The economics of metaverses and cryptocurrencies: do they have a future?

Today, when there is such an active development of digital assets and virtual worlds, more and more people are interested in cryptocurrencies, smart contracts, NFTs, which are becoming increasingly popular metaverses. What do they bring to humanity? Let's talk about this in our review.

It all started with blockchain and Bitcoin

The first steps of blockchain and cryptocurrencies deserve a separate historical review. But we will say only in a few words: this industry has been actively progressing since the distant 2008, when the world first learned the mysterious words “blockchain” and “bitcoin”. Soon, another concept was added to them: “Ethereum” - this digital unit has the advantage that it allows smart contracts to be carried out between two users without involving a third party. Ethereum gave a powerful impetus to the development of the global cryptocurrency market, where ICOs began to be produced (a kind of variant of IPO), over time the ERC20 standard was formed, and in 2018 ERC721 was added.

What is NFT?

Any NFT is unique, as is the entire set of data about its author, transactions with this property, recorded in a sequence of blocks - the blockchain. A characteristic property of NFT as a blockchain is that it is not tied to any one server (or even several servers), and its acquirer automatically declares his own right to the digital object during the transaction. The victorious march of such tokens across the planet was celebrated in 2021.

According to the JP Morgan analytical service, approximately two billion dollars worth of digital tokens are sold and bought every month, and the total value of the NFT universe has already reached seven billion.

What can be “encrypted” in an NFT? In addition to masterpieces of fine and musical art, this can be a literary work, collectible or sports cards, which, for example, are in great demand today among football fans. Often, an NFT contains a link to the digital property object symbolized by the token. At the same time, as we understand, this very object is often stored on some hosting, and this is fundamentally unsafe, since such a record can be deleted, which will lead to the depreciation of the corresponding NFT. Therefore, in order to securely store access to digital property and protect it from disappearance, new effective measures are needed that differ from the usual methods of storing information.

How do metaverses generate income?

Currently, in addition to mining, public interest in the space more or less conventionally called web 3.0 is rapidly growing. It made it possible to implement Play to Earn game universes (while playing, earn money). The peculiarity of these games is that they are combined with the real economy, and players earn more and more without leaving the gaming virtual space. In particular, you have the opportunity to buy in such a game a certain resource that is relevant to it (animals, bricks, cartridges and much more), and over time sell them to another user for NFT, making money on price dynamics. You can even open a business renting plots of land, cars, mounts and carts, or insuring players against the loss of their funds in the game - the choice is very large.

The Metaverse is also valuable because it is not just a game. This is a completely new approach to communication, leisure, choosing your place in society and self-realization. It’s not for nothing that these universes grow like a supernova explosion.

What are the future prospects?

It makes sense to call what is happening before our eyes “globalization 2.0,” when real and virtual economies are actively merging. And this process will very quickly transform our usual life beyond recognition. Musical parties, pop star concerts and glamorous fashion shows have now moved to new spaces, where the number of spectators is in the hundreds of millions. Businesses like to open virtual offices, which receive many more visitors than physical business centers.

Creative people and designers are learning to work in virtual laboratories with growing pleasure, in which it is very convenient to make a variety of projects, models, edit videos, write music, and create games. Is it worth talking once again about new opportunities for communication, finding friends and like-minded people in the growing virtual environment of metaverses around us? And it is certainly no surprise that man-made worlds are rapidly becoming the hottest agenda for investors.