A few months ago, world’s largest social media company took a very interesting leap of faith. Yes, Facebook inc, changed its name to ‘Meta’. This move validated the hypotheses of millions who were betting on Metaverse. A little known fact is that on the same day, all Metaverse based crypto tokens quadrupled in price. When a man who runs a platform that has 2 billion daily active users, believes in Metaverse, there must be something in store.
So today, we are going to unfold exactly that. What is Metaverse after all? Also, why does it hold so much value? Why are people spending millions of dollars to buy a piece of land that does not exist in real life? Well, to be honest, that is one question a lot of us have trouble with. Not any more though.
Is Metaverse a Brand New Concept?
For those of us who were born in the 90s, we must have grown up with a game called ‘second life‘. It was an online multimedia platform that allows people to create an avatar for themselves and have a second life in the virtual world.
Mankind has fiddled with the idea of a digital identity for a while now. Some movies that have explored this idea are Matrix (Early 2000s), Ready Player one (2018) etc.
But if there is already so much content around the notion of Metaverse, why is it being talked about so much right now?
Well, here is our three point hypotheses of sudden hype around Metaverse.
A. FOMO
FOMO or fear of missing out is real. No one wants to miss out on NFTs the way they missed out on Bitcoin. There is a general sense of greed that Metaverse may yield returns of Bitcoin’s magnitude. Therefore, a lot of Generation ‘Z’ audience is bullish on the overall concept of Metaverse.
economy. As a result, there was a lot of cash at people’s disposal. Apart from that, most of them were working from home so they found stocks and crypto markets as an avenue to vent out.
The kind of returns these people generated in the past two years have been phenomenal. All these investors now have a benchmark ROI in their mind which is driving this craze further. What they do not realize is the fact that market has never given similar kind of returns ever in the history. For some perspective, the crash of 2008 took about 6 years for the index to reach back to the same level.
B. Pandemic:
Pandemic and Covid induced lockdowns have further aggravated this situation. Digital has replaced everything we used to do physically. Work, attending weddings, festivals, all have been confined to a digital interface.
People believe that Coronavirus is not the last virus that has hit the world. Also, the fear of climate change is looming upon us.
As we go deeper into remote style of living, Metaverse will become more valuable each day. More and more people will flock on to these platforms to satisfy their craving for a social interaction.
Some people who believe in Metaverse envision the world confined in a pod someday where we don’t get to go out because of a catastrophic event. Hence making your digital life even more valuable than your physical existence.
C. NFTs:
FTs or non fungible tokens are one of the hottest narratives of the Blockchain space. NFTs enable the ‘proof of ownership’ for the holder. This proof is stored as immutable records on the Blockchain and hence verifiable in real time by anyone.
There was some form of Metaverse existing earlier as well but your virtual assets belonged to the creators of the environment and not you. This also meant that you had to repurchase all the assets if you moved to another Metaverse.
This was completely change with the advent of NFTs. You could now hold your assets in a platform agnostic wallet and carry your assets with you.
What is Metaverse?
“What is the metaverse?” — “It’s a virtual environment where you can be present with people in digital spaces. You can kind of think of this as an embodied internet that you’re inside of rather than just looking at.”
Mark Zuckerberg
At this point, Metaverse is an amorphous idea at best. There is no clear demarcation of what constitutes of Metaverse. But at a very high level, it is a combination of technologies such as AR (augmented reality), Virtual Reality (VR), Mixed Reality (MR) etc.
Here is an example much closer to home. With the onset of Pandemic we moved to working in a remote style of working. Our conference rooms turned into Zoom, Teams etc.
But that is still interacting with a screen at best. Now try to take it up a notch in your imagination and think of immersing yourself in that environment. This way, instead of just interacting with a screen, your avatar could be in it. You could interact with objects in that environment, move around etc.
In other words, you managed to create a digital twin for yourself. This twin could mimic you in a digital environment. Thus, breaking the barriers of emotional connect between you and your avatars.
What Makes Metaverse So Valuable?
Coming back to the question of the day. Why are people betting big time on Metaverse? Is buying a virtual land worth it? In this section we try to share a few instances which will highlight the value proposition of the virtual world:
A. Network Effects:
Last year, WhatsApp released a statement that they would be sharing the data generated by WhatsApp with Facebook for smarter targeted advertising. This statement created a lot of noise in India where people started tweeting about boycotting WhatsApp.
In fact, a lot of them downloaded alternative applications like Signal and Telegram to show their solidarity. This took off in such a manner that Signal saw highest downloads of its lifetime during that short period.
Fast forward to today, no one is using Signal any more. WhatsApp still implemented what they wanted to.
Why do you think this happened? Well, it is pretty straight forward. No one wants to hang out on a platform all alone. They want to be where there friends are. And that is what is driving the value up for Facebook and its acquired companies.
On a similar note, Metaverses are bound to capture a lot of value if people start hanging out on these platforms. If going out physically really becomes difficult, more and more people will start meeting virtually like this. Therefore, a Metaverse that is able to acquire maximum number of users would win this value race.
B. Bragging Rights:
Imagine you just bought a shiny Rolex for yourself. At a fundamental level that Rolex is not capable of doing anything more than what a $100 watch could do. However, there is a sense of pride attached to that Rolex. There is a definite swagger attached to flaunting that watch in front of your peers.
Now think of a situation where you cannot go out anymore. What good is that watch? Obviously you cannot wear it at home while doing chores. In such a case, the value of the physical watch drops instantly because at that point it is as good as any other watch out there.
If only there was a way to still flaunt that expensive watch. Well, Metaverse is the answer. Companies could now issue digital copies of that watch as NFTs. As an owner your avatar in Metaverse could own that watch and flaunt it yet again. This time, to a much larger audience may be. Why? Because you only meet a limited number of people offline. Whereas this limit is removed when you go online.
The Future?
Just like everything else in this fast paced world, all we could do is make a decent guess. With corporations like Meta, Microsoft, Apple, Google, Nike, Adidas, Gucci, LV trying to devise a Metaverse strategy for themselves, it is safe to assume that this is not just a geeky fad.
Apart from that, a future where every brand has its own Metaverse to promote their product is not really far fetched. It could easily become what website (.com) was during the web 2 realm.
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Until next time..
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