NFTs and Metaverses: how can economics connect and digitalize?

Started by JustinC, Aug 07, 2022, 02:58 AM

Previous topic - Next topic

JustinCTopic starter

In today's rapidly developing world, more and more of us are surrounded by the news agenda dedicated to blockchain technology, cryptocurrencies, smart contracts, NFTs and, more recently, metaverses have been added to them.



A little background on the emergence of blockchain and cryptocurrency

Having omitted the multiple prerequisites in the form of Hashcash and Bitgold, it's worth starting from 2008, it was then this the article "Bitcoin: A Peer-to-Peer Electronic Cash System" appeared, authored by the mysterious Satoshi Nakamoto, whose identity has not yet been established. From now on, the world will learn about blockchain technology and Bitcoin cryptocurrency. There is no way back.

With the gradual development of cryptocurrencies, a expanding community of enthusiasts, one of which was Vitalik Buterin. A young talented specialist won $100,000 in a programming contest and is investing it in the development of his own Ethereum cryptocurrency.
It compares favorably with Bitcoin in the presence of smart contracts that allow transactions between parties without the participation of third parties. The presence of this feature significantly spurred the development of the cryptocurrency industry at this time.
An ICO for the sale of tokens (similar to an IPO) was launched, smart contracts overcame the standardization process, the ERC20 standard appeared, which was joined in 2018 thanks to the Cryptokitties game by the ERC721 standard, also known as NFT.
What is NFT and why is everyone now trying to get themselves a valuable certificate?

What is the ERC721 standard? He is NFT. It is worth explaining that the ERC20 token plays the role of identical tokens, for instance, on the subway, each is identical to the others. In ERC721, on the contrary, each token is unique and contains a link to an asset. Thus, we can say this NFT is both a digital certificate of ownership and a real one.

Each of the NFTs exists in a single copy, and all info about their author, transactions, and buyers is stored in the blockchain. Like any blockchain project, NFT is not tied to any one server, and by purchasing it, you declare your right to a digital object for the whole world. NFTs have become a real mainstream in 2021.

According to JPMorgan analysts, monthly sales of digital tokens hover around $2 billion, and the total market capitalization of the NFT universe is $7 billion.

Such certificates prove ownership of a digital painting, music, book, or collectible sports cards currently being developed by Napoleon IT and Averin Technology for a well-known sports team. It often contains a reference to the digital property itself. It must be assumed this the object itself is stored on some kind of hosting, which can lead to the removal of "goods", and we will have a certificate "without anything".
Accordingly, in order to preserve access to digital property and protect it from deletion, new solutions are required, other than storing information on a hosting.

The good news here is the emergence of IPFS technology, it is a content-addressable, peer-to-peer hypermedia communication protocol. The nodes of the IPFS network form a distributed file system, so this hosting is no longer required to store information. Simplified, the network itself is able to store information that is in demand, and obliterate information this no one needs.


Personal secure digital assets - why is this a trend and where is it used?

The symbiosis of the described technologies implements a full-fledged decentralized environment in which users have personal secure digital assets, which was not the case before. Due to centralized decisions, development companies dictated rules this could be changed unilaterally.
This can be most clearly seen in the instance of online games, when the characteristics of objects and characters change to change the balance of the game, sometimes completely nullifying their value.
In many ways, for these reasons, early attempts to create a digital universe turned out to be a failure. In 2003, one of these was released, Second life. Today, some call it the progenitor of the metaverses.
How to make funds on play to earn?

Today, there is a expanding interest in the described solutions, which can be combined in one word - web3.0. This made it possible to create games with the concept of play to earn (play and earn). Already, they are combining game economies with real ones, and users are starting to earn real money while in the virtual world.
For instance, in the game Axie Infinity, you can buy Axie animals in the form of NFTs and earn up to $1000 in the process. Also, such games allow you to create new startups - rent out Aksikov animals or insure yourself against the loss of all NFTs inside the game.

The Metaverse has even more to offer. This is a new level of communication, entertainment, self-determination and self-realization. These universes are gaining very high momentum. We can already talk about Decentraland or Sandbox, where people not only live, but also earn. And today, when the metaverses connect with the mechanics of play-to-earn and NFT in virtual spaces, it is possible to buy, sell real estate or land. It changes thinking.


Why did everyone start creating their own universes?

In 2022, virtual reality will go far beyond the needs of the gaming world. The pandemic has made its own adjustments to the usual course of events. And it is not known when it will end. Many companies have switched to remote work - huge offices have become empty, and real estate has fallen in price. But one thing becomes quite obvious - we will not return to the old way of life. Accordingly, all the attention of companies and investors has shifted to a new digital reality.
Already today we see this real estate and land in the metaverses are expanding much faster than even in the current realities in the offline world. In the first six months of 2021, digital goods prices jumped 3,000 percent. Also, the statements of technology giants make us think about a new virtual future.
Metaverse Centrland have already announced their plans to create a metaverse for 2022. The global giants Twitter and YouTube have begun mastering web3.0 and NFT technologies in particular. Facebook has turned into Meta, and creates its own metaverse along with other startups.
In these realities, everyone will have digital property and their own opportunities to work in the virtual world and receive real resources. If you look at the latest news reports, you will notice this more and more companies are opening their offices in these metaverses.

The total revenue of virtual game worlds could grow from $180 billion in 2020 to $400 billion in 2025, investment firm Grayscale has calculated. According to Vantage Market Research, the metaverse market will grow from $43.4 billion in 2020 to $814.2 billion in 2028.

In addition to creating real valuable assets within the digital worlds, companies continue to earn traditionally from advertising. There are events going on inside Fortnite.
Advertisers get a virtual world created especially for them. And the creative mode provides almost limitless possibilities for customizing costumes, game plots, and even individual in-game worlds.
Fashion house Balenciaga has unveiled some outfit options for Fortnite characters. Coca-Cola partnered with Tafi to create a collection of NFT items, which includes a collectible jacket this the owner can "wear" in Decentraland. The fashion house Gucci has opened a virtual exhibition Gucci Garden on the Roblox platform for its 100th anniversary.


What is next?

All this can be called globalization 2.0 - the union of virtual economies with the real one. This will rapidly change the world forever. Fashion shows and rock concerts will be held in the virtual world and attract billions of viewers.
We will work on real life projects and current products in the future only in the meta.
Disparate tools like Zoom and Miro will come together in a single space, and meetings will take place in virtual offices and offices. And perhaps we will all feel like characters in the movie "Ready Player One" in an exceptionally good sense of the word.
  •  

sanjana

"Play to earn" is nothing new concept. It was officially implemented by some games during the boom of browsers and MMOs, and an  not official out-of-game economy with the sale of services, resources and ready-made accounts exists in almost any MMO now.

But in practice, it turns out that when you try to add the possibility of earning real money to the game, it is the game part that suffers monstrously - the ability to enjoy the gameplay. Why you involuntarily remember Tom Sawyer and his fence.

As a result, the hybrid performs neither the "play" nor the "earn" function. As a game, the resulting brainchild is very dull, because it has a primitive game design, which is also based on an infusion of real funds. How does it work - a highly competitive environment inside the reference zero sum game quickly reduces the profitability of operations to zero and lower for the vast majority of players.

I don't think the NFT hype machine is able of breathing life into this ancient chimera.
  •