How Are The Metaverse and Cryptocurrencies Related?
The metaverse may have generated a lot of coverage recently, but it’s not a new idea. In fact, the concept has been around for almost 30 years now, after having been coined in Neal Stephenson’s 1992 novel Snow Crash.
That might come as a surprise to some, and even those who keep up with the headlines. That’s because much of the recent press coverage of the metaverse has presented it in the context of Facebook’s 2021 announcement that it was investing in the technology.
The problem with this analysis is that it overlooks the deep roots that the metaverse has in many of the technologies we use today.
Among the technologies that the metaverse is building on is cryptocurrency.
In fact, when the history of technology comes to be written, it may be that people think of cryptocurrency, between 2010 and 2020, as a technology in search of real utility. And it might well find that in the metaverse.
First of all, let’s dispense with the notion that the metaverse is a new idea. Not only are there 30-year-old literary predictions of this technology, as we’ve already mentioned.
There are, in fact, fully functioning virtual worlds today, and millions of people around the world are already participating in them.
The reason why these worlds have not gained much attention in the mainstream press is that they tend to be inhabited by younger generations.
Roblox, Fortnite and Animal Crossing are games that have all garnered huge online player communities, and these communities interact in a way that is very like that “predicted” to exist, one far-off day, in the metaverse.
The situation today might, in fact, be something like that of the early days of the internet. For many years, the only people sending messages online were academics, or those in niche, techy subcultures.
It might be that the young people playing these games, and interacting through them, are getting an early glimpse of the way in which we will all interact in the future.
This is certainly the bet that Facebook are making. The company’s announcement that they are pouring research money into the metaverse has undoubtedly been influenced by scholars who have seen the future in such online communities.
Read through a sample of these, and you’ll come to the conclusion that the metaverse is not just an addition to the internet, but a wholesale replacement for it.
Venture capitalist and essayist Matthew Ball, for instance, has written that the metaverse will become “the gateway to most digital experiences, a key component of all physical ones, and the next great labor platform.” Others have concluded (or speculated) that it might eventually be the default place where we work.
Despite the best intentions of these scholars, such speculation tends to do the metaverse more harm than good, at least in the popular imagination.
The more they dwell on exotic, far-future scenarios, the more impossible the metaverse seems to be. It’s promoters, in other words, might be better off focusing on the way in which the metaverse has emerged from a suite of well matured technologies.
In fact, looked at in this way, the emergence of the metaverse seems almost inevitable. As a global society, we have spent the last two decades increasing internet speeds, making it easier for people to work from home, and especially to shop from home.
As part of this global shift, we have also developed new forms of currency that are already ideally suited to the metaverse – cryptocurrencies.
At first glance, it seems a very fortunate coincidence that cryptocurrencies are becoming mainstream just as the metaverse is also entering public consciousness.
And indeed, that would be one way of looking at this synchronicity – as a coincidence. It might be that cryptocurrencies, and all the technologies they are based on (strong encryption and blockchain, to name just two) happened to emerge just as investors look to the metaverse as the future of online commerce.
In reality, it’s likely that the causation runs in the opposite direction. The success of the metaverse relies on developments in a number of key technologies.
These include AR and VR, of course, but equally important will be the development of financial systems for these emerging online worlds.
Here, we come back to where we started – with video games. One reason why the online worlds built around video games have been so successful is that they possess fully functioning economies.
Participants in these online worlds can exchange hard currency for in-universe tokens, and then use these to buy items and pay for services within them.
If that sounds like the way that altcoins work, it’s because it is. And here we have the crux of the argument.
If the metaverse resembles the huge, immersive communities that gamers have already built, it’s going to need a currency. And that currency will need to be independent of the companies providing services in the metaverse. There is arguably no better candidate for this role than existing cryptocurrencies.
In practice, this might mean that within a few short years, most of us will be working in (at least) two currencies simultaneously – one that is issued by governments, and used to buy things “in the real world”, and another that is used only within the metaverse.
This will also open up whole new worlds for investors, of course, because the metaverse is likely to develop economic structures at least as complex as those that currently exist in “the real world.”
That’s why it’s important to get your tools in place today – including an adaptable, fully-featured investment platform like Wealthface.