What is Metaverse & Web3 & How it Will Affect Crypto?
If you haven’t been living under a rock, you’ve probably heard or seen the term “Metaverse” and “Web 3.0” explode into the media and get tossed around in every mainstream news article, every Twitter post and every meme, the last few months. But what is it all about? More importantly, what does all of it have to do with cryptocurrency?
In this article, we will explain what is Metaverse, what is Web 3.0, and what role does cryptocurrency and blockchain technology play in all of this?
What is Metaverse?
Even though it blew up only a few months ago, the term “Metaverse” was actually first introduced three decades ago by American Author Neal Stephenson in his 1992 novel, Snow Crash. In this novel, Neal paints a picture of a world where civilization has moved to a virtual 3D reality where people can meet, socialize, and interact just like in the physical world. Sounds familiar?
When Mark Zuckerberg announced that Facebook, which is now Meta, is working on Metaverse, he described something very similar. If you haven’t already, you should definitely watch it. From what he described and what we know so far, it seems as though the Metaverse will blur, if not erase, the lines between reality and the internet. To some, it may sound like a bad thing, but it really isn’t.
This current version of the Metaverse will be a combination of virtual reality and augmented reality, where a digital avatar of you, created by you in the digital universe known as the Metaverse, can work, play, socialize and do just about anything you can in the real world.
Remember the game Second Life? Or Minecraft? Metaverse is basically that, but instead of it being on a screen, in 2D, it will be in front of your eyes, in 3D, totally immersive and interactive.
And it’s not just limited to games. Instead of having boring zoom calls for work, you can be present in your office, with your colleagues, working together in a virtual environment. There’s so much more you can do with it. The opportunities are endless.
Even though it only became a sensation after Mark Zuckerburg’s announcement, the Metaverse has actually been around for a while now. Other big companies before Facebook, now Meta (will take some time to get used to it), have already been working on it.
Companies like Epic Games, developers of Fortnite, and Roblox are actually the first ones showing us a glimpse of the Metaverse by hosting virtual concerts by Ariana Grande and Travis Scott.
And contrary to what many people believe, Metaverse is not owned by Facebook, now Meta, Mark Zuckerburg, or Microsoft. That’s like saying Google owns every road in the world because they own Google Maps. Metaverse is completely built upon decentralized technologies and systems like Blockchain and Web 3.0.
Speaking of which…
What is Web 3.0?
There is no doubt that the internet has massively changed our world in very little time. We’ve seen innovation and technological growth at a pace that we didn’t imagine when the internet first came out. But that’s not to say the internet is perfect.
When the internet first came out, it was Web 1.0 – extremely slow and with no pictures, only text. Compared to Web 2.0, which we use now, Web 1.0 seems like the stone age. But Web 2.0 comes with its own set of flaws, mainly the centralization of information and power.
To give you an example – where would you go if you wanna post a video? Probably on Youtube. Or maybe Instagram. The point is that both platforms are owned by institutions that have their own set of rules and guidelines that users have to follow, centralizing the power. And as we have seen in the argument of fiat currency, the centralization of power causes mistrust and the risk of corruption.
We have seen these issues come up again and again. Sometimes it’s someone’s Twitter account that allegedly gets banned for unfair reasons. Sometimes, it’s Facebook allegedly stealing user data. These problems arise because we are dependent on an intermediary to function all of this.
Web 3.0 aims to take this power back from all these big companies and players and give them back to the people just as we first expected the internet to do. In simple words, in web 2.0, the data and distribution of data are centralized. But in web 3.0, data will be decentralized, allowing people to interact with public and personal data and information in ways that we didn’t imagine before.
This decentralization of power is backed by distributed ledger technologies, most prominently blockchain technology, along with AI, machine learning, 5G and the Internet of Things (IoT).
We are already seeing Web 3.0 tokens performing better than Bitcoin and other altcoins, with a 244% increase in value, just in the last year, which is huge compared to Bitcoin’s 37% increase.
Some of these web 3.0 tokens include Livepeer, which provides a marketplace for streaming applications and video infrastructure providers, while Filecoin provides decentralized data management and storage networks.
Now that you know what Web 3.0 and Metaverse are, you can imagine how they intertwine with each other. Web 3.0 is one of the building blocks of the future of Metaverse that we’re getting into.
But how will it affect cryptocurrency, or what role will cryptocurrency play in all of this?
Crypto in Metaverse
The metaverse is like an alternate world to our reality, and like every other world, transactions and currencies will be an integral part of it. We will need a system that is fast, safe, secure, unhackable and most importantly, decentralized.
Enter cryptocurrency.
If we’re to live in a virtual ecosystem, we will need a different economic system than what we have in the real world. One that aligns with the decentralized structure of the Metaverse and allows faster, instantaneous transactions.
So, it’s pretty apparent that the demand and price of crypto will rise tremendously in the coming years. But what’s more important is that crypto will be at the center of the development and adoption of Web 3.0 and Metaverse.
NFTs in Metaverse
NFTs are already playing a big role in the Metaverse? How? Look at games like Fortnite. It’s basically a Metaverse without the 3D immersive experience (yet), with the skins and cool dance moves you buy being the NFTs.
Epic Games, the developers of Fortnite, make billions of dollars worth of money every year selling skins. And that is just within a game. Only one game. Now, imagine living in a completely virtual world. How big of a role will NFTs play in it? Everything from your jacket, shoes, hats, wall paintings will be NFTs.
But a key difference between Fortnite skins and NFTs that is worth mentioning is that you can’t take the same Fortnite skin to a different world, like in Minecraft, for example. So, the skin only has value within the game.
But as we talked about before, Web 3.0 will change that. In the Metaverse, you can wear the same jacket to a virtual concert, your office and probably in different games.
Challenges of Crypto in Metaverse
The road to Web 3.0 and Metaverse is exciting but not free of obstacles. Other than all the good things and endless opportunities we talked about these technologies, there are some real challenges involved with adopting cryptocurrency in the Metaverse.
Two of the major issues people are pointing out regarding the use of crypto in Metaverse – (a) Price Volatility, (b) High Energy-Consumption and Environmental Concerns.
It’s true that crypto mining consumes a lot of energy and electricity and that there is a risk to the environment associated with that. However, many smart people and organizations are working towards finding a solution to that problem. There have even been developments like how Ethereum is moving towards a greener and less energy-consuming method for mining. Overall, people are optimistic that we will find a solution simply because we have to.
As for the challenge of price volatility, which is also a real concern, we have seen a steep rise in stable coins and CBDCs in the last couple of years. If given enough time and the right circumstances, we are sure we can counter this problem too because we are already doing it.
Most importantly, people need to realize that cryptocurrency, Web 3.0 and the Metaverse are still at their very early stages of development. We can’t start to imagine what all of this will look like thirty years from now.
When the internet first came out, it was all text, painfully slow, difficult to search anything. If you go back and tell the people of that time that in the future, we can broadcast ourselves live from a small device that we keep in our pockets, they would probably laugh at you and think you’re crazy.
The point is, it wasn’t perfect then, it isn’t perfect now, and it will never be perfect. It’s the constant evolution and development of what we have today into something better. So, what we need more than anything right now is patience.
By the way, living in a virtual world and using cryptocurrencies doesn’t mean that you won’t have to pay taxes on crypto. Bitcoin.Tax can help you automate the process of identifying and calculating your taxes before filing them to the IRS.