Is this the dawning of the age of the metaverse?
One of the greatest promises of crypto is that it will do for money what the internet has done for information. Evangelists proclaim that it will bring financial services into a new era, decentralising and democratising money in ways that will create new efficiencies and transparency.
What does this mean in practice? So far, we seem to be a little closer to authentic virtual realities where seamless financial transactions can also take place using decentralised finance, or DeFi, tools. This activity is taking place in one of the newly dubbed metaverses, where people can interact openly and transact seamlessly online with anyone, anywhere in the world. And because the metaverses are built around DeFi, there is no central system, just a network of global computers managing it all, which means that rules are set by the users rather than an authority.
It is very easy to be cynical about this whole concept. We’ve heard about virtual realities several times over the last couple of decades, and yes, they can be fascinating, but they rarely live up to their promise. Equally, why would you spend time in a metaverse when there’s a real world out there with shops and actual people?
The in-universe perspective
These are both potentially fair points from a particular perspective, but there are several points that need to be made about the metaverse and its potential to change the way that we interact.
Firstly, there is the generational point. Games like Fortnite and Roblox have shown the way that the emerging generation has engaged with each other online, a trend that has only been accentuated by the lockdowns of the last 18 months. Many in Generation Z place great store in having the best skins for their avatars (digital clothes for their online representations for anyone older than Generation X) and this is part of the reason why brands from Nike to Prada have been quick to dive into the metaverse.
More widely, we have all got used to a range of interactions moving online over the last few months, whether that’s classes, wine tastings, discussions with banks or simple supermarket shopping. The metaverse has the potential to enhance these interactions, bringing them to life in a way that Zoom or Teams could not yet hope to emulate.
This also reflects the debate about non-fungible tokens for things like digital art and memes, which have been commanding significant prices. The metaverse creates a place where you can potentially display your NFTs so that you can impress people visiting your space with your taste.
This process has the potential to accelerate as brands work out ways to incorporate NFTs with the real world. There are already several projects that associate NFTs with real world objects such as shoes or items of clothing. The theory is that you will be able wear your new kicks both in the meta or IRL (wear your new trainers both online and in the real world for anyone older than Generation X).
The difference between chaos and anarchy
The point is that when the internet came along in the mid-nineties, some people thought it was just a fad and they didn’t really need to engage with it. Many of the brands that were slow to appreciate its potential have now been consigned to the economic history books. When social media started to become important, many failed to grasp its impact and dismissed it as a distraction. Some of those brands have been regretting it ever since.
And we have moved past the point of this all being theoretically interesting but practically irrelevant. Figures cited in The Economist recently point out that the volume of activity in the DeFi space during the second quarter of 2021 was similar to the level for activity on Visa, the global payments network. Achieving this level of activity is only one step down the road to wider acceptance, but it certainly highlights the fact that there is active demand to participate in the sector.
The moment between present and future
Having proven both its value, at least among one demographic, and its ability to work at scale, the intermingled worlds of DeFi, the metaverse and crypto need to over come their most significant challenge: convincing the mainstream.
To achieve this, proponents need to find ways to simplify how they explain what it is on offer. At the moment, it seems like there are several strands of thought about how the sector will develop and to the outsider there appears to be a bewildering array of explanations about what is happening, why, and what it means for the future. There is the metaverse, there is crypto, both in currency and NFT form, and there is DeFi. But there is also blockchain, fiat, tokens and a long list of other things that only make sense to specialists.
The automotive industry can explain itself relatively simply without having to go through the details of what a camshaft or catalytic converter does: A car is a vehicle that can get us from A to B. Most of us can understand this without having to take up valuable thinking time understanding what is happening underneath the bonnet.
It could be that the metaverse will become this unifying concept that makes it easier for non-experts to understand the worlds of crypto, NFTs and DeFi, bringing together all of the different but interlinked technologies that seem to have sprung up over the last fifteen years. If this is the dawning of the age of the metaverse, it could lead to a new age of understanding for us all.
QATO CONSULTING LIMITED
Collingham House 6-12 Gladstone Road
SW19 1QT London
About Marco Quacken
Marco has a passion for business development that helps projects succeed and businesses flourish. With a global network of contacts, he brings teams together, matching expertise to requirements and implementing strategies that help good ideas grow into sustainable businesses. He has experience across a range of sectors including finance, real estate, technology, advertisement, automotive, consumer goods, energy, retail, sports and telecommunications.
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