The metaverse and cryptocurrency seem like concepts that go hand in hand – virtual worlds and virtual money to spend there.
Both are an integral part of what is being promoted these days as “web3” – the third generation of the Internet, after Web 1 – the World Wide Web, and web2 – social media. The idea is that this version of the internet will be more experimental and engaging, incorporating virtual and augmented reality (VR/AR) to create immersive 3D environments.
Metaverse and cryptocurrency are separate concepts and can happily exist without each other – as we’ve seen with Bitcoin, which has utility in the real world as well as in the virtual world. And many of the metaverse’s insights – including those of Mark Zuckerberg alone tangentially include crypto and blockchain.
However, there is clearly a potential synergy between the two ideas. People love to spend money, and shopping is fast becoming a major feature of web1 and web2, so there is no reason why web3 is any different! It is also becoming increasingly clear that while no one knows exactly what form the metaverse will take, it will likely influence how cryptocurrency develops and the impact it will have on society.
Virtual world, real value
One of the great advantages of the virtual world is that the friction is much less than in the real world. If we want to go somewhere, we just click on a link or press a button, and we (or our avatar, at least) are there. There is no longer a need for transportation infrastructure, passports, or our expensive and complicated suitcase packages.
The same goes for cryptocurrencies. Transactions in traditional currency (known as “fiat” to crypto enthusiasts – because their value is presumably based on government decree) require an extensive infrastructure of banks and regulators to act as custodians, brokers, and clearinghouses. On the other hand, cryptocurrency transactions usually require software that runs on standard computers only.
Of course we must not forget that the energy this software uses to grind the crypto making the coins work is very energy consuming. But protocols are constantly being refined and new technologies are being developed with the aim of reducing energy consumption. New Proof of Stake cryptocurrencies, for example, will be less harmful to the environment than older Proof of Work coins like Bitcoin.
As the Metaverse becomes more popular and we spend more and more of our lives online – working in virtual offices, playing games with our friends, or even taking Metaverse vacations – we will need frictionless ways to pay for virtual goods and services. Maybe we want to spend it on virtual real estate – if we want to own our own digital plot of land to entertain friends or start a business!
In fact, the metaverse could add significant value to the global economy – to the tune of $1.5 trillion by 2030. Much of this value can be realized in cryptocurrency. This could mean that cryptocurrency is really entering the mainstream as more of us get used to using it as a means of payment.
If this happens, there is no doubt that governments and lawmakers will feel the need to intensify their efforts to regulate and control cryptocurrencies to some extent. Although things have improved in recent years – with more and more countries starting to introduce regulatory frameworks around digital currency – it is still a “Wild West” environment. This means that there is less protection for buyers or companies that rely on currencies like Bitcoin, Litecoin or Dogecoin to do business and less recourse for consumers if they fall victim to too many scams out there.
As this becomes more common, governments may also choose to regulate cryptocurrencies based on their energy efficiency or pollution. For example, networks that rely on more expensive Proof of Work algorithms can attract higher transaction tax rates, while networks that use more efficient Proof of Stake algorithms can be taxed at a higher rate.
As cryptocurrencies become the primary medium of exchange for people buying and selling in the metaverse, their users will become increasingly comfortable with methods of acquisition, manipulation, and storage. This means that it will also be used frequently outside the metaverse – to send money to friends and family, for example – especially if it includes money that crosses national borders, which, in traditional currency, can often incur high fees (if that is even possible at all). ).
This in turn means that existing banks and other financial institutions are likely to step up their efforts to facilitate financial models derived from cryptocurrencies or the blockchain. In order to remain competitive in the age of financial systems without borders or intermediaries, it will have to rationalize its own infrastructure. While some — such as the head of the International Monetary Fund — have predicted that cryptocurrency could eventually mark the end of banking as we know it, it is likely in the short term that companies, in particular, will still want to hold on to the layer of protection. and regulation imposed by banks and central banks on transaction networks. But it seems to me most likely that those who thrive in this new environment of digital currencies and peer-to-peer financing will be those who are resilient and forward-looking with their own policies around cryptocurrency adoption. Pay Pal and MasterCard are examples of payment systems that are now fully working with cryptocurrency, especially Bitcoin – and both said this is because it clearly will play an important role in the future of payments.
What happens next?
Surely no one – not even the likes of Mark Zuckerberg – knows what shape the metaverse will actually take, and when (and if) it will be fully integrated into our lives. But based on past experience, one thing we can say for sure is that companies will use it to make money and consumers will use it to spend it!
When it comes to creating the currency of the virtual world, cryptocurrency is clearly a natural choice – and because this revolutionary technology is also in its infancy, its development will likely be affected by changes in the way we live our lives. spirits. For better or for worse, more of us are choosing to spend more time online, and this will only accelerate as the online world becomes more immersive, entertaining and engaging. This also means that cryptocurrency will play a greater role in our lives. As a result, we are likely to see them become more organised, greener, and more useful.
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