What is the metaverse? Why are global brands entering the space, and what are the advantages of participating in this relatively new but rapidly developing area? Zaf Chow, Director of Digital Strategy and Partnerships at Animoca Brands, provided an overview of the metaverse at a Chamber webinar on 10 February.
To understand the metaverse, you first need to understand NFTs, or non-fungible tokens, she explained. NFTs are units of data stored using blockchain, which can be bought and traded. Like cryptocurrencies, they are held in digital wallets, but unlike cryptocurrency, each NFT unit does not have the same value.
In recent months, NFTs and the metaverse have been garnering mainstream attention, particularly in the art, gaming and entertainment worlds. Facebook has rebranded as Meta, artist Damien Hirst has issued his own NFT collection, while sales of NFTs by companies including Bored Ape and CryptoPunk have attracted headlines.
“NFT collectables are being traded at high volumes and are selling for hundreds of millions of U.S. dollars,” Chow said.
Why are these sums so high, and what is the useability of NFTs? One driver is that gaming is shifting to blockchain, which is changing the user experience.
“When you play traditional games, you pay money to buy ‘skins’ for your character, but you don’t own them. So if the games company shuts your account down, you will lose all your assets.”
It is a similar situation with content on Web 2.0-era social media platforms like Facebook and Instagram, where people upload their photos, videos and other content. “It is the social media platforms that benefit most from Web 2.0, as they can analyse user behaviour and make money from that.”
But if a platform decides to shut down your account – or if the platform itself closes – you will lose all of your content. Blockchain is now facilitating the move from Web 2.0 to 3.0, giving users more control and enabling them to own their online assets.
As blockchain is transparent, no one can terminate your account, or change your ownership. Gamers can also play-to-earn in some of the platforms.
“A key feature of the metaverse is that it has cross-application interoperability, so one asset can be used in multiple platforms,” Chow explained. “This means that your avatar in one metaverse can go into other metaverses.”
Animoca has invested in around 20 different metaverses, which all have different attractions. In a metaverse specialising in music, for example, users can virtually attend a concert or festival. Chow believes that a lot more developments are on the horizon.
“To a lot of people, the virtual world experience is still just playing games inside the metaverse. But in the future it will become more immersive,” she said. “For example, if you are watching a concert, it is not just like watching on a screen. You are more immersed, and your avatar can walk around.”
In the near future, VR and AR technology will be able to capture movement using a mobile phone camera, so you can dance virtually with your friends. “I think when we reach this stage, it will change people’s perception of the metaverse. Having a second life inside the metaverse is not as far off as you might think.”
Chow noted that Web 2.0 has already changed behaviour, and enabled people to build connections around the world. The metaverse will develop this further through more immersive experiences.
In terms of major brands entering the metaverse, sports and entertainment companies are among those taking the first steps. This makes sense, Chow explained, as these sectors already have a large fanbase of users who want to connect with their idols and other fans.
So how can potential investors figure out the value of the different metaverses? Community and utility are really important: does the platform have a genuine community engaging with one another, and what users can actually do with their NFT, she said. “Web 3.0 is all about communication with your users.”