Metaverse is a buzzword considered the next big thing. The concept gained more traction when Mark Zuckerberg changed the name of Facebook to Meta in 2021, envisioning and promising its users augmented reality and three-dimensional (3D) virtual worlds. This is one form of the metaverse platform. The other group is that of Non-Fungible Tokens (NFTs) and cryptocurrencies that became widely popular with the arrival of Bitcoin. The metaverse' virtual worlds and 3Ds decentralized system is powered by the blockchain technology. In the metaverse, users can create characters/avatars, engage in social interaction and perform trade with virtual commodities. Blockchain technology is thus an indispensable component in the metaverse, just as the other elements like augmented and virtual reality.
This blog aims to dissect the relationship between blockchain technology and metaverse and explore how blockchain powers the metaverse economy.
What is Metaverse?
The Metaverse can be best called as an imaginary realm, where people across the globe can access and participate. It is a digital setting significantly enhanced with Augmented Reality (AR) and Virtual Reality (VR). It is an open, persistent and large virtual environment where users can confidently interact, communicate and transact with each other.
Meta meaning 'beyond' and 'verse' meaning universe, metaverse is the exploration of the world beyond the physical, natural and conventional. It is characterised by decentralized systems of virtual worlds and three-dimensional places that were created using blockchain technology.
Understanding Blockchain Technology
Blockchain technology has come to play a vital role across industries like healthcare, real estate, gaming, supply chain management, and its application is significantly seen within the finance sector. This technology saw a drastic boom with the launch of Bitcoin cryptocurrency, wherefrom the concept of a decentralized, dynamic, and transparent transactions came to be prominently talked about, and its impact snowballed across industries.
The blockchain technology, as known in the financial realm, is defined as a digital public ledger which is held on numerous systems/computers at the same time. It is a digital ledger shared across the networks nodes of a system. Although its application is not limited to cryptocurrency alone, they are best known for the secure and decentralized records of transaction. In a blockchain, data are stored in blocks and these blocks are interlinked in chain. The data in the blockchain cannot be modified or deleted without consensus from the network.
Blockchain in the Metaverse Economy: How does it power the economy of the imaginary realm
The metaverse is a convergence of a digital reality with a virtually enhanced physical reality, with an independent virtual economy powered by Non-Fungible Tokens (NFTs) and digital currencies. This imaginary realm is free from control and authority of any vendor or any entity having monopoly. It is an independent and largely democratized platform. Blockchain is a vital tool that enables the decentralization, transparency and autonomy features. The technology enables ownership of the digital assets in the digital realm. The NFTs owned in the virtual world is also a legit asset in the real world.
Let us identify the fundamental powering agents of blockchain in the metaverse.
Decentralization: The successful operation of a metaverse occurs when all the users share a uniform view of the virtual world. Similarly, the economy in metaverse must be uniformly accessible and viewable by the users. This is made possible by the blockchain decentralized ecosystem, which enables thousand of independent nodes to synchronize.
Smart Contracts: In the metaverse economic system, the smart contracts that users leverage to perform their financial, social, and legal activities are powered by blockchain. Users are given the autonomy to manage and control their finance efficiently without the interference of a third party. This autonomy enables easy, quick and direct transaction between parties using smart contract.
Cryptocurrency: In the virtually enhanced world, cryptocurrency acts as the money replacing fiat currency. This medium is applicable across metaverse-wide settlements. One fine example is the use of MANA - a virtual currency in the metaverse. This currency is largely used in the metaverse gaming called Decentraland. Players can use this currency/token in dealing with virtual real estate.
Security: This is a major component of the blockchain that powers metaverse economy efficiently. With blockchain, no hackers have the ability to hack or breach data to commit fraud in the metaverse. In the metaverse, users employ private and public keys to manage their assets and information, and user have complete authority over them.
Technologies behind Blockchain for Metaverse
3D Reconstructions: This technology enables the capturing of real objects in their totality - shapes, sizes, appearance and bringing them to life in the metaverse.
Cryptocurrency: Metaverse only supports cryptocurrency, and it is a crucial technology that powers transactions in the metaverse economy.
IoT (Internet of Things): It is the Internet of Things (IoT) that enables the seamless accessibility and interaction between the real world and virtual space. It is a foundational pillar of the metaverse infrastructure.
Artificial Intelligence: Robots and chatbot are a reality because of artificial intelligence, enabling the real-world computers with intelligence. The avatars in the metaverse are created by applying AI processing power. AI powers the digital humans to be highly realistic.
Augmented Reality and Virtual Reality: AR and VR are the key engines in the metaverse, enabling the creation of immersive 3D experience and transformation of the metaverse into a compelling virtual experience. AR enables the expansion of the metaverse reach, making it possible for users to experience virtual things like in real world through physical simulations. Users are allowed the experience of hearing, feeling and interacting within the metaverse.
Blockchain is critical for the metaverse economy and the virtual universe in general. Blockchain technology enables the regulation of the areas of decentralized metaverse economic aspects like NFTs. In the Metaverse, Blockchain enables a secure and transparent payment mechanism for all economic activities using cryptocurrency. This technology also enables efficient maintenance of the records of the transactions carried out in the virtual world. These records are maintained safely across computers and are interlinked. Blockchain is, thus, an indispensable technology that powers the metaverse economy and without its decentralized feature, a metaverse would be impossible.
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