NFTs and Metaverses: how can economics connect and digitalize?

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

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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.


"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.


Builders of Virtual worlds
In order for the metaverse to become a reality, several hardware and software developments need to be combined. Metaverse software consists of programs such as game engines that allow developers and coders to create digital worlds.
Currently, the two largest game engines are Unreal Engine and Unity Engine.
These platforms provide tools for creating games and can be used to create software and architecture for the metaverse. Accordingly, they have been called the metaverse equivalent of Android and iOS.
When it comes to hardware developments like AR and VR headsets, tech giants like Microsoft and Apple are vying for the top spot.

Earlier this year, Microsoft acquired Activation Blizzard for a whopping $62.7 billion. The gaming giant is behind Call of Duty, World of Warcraft and Candy Crush.
Apple has been engaged in augmented and virtual reality for decades, and there is an army of independent application developers behind them. In addition, since young people in America occupy 70% of the Apple market, some suggest that the metaverse may be slowly developing on top of Apple products.
But the company has always hidden the release of products to the public before they are ready, so it remains to be seen.

Who invests in the Metaverse?

In addition to the creators of the metaverse, last year there was a surge of brands, companies, celebrities, sports leagues, international banking institutions and even countries investing in the metaverse.
Below are some areas in which people invest in the metaverse, as well as major brands, companies and names:
Fashion: Gucci, Dolce & Gabbana, Nike, Crocs.
Music: Snoop Dogg, Timbaland, Steve Aoki, Paris Hilton, Eminem, Mick Mills.
Celebrities and athletes: Jimmy Fallon, Serena Williams, Michael Jordan, LeBron James, Steph Curry, Shaquille O'Neal.
Corporations: Walmart, McDonald's, CVS, Monster Energy.
Financial institutions: JP Morgan Chase, New York Stock Exchange, HSBC.
Sports leagues: NBA, NFL, Manchester United, Australian Open, NASCAR, UFC

So many new NFT and metaverse projects are launched every week, trademarks are registered and investments are made in the metaverse and Web3 that it is difficult to follow the NFT news. Even the country of South Korea has promised to invest almost $200 million in projects that support the growth of the NFT and the metaverse within the country.
Only time will tell what the metaverse will become, but it is already a huge industry, and it is growing every day.

Why should you care about the metaverse?
If all this doesn't sound very good to you, you may wonder, well, who cares? I'll just stay away from the metaverse and behave as usual—right?
Right. But think about how difficult it is to live without the Internet now. Of course, it can be done, but opportunities are missed. And some of these opportunities may be work-related.
Recently, we have seen thousands of new vacancies related to NFT, cryptocurrency, Web3 and the metaverse, and as more companies and brands realize the importance of having a presence in the metaverse, we expect that there will be even more.
Finally, the pandemic has shown people working in offices that they can work from home efficiently and productively, and it turns out that many people prefer this. It is unlikely that remote work will ever disappear, and if the metaverse can
increase the speed of work on workstations and fulfill its promise to help us feel a human connection with the avatars with whom we interact, this could play a huge role in the future of work.
To get a fair reward for your time and work, the metaverse can be an improvement for many people.

What is the future of the Metaverse?
If you've learned anything from this article, it's that no one can say for sure what the future holds for the metaverse. To do this, you will need a crystal ball.
We know that there have already been many important movers and shakers in the metaverse, and there will be many more. In the coming months and years there will be visionaries, programmers, creators, developers, investors, storytellers and curious ordinary people who will leave their fingerprint on the metaverse.
And we also know that no matter what your opinion of the metaverse is or whether you have it, the fact that it is somehow approaching is hard to deny.
It is also true that with the current decentralized infrastructure of the metaverse, many people will have a voice and a chance to participate in its deployment — not just one megacorporation.

And if the metaverse is not for you — like a mobile phone, home computer or TV — you can simply turn it off.


A very optimistic outlook for the future. I doubt very much that all of us (or future generations) will feel like characters in the movie "Ready Player One" in general, not in the good sense of the word.

Already, the world is on the verge of a global catastrophe in the form of a world war, and the reason is resources. All this "digitization" of the currency is already a "not clean" thing, and I'm not even talking about biblical prophecies regarding the "number of the beast", etc., although there are enough correlations here too.

This whole meta-universe is just a way to "lead" the conscious masses away from real world problems that have little to do with digitalization and the virtual world.

The first step on the path "to the abyss" was taken about half a century ago in connection with the abolition of the gold standard, when "particularly enterprising" people for mercenary purposes gained access to the unlimited issue of paper currency "on credit", and the economic consequences of which are unlikely to be resolved with through the "virtualization" of some areas of our lives.