Meet the Metaverse

Now that the various applications of the metaverse are covered, it is crucial to delve into the working mechanisms and economy of the metaverse. To do so, an understanding of blockchain technology is prerequisite. Blockchain is a novel technology of storing information in a database such that the data contained can be distributed but remain immutable in the process. Blockchain technology achieves this by storing digital information in the form of blocks instead of the conventional tables, and said blocks of information are interconnected and decentralised such that if one record were to be altered with malicious intent, the other blocks would be able to identify the error in the database. As a result, blockchain technology provides a secure possession of properties on the Internet, where digital items such as pictures may be replicated simply via a screenshot. The increasingly widespread implementation of blockchain technology has given rise to related assets such as non-fungible tokens (NFTs) and cryptocurrencies. The unique identification of data made possible via blockchain prevents physical theft of such possessions – barring elaborate hacking – and thus leads to the extremely exorbitant price of certain NFTs and cryptocurrencies. It is exactly this technology of blockchain that acts as the backbone of the economy of a metaverse, which the subsequent paragraphs seek to discuss.

While it may appear that the economic allure of the metaverse is strictly limited to the materialistic possession of virtual land and buildings, this is far from the truth. Axie Infinity is another metaverse platform with a different target audience – video gamers. Boasting a “play to earn” system, Axie Infinity enables its users to generate an income while playing its game, though unlike professional ESports players. Upon paying a fee in Ethereum to sign up for the platform, users are given virtual characters with unique traits and abilities. As they continue playing on the platform, they may obtain new characters, each of which can potentially be sold for a hefty sum depending on their rarity. To corroborate this, a character in Axie Infinity known as “Axie #2655” was sold for over $800K due to its unique parts and attributes coveted by many users. When users opt to cash out, the in-game credits they have earned are first converted into Ethereum, which they can later sell in exchange for real cash. In fact, Axie Infinity can be so lucrative that Sam Peurifoy, previously a research associate at Goldman Sachs, claimed that the amount of money gained on the platform could potentially exceed his yearly income.

At first glance, the metaverse economic system that is rising in both prominence and validity only affects individuals voluntarily involved in the virtual world. However, current trends and future estimations prove this belief erroneous, as the economy in a metaverse impacts the economy in real life as well. The increasing fame of the metaverse and NFTs has resulted in a drastic increase in the price of Ethereum, which reached a record high of $4470 on the 2^nd of November 2021. Other than cryptocurrencies, the effects of the metaverse extend to related companies as well. For example, Facebook has announced its decision to acquire chips for its metaverse project from AMD, one of the largest computer chip manufacturers alongside Intel, which led to an increase in over 10% of the company’s stock prices after the announcement. Meanwhile, other companies such as Google and Microsoft are also capitalising on the various opportunities that arise with the growth of the metaverse. The former company is planning to develop a unique pair of AR glasses in light of the latest trend while the latter seeks to release a new feature known as “Mesh for Microsoft Teams” which facilitates teleconference between colleagues. As for employees, the dependency on a conventional job may see a downtrend in the coming years as the means to earn side income via the metaverse becomes more varied.