Two of 2022’s hottest topics: Non-Fungible Tokens and the Metaverse. They hold massive potential for most industries. And while these two concepts have created much buzz in the media, they have created nearly as much criticism and confusion.
So, like most of us are asking now: what are they? Let’s enjoy this adventure into the weird new world of the metaverse and its NFTs. We will provide you with a rundown of how these virtual items are created and utilized in the real world.
Before we can delve deeply into the technical details of these two concepts, let’s first grasp the fundamentals.
The metaverse is a digital 3-D world that is entirely conceptual. People enter this world through virtual reality headsets. In this world, you’re represented by a fully customizable avatar. You can also have a home that you can fill with things you like, and there are potentially an infinite number of places you can visit. The metaverse enables you to interact with other users, play games, and work if you wish; you can virtually replicate everything you do in your real-world life.
The primary benefit of the metaverse is that you do not have to travel nor use any physical resource of the real world. The metaverse interconnects all users with all (relevant) content. Virtual reality enables users or players to interact with objects without exerting any effort. They easily switch between activities, chats, locations, and various interactions through simple gestures—no app or web screening applies here.
NFTs are digital tokens, like regular cryptocurrencies, but are 100% unique. No two NFTs are the same. Many think of them as digital certificates of ownership maintained by the blockchain.
Creators “mint” them through producing new digital files, most often images, gifs, or videos. Minting means developing a new digital, exclusive certificate of ownership through a unique coin.
This is most often found on the Ethereum network using the ERC-721 protocol, and the certificate is initially sold or granted to the NFT’s first owner, from whom it is further transferred.
Investors regard NFTs as advantageous because of the notoriously easy-to-steal and copyable nature of digital art and similar digital assets. NFTs often fail to prevent would-be purchasers from copy and pasting digital assets. However, they provide a neutral and unbiased solution for certifying ownership. If NFTs were to be integrated into the world of copyright law, they would serve as the primary evidence supporting a claim of copyright infringement.
The current method of purchasing, using, and transferring NFTs occurs through websites and web browsers. Since the metaverse is primarily a VR-based ecosystem, most feel confused at first glance with how it relates to NFTs. Even though both concepts remain new, leading tech companies already combine the metaverse and NFTs in creative yet effective ways.
Apps like VRChat established common rooms for VR-based communication and already boast solid followings. It’s not difficult then to imagine such areas becoming the chosen trading ground for NFTs. Potential sellers could provide actively market their products and garner reviews in a VR setting, or even mint new NFTs directly in the same VR landscape.
Combining VR marketplaces with NFTs appeals to several leading brands in multiple industries, particularly retail. Nike, for example, is thought of as a real-world physical brand, yet it’s already swooshing into the metaverse with its own virtual world, “Nikeland.” Further, it recently acquired the RTFKT studio, known for minting product NFTs. In time we suspect the two will meet for the first-mover advantage in VR-sold NFTs.
Nikeland on Roblox
Today, sports leads the NFT world and likely intends to dominate the metaverse as well, for it represents the next level of immersion. USA-based franchises recently established NFT marketplaces for digital memorabilia trading, such as digital cards. NBA’s Top Shot, NFLALLDAY, and UFCStrike all hold partnerships with Dapper Labs.
Virtual Art Galleries
VR represents the next stage of appreciating art outside of a physical gallery. It enables users to see art pieces in detail from multiple angles. NFTs differ from physical art pieces and their marketplaces since prices tend to be set and known, not negotiated. In addition, many NFT purchases prefer fractional ownership. This streamlines and eases the marketing process exponentially.
Crypotovoxels is the Ethereum-based, metaverse marketplace for many museums’ NFT artworks. The Art Newspaper says that Cryptovoxels’ “players can buy land and build stores and art galleries.” This site has attracted, among others, the Francisco Carolinum Linz from Austria, and the San Francisco Museum of Modern Art.
Image courtesy of Cryptovoxels
Whole New Worlds
Shrewd investors in real-world real estate often find themselves successful given the right markets, but the same principle applies to the metaverse. Homes in the metaverse are not bought and sold in the traditional sense, but they represent digital lands or territories sold in complete or parceled forms.
Let’s use an example: The Metaverse Decentraland is a virtual world where plots of land found within are sold as NFTs, and everything is represented as a three-dimensional space. Decentraland uses its own cryptocurrency, and it will be available to VR users in late 2022.
Courtesy of Decentraland Marketplace
Make no mistake, both concepts are new ground. Only a few implementations stand complete. Yet if we understand the rapid rise and success of NFTs thus far, this spells opportunity instead of caution. The requirements here remain twofold: resources and strategic thinking.
Most companies fail to have the necessary capacity for VR development and lack the necessary human capital. Therefore, aspiring entrants into this space should consider external, specialist firms. This is frankly the only good solution for companies with few internal developers, possibly lacking VR-specific software such as such as Unity and Unreal, in addition to motion tracking.
Further, there is a third requirement for blockchain and NFT minting capability. Again, two options: develop this internally or use outside help. Developing internally means a steep learning curve, though once the basics are understood and a solid team is formed, truly creative work can begin.
We hope you now understand these two concepts well, and clearly see where the market direction lies. Investors need companies to lead and define the best-in-class NFT opportunities: They need benchmarks and mass adoption. For companies, they need courage, innovation, and strategy, so to claim their spots in new, digital territories.
Disclaimer: The author of this text, Jean Chalopin, is a global business leader with a background encompassing banking, biotech, and entertainment. Mr. Chalopin is Chairman of Deltec International Group, www.deltecbank.com.
The co-author of this text, Robin Trehan, has a bachelor’s degree in economics, a master’s in international business and finance, and an MBA in electronic business. Mr. Trehan is a Senior VP at Deltec International Group, www.deltecbank.com.
The views, thoughts, and opinions expressed in this text are solely the views of the authors, and do not necessarily reflect those of Deltec International Group, its subsidiaries, and/or its employees. This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade.
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