The first thing we have to acknowledge about the Metaverse is it isn’t a new concept. Actually, they’re almost as old as dirt. But virtual worlds where people gather to do things and exchange goods and services are nothing new. It’s a little thing called online gaming, and it’s been around for over two decades.
Remember Second Life, back in 2003? 1997’s Ultima Online? Fast-forward to today, and we have World of Warcraft, the entire Roblox ecosystem and Fortnite…
Recently, all the hype makes it seem like we’re back in the 1950s.
So why should a crypto investor or enthusiast be excited (or even interested) in what is essentially decades-old technology being rebranded?
The answer is fairly straightforward and indeed thought-provoking.
Esports and the metaverse
Online gaming, as it stands, is a pastime. A hobby. The majority of people earning revenue from it, what we call esports players, are similar to IRL athletes. They spend most of their days training, practicing to become better. That helps them earn money, from contest prizes and endorsements and simply cashing in on their own celebrity.
Don’t laugh. Esports all-stars can make lots of money. Today’s top earner, Johan “N0tail” Sundstein of Denmark, raked in a bit over $3 million in 2019.
This money, though, it’s completely detached from the game. Totally separate. The financial systems and infrastructure that support finance and those that support Defense of the Ancients 2‘s wildly popular esports scene are utterly different.
Just the same, however one turns a profit in online gaming, it’s going to be external.
That’s where the Metaverse comes into the equation and things start taking curious turns.
Live in the game, earn in the game
If you’ve seen the graphics for any of the current Metaverse “games”, or virtual worlds, they’re not on par with modern top-tier games. A lot of people are banking this will improve, judging by the scope of investments in the sphere.
People and hedge funds are purchasing things like real estate in virtual worlds. They plan to create storefronts in the Metaverse, where they can sell digital assets to users to enhance their gaming experience.
Is digital real estate a bubble, or a new asset class? There’s just no way to know beforehand. A “bubble” is just an asset class that doesn’t withstand the test of time. Even if it is a bubble, how many times have we heard of real estate bubbles in real life? Is real estate still an asset class?
The newfound passion for gaming in the Metaverse by seemingly everyone is looking very good for cryptocurrencies indeed.
The new $1 trillion market
MANA, Decentraland’s native cryptocurrency, surged $0.10 to $4.50 this year. It’s being used to purchase and hold virtual land in this online game. But not all virtual worlds with native cryptocurrencies are going the feudal route.
Axie Infinity, an online game by Sky Mavis, has a fairly developed in-game economy that revolves around the Smooth Love Potion (SLP) token and other assets. These assets can be swapped for real-world money on exchanges, not unlike when Decentraland’s property owners want to part with some land.
Could this be the most bullish news cryptocurrencies have had so far? That remains to be seen. Cryptocurrencies originated with many purposes and have always had a lot of utility. For example, virtually all metaverse-adjacent cryptocurrencies run on the ERC-20A technical standard for creating digital assets. Smart contracts can be used to issue ERC-20 tokens, such as Chainlink (LINK), Tether (USDT), Dai (DAI), etc. Like all standards, ERC-20 allows for compatibility between a wide variety of blockchain-based services. technical standard, which is already fantastic for Ethereum.
But should the Metaverse take a hold in everyday life, as Facebook (sorry, Meta) has, they’re going to meet every bullish forecast and exceed it. Grayscale seems to betting on it, with their latest report estimating that a mainstream Metaverse could be worth $1 trillion in the next few years.
The Facebook comparison is not without reason. For all the talk of Facebook’s native token Diem, it seems to have been sidelined entirely while the crypto market went on. Now, the company is trying to pivot from social media to Metaverse. But an early look into its graphics and overall appearance shows that it’s quite off-putting compared to Decentraland.
Is Facebook being used to make something trendy, or is it actually unable to keep up with trends? We’ll see. Once again, it’s a very interesting time to be an observer in the crypto marketplace.