Innovation and disruption have historically been welcomed with pessimism. A paradigm shift creates a sense of anxiety and flux in the minds of people not directly driving this shift. From warnings against possible exploitation to scrutiny and environmental impact, the metaverse, cryptocurrency, and NFTs have been in the spotlight over the last year.
NFTs Have been getting mixed reactions and most people still don’t understand them.
No matter how pervasive the pessimism is, it is not as persistent as evolution. The Metaverse and NFT domains today reflect disruptive changes in human behaviour. Digital-first lifestyle choices are quickly replacing traditional consumer behaviour. As of now, 2.5 billion people across the globe access banking services digitally. This number will reach 4.2 billion by 2026, 53% of the global population. At this rate, future generations will never step into a traditional bank as we knew it.
Such widespread digital transformation only points to one thing: people will continue spending more time on digital platforms and eventually become digital natives.
According to Gartner, 25% of the world’s population will spend at least one hour a day on metaverse platforms across all facets of life, be it work, shopping, learning, socialising, leisure or entertainment, by 2026. The metaverse will enable people to transcend multiple destinations across digital worlds enabled by interoperable assets, digital currencies and non-fungible tokens (NFTs).
Necessity Is The Mother Of Invention
There was one crucial thing infantry troops couldn’t do without during WWI: coffee. But coffee was difficult to process and brew on the battlefield. This need sparked a race to make coffee easier to carry, brew, and consume, leading us to instant coffee popular across the world today.
Coffee ad in the New York Tribune on June 22, 1919. Credit: Library of Congress, Serial and Government Publications Division.
Expanding digital adoption paradigms have created a shift in consumer behaviour today, making virtual experiences a necessity. Similar to the disruptions caused by Web 2.0, no industry will go unaffected by the evolution of Web 3.0. Along with having a massive impact on every business that consumers interact with, the metaverse will change how we live and thrive. Through simple and intuitive immersive experiences, the metaverse will improve productivity, engagement, collaboration, and connections.
The extent and rate of the transformation are difficult to predict, but it’s becoming increasingly clear that as this technology grows, so do its benefits. For example, as blockchain technology seeps into business and finance, we’re witnessing an acceleration of financial inclusion for individuals who’ve historically been excluded from taking part in formal financial systems.
Evolution Is Not An Overnight Phenomenon
It is natural to be sceptical of new things, especially if they disrupt our worldview and lifestyle. We’ve seen this pattern of behaviour repeat through history.
It took the Wright brothers years to get militaries interested in aviation industry at first.
It’s hard to imagine a world without air travel today, a wishful dream in the 1900s. It took the aviation industry over 120 years to develop, engineer and fine-tune the technology and regulatory practices to attain current safety standards.
When Web 2.0 champions like Netflix, Amazon, and Facebook first went to market, they faced public scepticism and criticism. Barron’s May 1999 release headlined amazon.bomb called Bezos’ idea ‘silly’ and predicted that Amazon would fail. We all know how that turned out!
Jeff Bezos tweeted about Barron’s 1999 release 20 years later.
Web 3.0 is headed the same way, only bigger, bolder, faster, and more profound. Like how the internet democratised access to information, the blockchain enables everyone to own and trade authentic digital assets of value. The emerging popularity of NFTs is a clear reflection of shifting consumer behaviours and growing adoption paradigms.
Problems Have Solutions
As with any invention, the metaverse, cryptocurrency and NFTs are liable to abuse. With different industries pioneering more applications across these new asset classes, it’s essential to consider how we securely connect these virtual components to the physical world.
In a recent 40-page report, the U.S. Department of the Treasury issued a warning against non-fungible tokens (NFT) becoming a tool for money laundering in the high-value art market.
Money laundering is a historical problem in the traditional art world. But a new report by Chainalysis reveals that crypto money laundering activities are easy to target as they are incredibly concentrated. Even though billions of dollars worth of cryptocurrency is shuffled amongst many illicit addresses every year, most of it is funnelled into a tiny group of services specially built for money laundering. These are easy to recognise if you look at their transaction histories closely. Cracking down on them can help law enforcement fight back.
The problem of wash trading has been apparent in the NFT domain since Bitwise Asset Management revealed that 95% of volumes reported by BitcoinExchanges on data aggregator CoinMarketCap were manipulated. But this problem may not be around for long.
The inherent transparency of blockchain technology provides a way to track NFT wash trading by analysing sales of assets to self-financed addresses. Although this practice is not yet regulated in the NFT domain, it is strictly prohibited in conventional securities and futures trading. Regulators can easily apply this existing anti-fraud regulation framework to new NFT markets.
Since the beginning, crypto operations have faced backlash for generating a massive carbon footprint. As of July 2021, a single bitcoin transaction consumed over 1700 kilowatt-hours. That’s the same amount of power an average U.S. household consumes in 59 days.
It may sound contradictory at first, but accelerating the adoption of blockchain technology could have a positive impact on the environment over the long term. Companies can use blockchain technology to automate many of their complex payment systems, effectively reducing commuting for a large number of employees and producing fewer transport-related emissions.
It’s the same for other metaverse experiences that transport us to another place virtually instead of physically. Using NFTs and blockchain technology in domains such as fashion and travel will also help create consumer experiences that exhaust only a fraction of the energy their physical-world equivalent requires.
Acceleration Is The Way Forward
Experiences and technology will evolve rapidly to bring the metaverse to life in real-time. There is still much work to be done to make the technology safer and more reliable. To understand how this will happen, look at the evolution of the automobile industry. From using wooden blocks as brakes to designing precise Electronic Stability Controls for cars, the automobile industry has come a long way since the 1800s. The inherent utility offered by cars made them not only desirable but also a necessity, sparking a wave of innovation we’re still riding today.
The first version of the car did not have 4 wheels like we’re used to today.
The same is true for the metaverse, crypto and NFTs. As more businesses and consumers continue to spend time, and invest money, and contribute effort into the domain, new use cases are being discovered along with new challenges to solve. But that’s a good thing. Innovation and widespread adoption are helping draw attention to the need for safety, sustainability and equity in the emerging virtual worlds.
Moving forward, businesses will need to embrace innovation and adopt modern constructs for brand engagement to serve the growing digital-first population worldwide. That’s why we’re here. Metamaxx helps businesses demystify the hype and design brand-aligned metaverse solutions to cultivate an engaged and active community and brand presence in the new world.
