What is Metaverse? How it works and why it will be important in the future?

11/22/2021, 12:54 PM

What is Metaverse? How it works and why it will be important in the future?
What is Metaverse? How it works and why it will be important in the future?

Metaverse is a virtual representation of the real world that any person can access via the Internet. What suddenly led to the popularity of Metaverse? Can Metaverse have a positive impact on business, technology, or everyday lives?

Metaverse is a concept that once again attracted media attention after Mark Zuckerberg announced that Facebook would change its name to Meta as part of the rebranding process.

Contents:

  • What is Metaverse ad how it works?
  • 5 main features of Metaverse
  • 4 areas where Metaverse can be applied
  • How will cryptocurrencies be linked to Metaverse?
  • Top 4 most popular blockchain projects right now

In addition to the rebranding of the company, Zuckerberg also announced the development of a metaverse in which users will be able to hold virtual meetings, visit virtual stores, travel, buy virtual houses and many other things.

In short, users will be able to do everything in a digital environment as in the real world.

Microsoft is also developing solutions for its own version of the metaverse. Unlike Facebook, they are more focused on business applications (holding virtual meetings). Recently, Nike also announced filing new trademarks. While not being too specific, it was clear that they are preparing to offer their products in digital space (future metaverse projects).

Four virtual avatars having a meeting in a virtual office.
The virtual office concept developed by Facebook as part of the its metaverse.

Why is everyone talking about Metaverse all of the sudden? Big market players investing in metaverse projects certainly had a big impact on sudden media coverage.

On the other hand more people are starting to talk about the “new generation” of the Internet better known as Web 3.0  Many believe that Metaverse, along with blockchain technology, will be a key element of the “new” Internet.

Many technology experts believe that creating a virtual world is a logical step forward in which blockchain technology, NFT’s and decentralization will have a huge impact.

“I think the Metaverse is the all-encompassing space in which all digital experience sits; the observable digital universe made up of millions of digital galaxies” - Eric Redmond, Global Director, Technology Innovation at Nike.

The concept of Metaverse is not something that appeared recently. There were several projects that had features which enabled people to experience real world activities in a digital environment.

Back in 2007, millions of people in the United States were able to make their avatars in a popular video game - “Second Life”. For many, this video game concept was  “the future”. Lives were going to be lived online, as avatars represented every person in nightclubs, bedrooms, and banks made of pixels and code.

However, with the advancement of technology, the popularity of this project has declined over time, while the focus and socializing shifted to more popular social media.

Today, Metaverse is still in the early stages of development. There is still much work to do in order to develop a technology that will be able to authentically replicate the real world in digital form. People today can experience virtual reality with the help of VR glasses or AR apps, but these environments still look like they are a video game.

Illustration of a person with VR glasses working in a virtual space.

What is Metaverse and how it works?

Metaverse is a network of virtual, 3D environments in which people can communicate with each other and interact with many digital objects, while managing their avatars - digital versions of themselves.

This is one of many definitions that seek to explain the essence of Metaverse. Many associate metaverses with the gaming industry, however this is only one branch where metaverses will be able to be applied.

Every Metaverse has 3 key elements:

Virtual presence - the feeling that your digital version is present in a virtual environment and that it can communicate with other people (their virtual versions).

Interoperability - the ability to move freely between different virtual spaces using your own avatar and transfer virtual objects from one space to another.

This element is most often associated with blockchain technology because of its ability to transfer digital assets at high speed and with low cost.

Standardization - the introduction of technological standards in Metaverse projects will enable interoperability and service sharing within different virtual spaces.

If the technology develops the Metaverse powered Internet would be like someone gave a 3D form to the internet we use today. Unlike today's internet, which we use by looking at the screen, you will be able to "get in and out" in a virtual environment.

5 main features of Metaverse

  • A system that will allow the user to experience real life activities within digital environment and use all web 2.0 services
  • A system with real time 3D graphics and 3D avatars (virtual replica of the real user)
  • A system that will enable all users channels for interaction and social socialization
  • Connection to real economic systems so that people can make a profit from creating virtual goods.
  • Ability to access virtual space from any device at any time.

4 areas where Metaverse can be applied

One of the key benefits of Metaverse will be presence - in other words, the ability to be present in a certain place (inside the digital environment) and socialize with people without having to look at the screen.

The idea that you can socialize with other people in the virtual space as if you were in the real world is appealing especially at a time when the pandemic has limited contacts.

Once the technology develops enough to power a full featured Metaverse, new corporations will emerge, and they will have their own visions of how to take advantage of metaverses.

Where will Metaverse be applied?

Currently, the are 4 areas where Metaverse can be applied according to tech experts:

1. Gaming industry

The gaming industry is a perfect match for all Metaverse solutions. Today's most popular games like Fortnite and Axie Infinity already have some metaverse features, but all activities are available exclusively within the game.

Many games already work on one of the most mportant Metaverse features, and that is in-game communication. Thanks to the multiplayer options and console interoperability, you can easily communicate with other players and play the game at the same time.

As technology advances, the communication feature will be expanded once the Metaverse gets the ability to communicate with other Metaverses. Also, the players will possibly have the option to transfer their avatar with unique skin to another multiverse game.

The possibilities will be limitless.

