What is the metaverse?
The important role of NFTs in unlocking new virtual worlds.
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A metaverse refers to any digital ecosystem or virtual world that combines virtual and physical elements. It represents a digital place for people to meet, play and transact — without leaving their homes.
The term "the metaverse" was first coined in 1992 to describe a "computer-generated universe," in Neal Stephenson's novel, Snow Crash. Since that time, the term has grown into something of a buzzword among players and investors as immersive digital experiences become a reality for global participants.
This essential guide walks you through the elements — and opportunities — found within these immersive digital worlds.
How does a metaverse work?
A metaverse works by providing an online space for participants to interact with each other through avatars in a new, digitally designed world. Participants can use metaverses to play games, buy and sell digital merchandise or simply hang out.
For example, Roblox is a game metaverse where users can play games created by other players, while Spatial offers virtual meeting rooms for users to collaborate. Some metaverse platforms such as Decentraland or The Sandbox may even use nonfungible tokens (NFTs) to represent physical items — like artwork or real estate — within the space.
It's forecast that one day the metaverse may represent an interoperable space, indistinguishable from reality and powered by the Internet through Web 3.0. But for now, the concept remains somewhat fragmented, with individual worlds feeling more like video games than anything found in society.
The virtual economy that metaverses incorporate is largely built using blockchain technology. With a blockchain, transactions are recorded in a decentralised manner, without the need for a central authority.
Virtual marketplaces are as integral to transactions in metaverses as they are in the real world. The blockchain provides an element of fairness and transparency to its participants.
AI is increasingly incorporated into metaverses to create scalable, precise virtual worlds for a true-to-life experience. While immersive 3D worlds can technically function without it, AI adds a more authentic interaction.
High-fidelity 3D avatars personalise the user's involvement. Also, multilingual accessibility features are incorporated into these immersive worlds so users across different linguistic regions can communicate. Whatever the application, the sheer amount of data that AI can process makes the technology a necessity for building the resource-intensive metaverse of tomorrow.
NFTs are digital tokens used to verify ownership of an item. This is made possible because all transactions are tracked on a blockchain, or public ledger, making digital asset ownership easily verifiable. NFTs are used to represent both digital and physical items, including digital art.
Many metaverse projects employ NFT technology so users can verify ownership and buy and sell NFT items in metaverse marketplaces such as avatars, digital land or other virtual objects.
Metaverse companies and marketplaces
Many corporations believe the metaverse is the next step in the evolution of online activity.
Top companies moving to participate in the metaverse include Meta — formerly known as Facebook — and Microsoft. Meta is currently working on 3D workspaces using augmented reality headsets. These headsets give users an immersive view of the virtual world around them. Microsoft is now developing ways to incorporate metaverses into existing applications, like Microsoft Teams, for more effective communication.
Marketplaces incorporated within metaverse applications are central to immersive worlds. Generally, these marketplaces are where participants buy and sell NFTs representing avatars and other physical items used to enhance or adorn them.
How to make money in the metaverse
Transactions in metaverses largely take place in the marketplaces incorporated within virtual worlds. NFTs are often available for sale in these marketplaces. Getting involved in an application early on and securing digital accessories for later trade can be a great way to earn money in a metaverse, especially if demand for your items increases over time.
Depending on the world you're visiting, opportunities for staking tokens may also exist. Staking virtual currencies or NFTs for rewards is a lucrative way to participate in the metaverse. By staking, you can earn passive income over time by locking-up digital assets on the platform.
Privacy concerns are an issue in these metaverses. The main concerns regard the scale of data collected in immersive worlds. VR use generates millions of data elements within minutes — including personal details.
In a 2D world, user information is collected to build profiles and serve ads on your computer or mobile device. Although data collected in a metaverse is used to enhance your experience in the platform, the targeted ads or suggestions may negatively affect your overall experience.
Metaverse real estate
The arrival of digital real estate represents a natural evolution within metaverses toward a more true-to-life experience. Virtual lands are divided into plots for sale, creating a new opportunity for markets to flourish.
Several interesting platforms with metaverse real estate have sprung up in the last few years. Some of the most popular applications selling digital land include Decentraland and The Sandbox.
Online game companies rush to meet the growing demand for metaverse applications. And the games hitting the market often offer new revenue sources through Play-to-earn (P2E) models. Metaverse games, like Axie Infinity, support the use of cryptocurrencies on its platforms, combining aspects of decentralised finance (DeFi), like yield farming, with NFT-based gameplay.
What makes the metaverse worth joining
Joining a metaverse can be valuable both as a social outlet and an avenue for profit. In an increasingly isolated world, digital realms can take the place of traditional meeting sites. They also present an opportunity for trade.
Metaverses allows you to:
- Meet new people
- Play games
- Engage in new social experiences
- Separate from stressful real-world situations
- Participate in markets
- Collect NFTs
- Stake tokens for rewards
NFT Metaverse projects
Here is a list of the most popular NFT metaverses, plus its platform and token.
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What to watch out for
Experts recently point to a growing number of child predators lurking on metaverses. Parents of underaged participants may want to closely monitor their children's online activity. When interacting with new people online, protect yourself and your assets from people looking to take advantage of less-experienced traders.
Platforms creating immersive virtual worlds generally represent high-risk investments. The value of NFTs and tokens may not hold up over time. Do your research before participating in NFT marketplaces, or transacting with virtual currencies within the metaverse.
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