Metaverse and Cryptocurrency seem to be linked inextricably. Web3 is the third iteration of the Internet, following the first and second generation web1 and web2 protocols (social media). The future generation of the Internet will combine virtual and augmented reality to create completely immersive 3D environments, transforming online time into an exciting new adventure. Some experts within the IT sector think that cryptocurrencies and the metaverse are intrinsically linked and will constitute a critical component of Web3, a decentralized internet administered by its users.
We can see from Bitcoin that the metaverse and cryptocurrencies are not mutually incompatible concepts. However, it is hard to dismiss the possibility of combining the two. There is no reason to believe that Web 3 buying will differ from Web 1 or Web 2. More and more people are beginning to feel that the metaverse, in whatever form it takes, will significantly impact the future of cryptocurrencies and its associated social and economic ramifications. This blog will discess metaverse and Cryptocurrency and analyze if there is a significant relationship between them.
The virtual world- real value
The fact that the virtual world is so much easier to traverse than the actual one is a huge bonus. With the click of a mouse or the push of a finger, we can swiftly teleport ourselves (or our avatars) to any destination on the Internet. We do not need to do the time-consuming and labor-intensive travel preparations of getting passports, packing, and arranging transportation.
Cryptocurrency has the same properties. The existing monetary system, which crypto enthusiasts refer to as “fiat” since its value is allegedly determined by government mandate, primarily relies on banking institutions and government agencies. On the other hand, Bitcoin transactions frequently require only software on regular PCs.
The computational power required to break the encryption that underpins virtual money is well understood. Nonetheless, efforts are being undertaken to improve existing protocols and create innovative technologies to lower energy use in the long run. Proof-of-stake cryptocurrencies, as opposed to earlier proof-of-work currencies such as Bitcoin, are significantly less environmentally damaging.
As the metaverse grows in popularity and more time is spent online for things like work, socializing, and even holidays, a simple means to pay for virtual objects and services must exist. It’s feasible that we’ll use it to purchase virtual real estate and use it to house our pals, and run our businesses.
According to Statista, the metaverse might add $1.5 trillion to the world economy by 2030. Some of its value may be convertible into bitcoin. When consumers grow accustomed to using digital currencies as payment, this might be the start of widespread acceptance.
If this occurs, anticipate governments and politicians to increase their attempts to monitor and control the bitcoin market. As more nations implement legal frameworks for digital money, it is becoming less of a “wild west” than it was a few years ago. As a result, victims of countless scams committed using cryptocurrencies such as Bitcoin, Litecoin, and Dogecoin have limited legal redress and protection.
Governments may wish to restrict bitcoin as it grows in popularity for various reasons, including its potentially harmful environmental impact (i.e., its energy efficiency or pollution level). Due to the lower resource consumption of proof-of-stake algorithms, transaction fees may be higher for networks that employ inefficient and lower for networks that utilize proof-of-stake algorithms.
As bitcoin develops acceptance as a mode of payment across the metaverse, its users will become used to various alternatives for acquiring, transferring, and keeping digital money. As a result, it is expected to become more prevalent in typical life applications such as transporting cash across international boundaries when doing so with traditional currency is difficult or prohibitively expensive.
As a result, established financial institutions like banks will likely begin supporting cryptocurrencies such as bitcoin and other blockchain-based economic models. They will need to simplify their operations to compete in a borderless, intermediary-free global market. Despite forecasts contrary to the head of the International Monetary Fund, it is more likely that businesses will want to maintain the security and accountability that banks and central banks provide for transactional networks (IMF).
However, in the current digital currencies and peer-to-peer finance era, I believe that success will go to institutions whose policies are the most flexible and ahead of the curve in terms of cryptocurrency acceptance. Payment systems such as PayPal and Mastercard are now aggressively collaborating with cryptocurrencies such as Bitcoin due to the essential role that Cryptocurrency, particularly Bitcoin, will play in the future of payments.
Cryptocurrency as Metaverse Pillar
In the real world, you buy and sell with fiat currency, which serves as a store of value and a medium of exchange. How do you propose to acquire a picture, some land, and tickets to a concert in your virtual world if you want to do it quickly and easily? The logical solution is crypto.
The operation of the metaverse, the other but equally actual reality appears to depend on Cryptocurrency. Crypto is no longer a luxury item in today’s interdependent and unpredictable society. Essentially, bitcoin is the most acceptable medium of exchange for the future’s rapidly increasing mixed economy.
Avoid making hasty decisions on the possibilities. First, the authority to approve and validate your desired transactions does not reside with a single centralized control or hub but rather with every participant in the network collectively, making it more democratic, accessible, and fast; this is especially true for quick, swift, and frequent transactions such as selling your vintage and immediately purchasing a new one, or even obtaining that NFT. There is no single individual on whom you can rely.
The promise of scalability, or the capacity to process or confirm a higher number of transactions per second, of Cryptocurrency, satisfies this demand admirably, making fast processing the metaverse’s third pillar. Cryptocurrencies are the future of the digital economy because they enable quick value transfers between blockchains and serve as a permanent digital record of ownership.
Summing up: Nobody, not even Mark Zuckerberg, knows what shape the metaverse will take once it is completely incorporated into our lives. However, history suggests that firms and consumers will capitalize on this trend to improve their bottom lines.
Since this new technology is still in its infancy, changes in how we live will likely influence the route that cryptocurrencies go as they aspire to become the de facto money of the Internet. For better or worse, as the online world gets more vibrant, exciting, and engaging, more and more of us will choose to spend more time there. As a result, cryptocurrencies will be used more frequently in everyday transactions. As a result, we may expect stricter rules, improved sustainability, and increased utility.
