How the Metaverse Cryptocurrency Will Change

The metaverse and cryptocurrency seem to be concepts that go hand in hand – virtual worlds and virtual money to spend in them.

Both form an integral part of what is being hailed these days as “web3” – the third generation of the internet, after web1 – the worldwide 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.

Metaverse and cryptocurrency are separate concepts and can happily exist without each other – as we have seen with Bitcoin, which has utility in the real world as well as the virtual world. And many visions of the metaverse – including Mark Zuckerberg’s only tangent involving crypto and blockchain.

However, it is clear that there is a potential synergy between the two ideas. People love to spend money, and shopping has very quickly established itself as a key feature of both web1 and web2, so there’s no reason why web3 will be any different! It’s also becoming increasingly clear that, while no one is quite sure exactly what form the metaverse will ultimately take, it has the potential to significantly influence the way cryptocurrency evolves, and the impact it will ultimately have on society .

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 simply click on a link or press a button, and we (or our avatar, at least) are there. There is no need for expensive and cumbersome transport infrastructure or passports or packing our luggage.

The same goes for cryptocurrency. Transactions in traditional money (known as “fiat” by crypto-enthusiasts – because its value is supposedly based on government mandate) require a large infrastructure of banks and regulators to act as custodians, intermediaries and clearinghouses. Transactions in cryptocurrency, on the other hand, usually only require software running on standard computers.

Of course, we should not hide the fact that the energy used by this software to crush 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 goal of reducing energy consumption. For example, newer proof-of-play cryptocurrencies are said to be much less harmful to the environment than older proof-of-work currencies like Bitcoin.

As the metaverse becomes more popular, and more and more of our lives are spent online – working in virtual offices, playing games with our friends, or even taking metaverse vacations – we will need frictionless ways to pay for virtual goods and services. Maybe we’ll want to spend it on virtual real estate – if we want to own our own piece of digital land on which to entertain friends or build 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 cryptocurrency really breaks into the mainstream as more and more of us get used to using it as a means of payment.

If this happens, governments and lawmakers will undoubtedly feel the need to step up efforts to regulate and to some extent control cryptocurrencies. Although things have become more organized in recent years – with a growing number of countries starting to introduce regulatory frameworks around digital currency – it’s still something of a “wild west” environment. This means that 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 should they fall victim to the large number of scams out there.

As they become more popular, governments may also choose to regulate cryptocurrencies according to how energy efficient or polluting they are. For example, networks that rely on more wasteful proof-of-work algorithms may attract higher tax rates on transactions, while those using the more efficient proof-of-play algorithms may be taxed at a lower rate.

The road to adoption

As cryptocurrency becomes the primary means of exchange for people buying and selling in the metaverse, its users will become increasingly comfortable with methods of acquiring, handling and storing it. This means that it will also be used more frequently outside the metaverse – for example to send money to friends and family – especially if it involves the money crossing national borders, which, with traditional currency, can often incur high fees (if even at all possible).

This, in turn, will mean that banks and other existing financial institutions are likely to step up their efforts to facilitate cryptocurrency or blockchain-derived financial models. To remain competitive in an era of borderless, middleman-free financial systems, they will need to streamline their own infrastructure. While some – such as the head of the IMF – have predicted that cryptocurrency could eventually spell the end of banking as we know it, in the short term it is likely that businesses in particular will still be at the layer of protection and regulation that banks and central banks have to offer. bring transactional networks. But it seems likely to me that those who thrive in this new environment of digital currencies and peer-to-peer finance will be those who are flexible and forward-thinking with their own policies when it comes to cryptocurrency adoption. Paypal and Mastercard are examples of payment systems that are now fully involved in cryptocurrency, especially Bitcoin – and both said this is because it is clear that it will play an important role in the future of payments.

What comes next?

It’s certainly true that no one—not even people like Mark Zuckerberg—knows what form the metaverse will actually take, when (and if) it’s 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 it!

When it comes to establishing the currency of the virtual world, cryptocurrencies are clearly a natural fit – and because this groundbreaking technology is also in its infancy, its evolutionary course is likely to be affected by changes in the way we we live lives. For better or worse, more and more of us are choosing to spend more of our time online, and this is only likely to accelerate as the online world becomes more immersive, entertaining and engaging. It also means that cryptocurrency will play a bigger role in our lives. As a result, we are likely to see it become more regulated, more environmentally friendly and useful.

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