THE metaverse and cryptocurrency seem to be concepts that go hand in hand: virtual worlds and virtual money to spend there.
Both are an integral part of what is today called “web3” – the third generation of the Internet, after web1 – the World Wide Web, and web2 – social media. The idea is that this version of the Internet will be more experiential and engaging, involving virtual and augmented reality (VR /AR) to create immersive 3D environments.
The metaverse and cryptocurrency are separate concepts and can happily exist without each other – as we’ve seen with Bitcoin, which is useful in the real world as well as the virtual world. And many visions of the metaverse – including that of Mark Zuckerberg only tangentially involve crypto and blockchain.
However, it is clear that there is potential synergy between the two ideas. People love spending money, and shopping has quickly become a key feature of Web1 and Web2, so there’s no reason why Web3 should be any different! It is also becoming increasingly clear that, while no one knows exactly what form the metaverse will ultimately take, it has the potential to have a significant impact on how and whether cryptocurrency evolves. will eventually have on the company.
Virtual world, real value
One of the great advantages of the virtual world is that there is much less friction than in the real world. If we want to go somewhere, we just click a link or press a button, and we (or our avatar, at least) are there. We don’t need expensive and cumbersome transport infrastructure, or passports, or packing.
The same goes for cryptocurrencies. Transactions in traditional currency (called “fiat” by crypto aficionados – because its value is supposedly based on government decree) require a vast infrastructure of banks and regulators to act as custodians, intermediaries and clearing houses . In contrast, cryptocurrency transactions generally simply require software running on standard computers.
Of course, we should not hide the fact that the energy used by this software to master the cryptography that makes currencies work consumes a lot of energy. But protocols are constantly being refined and new technologies are being developed with the aim of reducing energy consumption. More recent proof of stake cryptocurrencies, for example, would be much less damaging to the environment than older proof-of-work currencies like Bitcoin.
As the metaverse becomes more and more popular and we spend more and more time online – working in virtual offices, playing games with our friends or even taking vacation to the metaverse – we will need simple ways to pay for virtual goods and services. Maybe we’ll want to spend it on virtual real estate – if we want to have our own digital land on which to entertain friends or create a business!
In fact, the metaverse could add significant value to the global economy – to the tune of $1.5 trillion by 2030. And much of that value could be realized in cryptocurrency. This could mean that cryptocurrencies are truly entering the mainstream, as we become more accustomed to using them as a means of payment.
If this happens, governments and legislators will undoubtedly feel the need to step up their efforts to regulate and, to some extent, control cryptocurrencies. Although things have become more organized in recent years – with number of countries start to introduce regulatory frameworks around digital currency – it’s still kind of a “Wild West” environment. This means there is little protection for buyers or businesses that rely on coins like Bitcoin, Litecoin or Dogecoin to do business and little recourse for consumers if they fall victim to the large number of existing scams.
As they become more popular, governments could also choose to regulate cryptocurrencies based on their energy efficiency or pollution. For example, networks that rely on more expensive proof-of-work algorithms could benefit from higher tax rates on transactions, while those that use more efficient proof-of-stake algorithms could be taxed at a higher rate. lower.
The road to adoption
As cryptocurrency becomes the primary medium of exchange for people buying and selling in the Metaverse, its users will become increasingly comfortable with the methods of acquisition, manipulation, and storage. This means it will also be used more frequently outside of the Metaverse – to send money to friends and family, for example – particularly if it involves money crossing national borders, which with traditional currency, can often incur high fees (if at all). even possible at all).
This will likely mean that banks and other existing financial institutions will increase their efforts to facilitate financial models derived from cryptocurrencies or blockchain. In order to remain competitive in the era of borderless and intermediary-free financial systems, they will need to streamline their own infrastructure. While some – like the head of the IMF – predicted that cryptocurrencies could eventually mean the end of banking as we know it; In the short term, it is likely that businesses, in particular, will still want to cling to the level of protection and regulation that banks and central banks provide to transactional networks. But it seems likely to me that those who will thrive in this new environment of digital currencies and peer-to-peer finance will be those who are flexible and forward-looking with their own policies around cryptocurrency adoption. PayPal And MasterCard are examples of payment systems that are now fully involved in cryptocurrencies, Bitcoin in particular – and both have stated this because it is clear that it will play an important role in the future of payments.
What happens next?
It is certainly true that no one – even Mark Zuckerberg – knows what form the metaverse will actually take, when (and if) it will be fully integrated into our lives. But from past experience, one thing we can say for sure is that businesses will use it to make money and consumers will use it to spend!
When it comes to establishing the currency of the virtual world, cryptocurrencies are clearly a natural choice – and as this revolutionary technology is also in its infancy, its evolution will likely be influenced by changes in the way we live our lives. lives. For better or worse, more and 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 cryptocurrencies will play a bigger role in our lives. As a result, we will likely see it become more regulated, more environmentally friendly, and more useful.
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