermore, these wallets could connect to your contacts, enabling the transfer of your social network data across virtual spaces.
In the future, wallets might also link to reputation scores, influencing your ability to interact publicly and connect with others outside your network. A negative reputation could diminish your influence, encouraging respectful behavior within the metaverse—a priority that platform developers must address.
Section 2.1: Exploring Business Opportunities in the Metaverse
If the metaverse holds financial value, businesses will seek to engage. While blockchain’s decentralized nature may reduce reliance on intermediaries, numerous revenue-generating opportunities will remain available, potentially exceeding those in today’s economy. Major companies like Meta will provide expansive platforms for users to work, play, and socialize.
Brands such as Dolce & Gabbana, Coca-Cola, Adidas, and Nike have already entered the NFT market. In the future, purchasing a physical item may also grant ownership of a corresponding NFT in the metaverse.
For example, buying a trendy dress for a real-world event might also give you the crypto version of that garment, allowing your avatar to wear it at a virtual concert. Just as with physical clothing, you could resell the NFT for another avatar to use.
These scenarios represent just a glimpse into how metaverse business models will likely integrate with conventional business frameworks. As augmented reality technologies become more advanced, these interactions will likely grow more complex, blending the metaverse and the physical world even further. Although the metaverse is still in development, foundational technologies like blockchain and crypto-assets are swiftly being established, paving the way for a future where virtual experiences become all-encompassing.