The Role of NFTs in the Emerging Metaverse Economy
2022.04.03 08:34
The Role of NFTs in the Emerging Metaverse Economy
Since its inception almost a decade ago, people have often peddled the misconception that NFTs are mere photographs of either tangible or intangible artwork, or even digital copies of collectibles that sell for large sums of money.
Interestingly, this seeming ignorance of this sect of the public isn’t entirely their fault, as it is the most visible side of NFTs that receive publicity. However, with the chaos surrounding digital art in recent times, it has become evident that NFTs open up many new possibilities and areas to explore.
One example of this would be the fact that their connection with the metaverse has a major role to play in the future of NFTs. The path to this future offers many new possibilities and opportunities for companies, investors, and enterprises alike who will play a significant role in shaping the adoption and usage of NFTs in the long run.
That said, accessing the metaverse in the first place has recently become one of the most significant uses of NFTs. For those who understand the NFT-metaverse relationship, you’ll realize this is a big deal in the blockchain space.
Will NFTs help in accessing the metaverse? Do they hold value for defining how the metaverse will look in the future? What role do they serve in the grand scheme of the metaverse economy? Let’s take a close examination of how crucial NFTs are in the development of the metaverse.
Blockchain and NFTs
With the fourth industrial revolution now underway, blockchain happens to be one of the major spheres of technological interventions to have debuted in recent times.
Blockchain’s popularity has grown unimaginably quickly, and this can be attributed to the vital role it has played in resolving the problems of double-spending associated with most cryptocurrencies, and, in this context, in serving as a building block for the Bitcoin mainnet.
With the aforementioned in mind, blockchain was thereby used to facilitate the existence of NFTs, or non-fungible tokens, which introduced the characteristics of interoperability and scarcity.
However, mainstream adoption, the increasing demand for NFT-metaverse projects, and the growing interest in the emerging industry, has necessitated further research into the potential role of NFTs and blockchain in the metaverse.
Understanding NFTs and the Metaverse
In order to understand the role of NFTs in the rapidly-evolving metaverse space, you must consider: “What are NFTs and the metaverse?”.
Non-fungible tokens, or NFTs, are a new type of digital asset that are one-of-a-kind, indivisible, and immutable. They aid in the representation of digital and physical asset ownership on the blockchain. If you find yourself confused as to what exactly this means, then we recommend reading our beginners’ guide on how to kickstart your journey into NFT space, found here.
To continue, NFTs are having a major impact across all sectors; from digital artwork to marketing, and even to disrupting the traditional gaming industry.
However, before the importance of NFTs to the metaverse can be considered, it is pertinent to first examine what the hype around the metaverse is all about. The metaverse can be thought of as a blockchain-based digital world with visual components provided by technologies like virtual reality (VR), augmented reality (AR), and artificial intelligence (AI), to mention a few.
As mentioned previously, blockchain’s decentralized nature opens the door to limitless economic potential and social interaction. As such, by leveraging the capabilities of blockchain, the metaverse essentially provides digital environments that are exceptionally malleable, adaptable, scalable, and interoperable.
More importantly, the metaverse combines breakthrough technology with the participant engagement models from both individual and corporate perspectives. Corporate parties can then use this data to better understand what to market and how to set up shop within the metaverse.
Are NFTs a Component of the Metaverse?
Almost every discussion of the metaverse revolves around the potential to combine the metaverse and NFTs. Many people, on the other hand, believe that NFTs are merely another part of the larger metaverse. Indeed, “NFTs” and “metaverse” are often used interchangeably.
The fundamental rationale for such beliefs is that NFTs in the blockchain gaming industry have experienced unprecedented levels of growth. It’s therefore reasonable to assume that only virtual worlds will be able to influence the metaverse. Interoperable games can thus help to propel the metaverse forward by serving as virtual environments.
Furthermore, the ability to link one’s real-life identity with a digital avatar opens up a world of possibilities that enable NFTs to define access to the metaverse. With the instance of NFT-controlled access in 2019, the metaverse NFT token made its first appearance when the first ‘NFT.NYC’ conference employed an NFT-based ticket system to admit attendees. Even if no one could realistically call the conference a “metaverse,” it created a positive precedent for NFT metaverse interaction going forward.
Will NFTs Help to Create the Metaverse?
