Two hot topics, non-fungible-tokens (NFTs) and the metaverse go hand-in-hand, garnering a lot of media buzz, headlines and interest. But they have also created just as many questions. In this weekly column, we help you navigate the quirky and promising world of NFTs and the metaverse.
First things first
Before we delve into the details, let’s quickly recap the two concepts. Any digital items starting — your art, photo, video, GIF, an mp3 or even a selfie — can be turned into an NFT.
You might think, NFTs are just jpeg files which can be copied easily. But what makes NFTs unique from other digital forms is that they are backed by Blockchain technology. Blockchain is a distributed ledger where all transactions are recorded. Consider it like your bank passbook, except all your transactions are transparent and can be seen by anyone and cannot be changed or modified once recorded.
For the uninitiated, metaverse can be simply defined as a shared virtual space that is hyper realistic, immersive and interactive, thanks to the use of augmented reality (AR) and virtual reality (VR) technology. Metaverse is posed to reflect the real-world, albeit digitally. However, it should be noted that metaverse is not aimed to replace reality, rather what it aims to do is to enhance the digital space that we see today.
NFT uses in the metaverse
NFTs are mostly associated with digital arts and metaverse with VRs, so there might be some confusion whether there is any common ground between them in the first place. Here are the use cases of NFTs in the metaverse:
Online shopping: Metaverse will enable you to try on virtual outfits before buying. This will ensure that you don’t buy ill-fitting clothes or any misrepresented products. Some metaverses will allow you to buy tokenised clothes in the form of NFTs. These NFTs could then be traded for physical clothing as well.
Footwear giant Nike is already stepping into the world of NFT based metaverse. The company is calling it “Nikeland ” where customers can buy tokenised shoewear in the metaverse.
Games: Metaverse, fueled by NFTs, will take video gaming to another level. VR-based multiplayer games are posed to get as real as possible. Players can earn rewards in the form of NFTs, which will help boost the gaming economy.
Real estate: When you buy a virtual property in the metaverse what you gain is an NFT of the virtual land. NFT minimises any chance of real estate frauds such as forced cancellation, selling without authorisation, fake promises, and even delays in possession.
Loans in metaverse: Giving loans is not as easy as it sounds. There are various factors involved for lending loans with ease, and safely. To process any loan, Decentralised Finance requires a collateral. In the case of metaverse, the collateral can be an NFT that you bought.
Ownership in metaverse through NFTs
Imagine if you want to attend a musical concert in metaverse. Just like real-world concerts you would require a ticket or a pass to gain access to the event. A digital pass could be issued to you but how would the organisers in the metaverse be sure whether it’s you who actually owns the pass.
NFTs in metaverse will provide proof of ownership for both ticket holders and organisers. All the parties involved can check the pass’ authenticity. Moreover, NFTs can be made non-transferable if the resale of the tickets are forbidden.
In 2019, at a crypto event in New York, NFT controlled access was enabled, meaning that the organisers allowed entry using an NFT-based ticket, along with a VIP dinner, and even an opportunity to display a custom message on the Times Square billboard.
NFTs serve a key concept in the metaverse ecosystem, allowing people to own virtual goods in the form of real-estate, items like cars, boats or even accessories and paintings—all possible through NFTs.
For instance, if you own a virtual land in the metaverse (which is quite possible), you gain an NFT as deed to the virtual property. This means you are the rightful owner and only you have exclusive access to enter the location in metaverse alongside allowing access to others.
Further, NFTs are also responsible for constructing digital identity in the metaverse. NFT enabled digital avatars give you an identity in the metaverse. This avatar, minted on blockchain can be transferred from one metaverse to another. Notably, NFTs are immutable. It is only owned by you and nobody else can duplicate, edit your customised NFT based avatar. So, it is quite clear that the metaverse and NFTs are made for each other.
Metaverse is still in the early stage of development. Tech corporations together will take full advantage of the potential and financial opportunities that NFTs and metaverse offer together. By combining the power of VR, social media and elements of crypto, NFTs will become an integral part of Web 3.0. It will be interesting to see what the future holds for NFT enabled metaverses.