Different Ways Metaverse Might Influence Cryptocurrencies

Different Ways Metaverse Might Influence Cryptocurrencies

Cryptocurrency
July 13, 2023 by Diana Ambolis
2061
Cryptocurrency and the metaverse, which consist of virtual worlds and virtual money to use in them, seem to be related ideas. Both are essential components of the third generation of the internet, known as “web3,” which follows the world wide web and social media. With virtual and augmented reality (VR and AR), which combine to
Certain Ways Metaverse Might Influence Cryptocurrencies

Cryptocurrency and the metaverse, which consist of virtual worlds and virtual money to use in them, seem to be related ideas. Both are essential components of the third generation of the internet, known as “web3,” which follows the world wide web and social media. With virtual and augmented reality (VR and AR), which combine to create 3D environments, this next iteration of the internet is intended to be more engaging and experiential. As we’ve seen with Bitcoin, which has been used in both the natural world and the virtual world, the metaverse and cryptocurrencies are independent ideas that can coexist peacefully without one another. Additionally, many metaverse concepts, like Mark Zuckerberg’s, only tangentially reference cryptocurrency and blockchain.

Even though no one knows what the metaverse will look like in the end, it’s becoming clear that it could significantly impact how cryptocurrencies develop and their effects on society. Shopping soon became a prominent aspect of Web1 and Web2, and since people love to spend money, there is no reason Web3 will be any different! But the two concepts may work well together.

The real value in the virtual world

One of the best things about the virtual world is that there is much less friction than in the real world. Passports, expensive and complicated transportation infrastructure, and luggage packing are not required. When we want to go somewhere, all we have to do is click a link or press a button, and we—or, at the very least, our avatar—are there.

Bitcoin shares the same characteristics. Traditional money transactions require a massive infrastructure of banks and regulators to serve as custodians, middlemen, and clearinghouses (traditional money is referred to as “fiat” by crypto enthusiasts because its value is allegedly reliant on government decree). On the other hand, bitcoin transactions typically merely require software that runs on regular PCs.

Of course, we shouldn’t ignore the reality that this software uses a lot of energy to process the cryptography necessary to make currencies function. However, new technologies are continually being created, and procedures are being improved to use fewer resources. For instance, newer proof-of-stake cryptocurrencies are said to be much less harmful to the environment than earlier proof-of-work cryptocurrencies like Bitcoin.

As the metaverse grows in popularity and more and more of our lives are spent online, we will want frictionless methods of payment for virtual goods and services (working from home, playing games with pals, or even enjoying holidays in the metaverse). We might wish to invest money in virtual real estate if we want to own our digital plot of land where we can host guests or launch a business.

The metaverse could add $1.5 trillion to the value of the global economy by 2030. And a significant portion of that value might be realized in cryptocurrencies. As more people get used to using cryptocurrencies as a form of payment, it could mean that they are becoming more common.

Governments and lawmakers will likely have to do more to manage and control cryptocurrencies if this happens. It’s still somewhat of a “wild west” environment, even though things have recently grown more organized as more nations start to build legislative frameworks around digital money. Few safeguards exist for customers or enterprises that depend on currencies like Bitcoin, Litecoin, or Dogecoin to conduct business. This implies that customers have few options should they become victims of one of the many available frauds.

Governments may decide to regulate cryptocurrencies based on how energy-efficient or polluting they are as they gain popularity. For example, networks that use proof-of-work algorithms that are less efficient may have to pay higher transaction fees. On the other hand, networks that use proof-of-stake algorithms that work better may have to pay less in transaction taxes.

Also Read: Identifying The Essential Components Of Metaverse

The adoption process

Users of cryptocurrencies will become more at ease with their acquisition, handling, and storage methods as they replace traditional currencies as the primary means of exchange for people trading and purchasing in the metaverse. This means that it will be used more often outside the metaverse, like when sending money to friends and family, especially if the money has to cross international borders, which can be expensive (if possible).

Because of this, banks and other well-known financial institutions are likely to try even more challenges to support cryptocurrency or economic models built on blockchains. They will have to streamline their infrastructure if they want to compete in a world of global, middleman-free financial systems. Soon, businesses will probably want to keep the extra layer of security and control that banks and central banks give to transactional networks. While others, like the head of the IMF, have said that cryptocurrencies could end banking as we know it in the long run. But it seems likely to me that those who are adaptable and forward-thinking with their own rules when it comes to bitcoin adoption will be the ones who survive in this new world of digital currencies and peer-to-peer finance. Paypal and Mastercard are two examples of payment systems that are now actively supporting cryptocurrencies, especially Bitcoin. Both of them have said that they are doing this because it is clear that cryptocurrencies will be a big part of payments in the future.

What follows?

It is undoubtedly true that no one, not even tech titans like Mark Zuckerberg, is certain of the precise shape that the metaverse will take once (and if) it has been fully incorporated into our lives. However, based on experience, we can be sure that firms and consumers will use it to generate money.

Cryptocurrencies are a natural choice for creating the virtual world’s money. As this new technology is still in its early stages, our changing lifestyles will likely affect how it develops. Whether for good or bad, we are opting to spend more time online in general, and that trend is only sure to quicken as the online environment gets more immersive, amusing, and engaging. Additionally, this implies that the influence of cryptocurrencies on our lives will increase. As a result, it will probably become more controlled, environmentally friendly, and practical.