There has been lots of talk and hype in the past 1-2 years about the concepts of "digital worlds” and “Metaverse”. Most notably Facebook changing its name to Meta in order to signal to the world their focus on the concept of the “Metaverse”. Besides Facebook, in the cryptocurrency and web 3.0 part of the internet, they have also spread the idea of a “Digital World”.
What’s the “Metaverse” / “Digital World”?
The physical world, but now digital. Decades ago kids used to play outside in the parks, now they play in Minecraft or ROBLOX “parks”. School and work used to be in person all the time. Well now with the recent COVID-19 pandemic, many jobs have become permanently remote. As with education, many students have gotten used to Zoom university and online education. As you can see in the previous examples, over time we have spent more and more time online on the digital world, instead of the physical world. Well the “Metaverse” is the idea of having a digital life. Replicate all the activities in the physical to the digital world.
Where is this “Digital World”?
As for my opinion, I think it will be in the cryptocurrency space. Reason why is because in the cryptocurrency space there is an emphasis on the decentralization of power. Say you have a digital property. Would you rather be on the Ethereum blockchain or on Facebook’s servers. We have seen in the past with Google, Twitter, and Facebook, when they want to delete your channel or content , they will do so without any vote or warning. Whereas with the Ethereum blockchain you would need the collusion of thousands of computers/people all around the world to steal your digital property.
How will economics work in the digital world?
Well in the Ethereum ecosystem there are already financial primitives that can create a digital economy. There is NFT’s (non fungible tokens) they can represent unique objects. They have become famous for representing digital art, but they can also act as digital property. Besides NFT’s there is DeFi (decentralized finance). In DeFi you have lending, swapping, and other services with tokens (shares). And because Ethereum has a thing called “smart contracts” (you can program automatic contracts),any transaction or contract in the real world can be duplicated to work in the digital world.
The integration of the physical world and the digital world.
Ok so we can conclude there indeed can be a digital world that lies on the Ethereum blockchain. But what is interesting is how the physical world integrates with Ethereum. In the physical world economic activity and how it is measured is usually tied to countries. As in GDP of the U.S or other countries. With blockchain, would it be the different types of blockchains? Is there a GDP of Ethereum? are transfer of assets on Solana to Ethereum an export on Solana’s side?
Besides this, some blockchain protocols don’t have a home base. They don’t reside in one single country, which country claims economic value from those protocols. Is it the users of the residing country? What if a large amount of people flock towards blockchains, will countries enact embargos on using certain blockchains?
The cryptocurrency and blockchain space is still extremely nascent. Privacy, scalability, and wallet custodian products need to be achieved in order to go from a speculator playground into a platform billions of people use in order to live. However if the crazy crypto kids manage to create a true metaverse, how will this affect physical world economics? Will it change economic transfer between peoples around the world, creating a more meritocratic world? How will economic activity on the metaverse be accounted for in countries’ GDP, will it be?
Its the wild west in the cryptocurrency space, no suffocating regulation and tons of dreams, scams, and risk. No-one knows what the metaverse will look like or how big it will get. But that’s the exciting and fun part, you the reader or me the author have the potential to form the future.