2. Communication and social networks

The core of the metaverse concept will be human interaction. Many global companies like Facebook and Microsoft are already developing solutions for virtual meetings. Unlike currently popular Zoom calls, users will be able to enter a virtual space with colleagues where they will be able to hold meetings, presentations, etc.

When it comes to communication there is also an app called VRChat which is completely focused on socializing and meeting new people in the virtual space.

Communicating in virtual space could have a positive effect on the work from home concept.  In the future, Instead traveling to work, with the help of Metaverse we will be able to work and communicate with colleagues in the virtual office space.

3. Shopping experience

Imagine a shopping experience where you can try on clothes or shoes by visiting a virtual shopping mall. Instead of losing time on driving to the mall, you will be able to enter the virtual space from the comfort of your home, visit the virtual store and try on the clothes.

Epic Games CEO Tim Sweeney recently told the Washington Post that he envisions a world in which a carmaker would advertise a new model by putting it into a virtual space and allowing potential buyers to try it out.

4. Education

Metaverse could also revolutionize education. Virtual schools and classrooms could become the standard for students of the future. Just as work will be moved to virtual offices, classes will be held in digital educational spaces, laboratories and other spaces.

Imagine history lessons taking place in a virtual museum, experiencing how people lived in a particular period, or chemistry lessons in a virtual laboratory.

GIF illustration with two characters watching Bitcoin through VR glasses.

How will cryptocurrencies be linked to Metaverse?

Metaverse will most likely be connected to the real world economy and will eventually become an important economic factor. Therefore, Metaverse will need to enable companies and individuals to participate in all economic activities in the way they do in the real world.

Simply put, this means that people and companies will be able to build, trade, invest and exchange goods and services.

Cryptocurrencies and NFT projects should play a major role in Metaverse economic activities. Cryptocurrencies have already laid the foundations for a modern financial system and a fully open and transparent economy.

Thanks to blockchain technology, every transaction and transfer of assets is securely stored and information about them is easily accessible. Additionally, large amounts can be sent at high speed with low fees.

NFT will also play a big role as it will give people and companies full ownership of all digital items, properties and even characters within Metaverse games. NFTs are digital certificates that can record the transfer of ownership of digital objects on the blockchain.

Currently, a lot of time is being invested in developing applications that will allow you to use a digitally purchased item in multiple different Metaverse.

For example, Polygonal Mind is currently developing a system that will allow people to purchase 3D avatars as NFTs. Once purchased, users will be able to use them in games (as skin), or in other available Metaverse worlds.

Today, there are already projects that use blockchain solutions and have metaverse features. Users pay for each transaction with the native currency.

Top 4 most popular blockchain metaverse projects

1. Decentraland

Decentraland is virtual reality software that uses the Ethereum network as a base.

In Decentraland Metaverse, users can buy and sell real estate, create and monetize content, meet other users and communicate with them, play games and many other things.

Decentraland virtual space is divided into 90,601 plots, and each plot has about 16m2. Also each piece of land is an NFT.

Within the Decentraland metaverse, there are two tokens MANA and LAND. The LAND token is used to purchase land. The owner of the LAND token is also the owner of the land in Decentraland.

MANA, on the other hand, plays a vital role in the virtual world of Decentraland and can be used for transactions within the ecosystem and for decision-making concerning the management and development of software powered by Decentraland.

MANA also allows users to purchase avatars and a variety of items that will enhance their appearance or equipment, interact with other users, and explore the entire metaverse.

2. Sandbox

Sandbox is a project that combines elements of metaverse and video games. It is one large ecosystem developed on the Ethereum network. In Sandbox, users can create, share and monetize assets or content they have created within the game.

Sandbox is a metaverse project created to give gamers and creators complete control over content. They are trying to challenge centralized platforms that control everything that is created within games.

In Sandbox, users have absolute ownership of their creations in the virtual world. Sandbox Metaverse also has its own SAND token. Since this is a metaverse project based on the Ethereum network, SAND is the ERC-20 token.

Currently, SAND is used for in-game transactions, and in the future the token will be used as a means of voting within the system.

3. Axie Infinity

Axie Infinity is currently the most popular metaverse game based on blockchain. It is a game where players collect and breed digital characters (animals) called Axies.

Each Axie is actually an ERC-721 token or in other words NFT. This means that each Axie is a unique digital asset with unique features.

The game Axie Infinity introduced a novelty in the world of games through the concept of "play-to-earn".

Axie Infinity has 2 own tokens - Axie Infinity Shards (AXS) and Smooth Love Potion (SLP). With these two tokens, users can purchase various add-ons and enhance their Axie characters, and holders can use tokens as a means to vote for changes within the game.

4. Enjin

Enjin is software that gives developers the ability to create and manage virtual items and assets on the Ethereum blockchain.

It is actually a holistic infrastructure that allows users to create digital assets that can be integrated on the Ethereum blockchain and that can then be used in a variety of applications or games.

Enjin has several products Enjin Wallet, Enjin Wallet, EnjinX and Efinity. The whole ecosystem also has its own token - Enjin coin (ENJ). With the help of Enjin coin, users can mint, manage and store virtual assets that can then be used in various video games.

It was recently announced that Enjin’s company is launching a $100 million fund to fund research and development of metaverse projects to make its own network even more decentralized.

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