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It’s often believed that cryptocurrencies make the metaverse viable. But is this claim true? To answer this, we'll need to examine the relationship that exists between the metaverse and cryptocurrencies. Also, there's a need to understand how their connection has impacted virtual worlds around us and how it is leading to a Web3 metaverse.
This article will explain what the metaverse is, the connection it has with cryptocurrencies, as well as the future prospect of integrating the two technologies present.
What Is the Metaverse?
Defining what the metaverse is can be tricky. That's because the term itself is not used to identify a specific technology but rather a collective of distinct technologies. Initially, the term was used in reference to virtual reality technology and only started getting linked with Web3 in the early 2020s.
According to Mark Zuckerberg, founder and CEO of Meta, “The metaverse is the next evolution in social connection and the successor to the mobile internet.” He further described it as “a place to connect, work, play, learn, and shop.”
While Mark’s description captures the core values of what the metaverse is all about, it doesn't give an in-depth view.
To understand what the metaverse means, you'll have to first think of it as an immersive "cyberspace." This cyberspace is facilitated by augmented reality, virtual reality, and other advanced computing and internet technologies. The collective of all these technologies creating a 3D-enabled virtual universe is what we refer to as the metaverse.
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Metaverse and Crypto: What Is the Connection?
Cryptocurrencies are digital assets designed to work as a medium of exchange outside the usual banking system. The connection between metaverse and cryptocurrencies can be briefly explained with the phrase “virtual currencies for virtual worlds.”
The metaverse itself is outside the traditional world we know. So, it only makes sense that it has its own means of transacting, which is where crypto comes into the picture.
If we were to integrate the traditional banking system into the metaverse, it’ll take a lot of paperwork and politics to get even one platform to function. That’s why some metaverse projects like Decentraland and the Sandbox have their own metaverse tokens that work within their ecosystems.
Popular Metaverse Platforms Using Crypto
Below, we look at a couple of metaverse platforms that have built their own tokens.
Decentraland (MANA)
The first on our list that shows the perfect relationship between metaverse and crypto is Decentraland. Decentraland is one of the longstanding metaverse projects that offers a full virtual world experience. Many brands, from Coca-Cola to Dolce and Gabbana, have launched virtual events or spaces on this Ethereum-powered platform.
Decentraland has its own token, which is called MANA. With MANA, you can buy a parcel of land and build whatever you want on it. It also powers a huge marketplace where users are already buying and selling different assets, from clothes to accessories, that all work within the Decentraland platform.
The Sandbox (SAND)
Sandbox is another popular metaverse platform that has integrated cryptocurrency into its ecosystem called SAND. Like Decentraland’s MANA, you can use SAND for pretty much anything you want to do within the Sandbox virtual environment.
Sandbox focuses a lot on user-generated content and gaming. So, the SAND token is used mostly for purchasing non-fungible assets like gear and to customize characters. It's also used as rewards within the platform.
So, Are Metaverse and Crypto the Perfect Match?
Arguably, yes, the relationship between the metaverse and crypto is symbiotic. That means the growth of one would lead to the expansion of the other.
For example, we've already discussed how crypto in the metaverse has added more functionality in virtual worlds, facilitating a complete immersive experience.
Consequently, increased adoption of the metaverse is also driving up the prices of cryptocurrencies. This was evident when prices of crypto tokens and NFT skyrocketed following Facebook’s rebranding to Meta.
Below are some positives and negatives to consider:
Pros:
● Decentralized economy enables seamless cross-border transactions.
● Secure ownership and monetization of digital assets (via NFTs).
● Cryptocurrencies enhance immersive virtual experiences.
● Interoperability across multiple metaverse platforms.
Cons:
● Increased vulnerability to cyberattacks and fraud.
● Regulatory uncertainty and potential government restrictions.
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The Future for Metaverse and Crypto
Without a doubt, cryptocurrencies will continue to remain integral to the advancement of the metaverse.
We can expect to see the relationship promoting more financial inclusivity, cross-border transactions, and new revenue models. However, experts are raising concerns about potential issues with abuse, regulatory frameworks, and security.
In the end, a virtual world where cryptocurrencies are part of our daily lives doesn't seem far-fetched anymore.