The metaverse is a vague, adaptable concept, and NFTs can play an important role in its overall ecosystem. The possibility of employing NFTs to serve as deeds to virtual property would be driven by NFT metaverse projects. NFTs could be used to acquire exclusive access to a metaverse area, while also granting others access.
Surprisingly, NFT smart contract capabilities could be useful for selling real estate in the metaverse. In the early phases of metaverse development, NFT-controlled access has been the most common use case. NFT-controlled access, like the first-ever real-world application of NFTs in the metaverse, might help to ensure VIP access to real-life and virtual events alike.
NFTs might also be convenient for airdropping branded items, or granting followers unique access rights. Likewise, they might provide interoperability outside of the metaverse, with infrastructure that supports features like location-based interactions and augmented reality, in addition to increasing efficiency in fan engagement.
These possibilities combined make it evident that the metaverse and NFTs are meant to be together. Many companies are starting to realize this and are pouring resources into creating their own NFTs and working on unique experiences that will bring customers to their digital doorsteps. An example of this? Real estate.
The Impact of NFTs on the Metaverse
It’s critical to understand the role of NFTs in influencing the metaverse’s fundamental design. You’ve probably noticed that NFTs have the potential to disrupt the metaverse’s traditional social network patterns of user engagement, transaction, and socializing. So, how would these aspects play out in the metaverse as a whole? Here are a few examples of how metaverse NFT interactions could look in the future.
- A fair and transparent economy
As of writing this article, individual users like yourself, and major businesses around the world can easily represent their real-world assets and solutions in a digital, transparent, decentralized environment. The metaverse could create new opportunities for more real-world assets through the use of innovative gaming models in synchronization with interoperable blockchain games.
The role of NFT in the metaverse would become much more significant to infrastructures, such as with the play-to-earn gaming model. This not only creates the opportunity for NFTs to increase user engagement in the metaverse, but also promises to empower the players themselves to make choices.
Furthermore, play-to-earn games provide a fair, transparent gameplay experience by giving players full ownership and management of their assets.
The very fact that blockchain provides transparency and immutability illustrates the importance of NFTs to the metaverse. These features play a crucial role in the metaverse’s fair and open economy. The scarcity of NFTs and their on-chain value would henceforth be determined by the fundamental rule of supply and demand. With these systems in place, there are no opportunities left for fake value inflation.
That said, it is clear as day that the metaverse and NFTs must actively collaborate in order to truly build this fair and transparent economy.
- Possibilities for new social and community interactions
The impact of NFT metaverse initiatives on users’ identities, social, and communal experiences in the metaverse would be enormous. By owning NFT assets, users could show their support for a particular project, or express their thoughts on the virtual and real worlds. As a result, groups of like-minded NFT owners would be able to share their experiences and collaborate on producing content.
NFT avatars are a popular illustration of how the NFT-metaverse link is shaping the world. A player’s true self, the one they dream of being, can be represented in their NFT avatars. Players may enter and move between different areas using their NFT avatars as “access tokens”. NFTs could thus be seen as an extension of a user’s real-life identity, providing complete ownership, autonomy, and flexibility for their creation.
Users could utilize NFT avatars to earn virtual membership to a variety of real-world and metaverse experiences. As a result, combining metaverse with NFTs may improve users’ social and communal experiences. The vast potential of NFT avatars is further demonstrated by their use in the metaverse for startup launches and content development.
- Virtual real estate
A virtual world implies a lot of virtual real estate and space. NFTs can thus be used to take full control of virtual environments in the metaverse. Users could simply establish ownership of an item while also constructing virtual property with the aid of the blockchain.
One significant use of such NFT metaverse initiatives is the commercial sale of virtual land. Users are also able to rent land for passive income while working on other constructions such as online stores or event venues.
Conclusion
The myriad possibilities associated with the NFT-metaverse combo could have a profound impact on the future of the decentralized economy as a whole. It’s easy to understand how NFTs provide ownership and uniqueness, but the metaverse provides a digital environment in which everything is conceivable.
Economic and social experiences in the metaverse would be altered if the digital world lacked the means to represent those actual digital assets. While many people indeed believe that NFTs are a part of the metaverse, some even believe that NFTs are the building blocks to the metaverse. It is apparent that NFTs and the metaverse could serve to open up a wide range of possibilities.
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