In 2021 the idea of a global Metaverse was introduced to the world. It would work as hundreds of interconnected virtual spaces in which people could interact with one another through virtual reality. Much like the internet, but instead of looking at a screen you’re in the room with others. So how has this technology come about? And what implications does it have for the future of finance?
When the web (Web 1.0) was first created, it was designed to share information. A superhighway of connected servers that would allow users to search, explore and produce using a centralized company’s platform. For example Google, Microsoft and FireFox.
This soon changed with the introduction of Web 2.0. Web 2.0 introduced social networking, blogging and the collection of user data through sites such as Facebook, Snapchat, Twitter and TikTok. Now Web 3.0 will work as the foundation of the metaverse, built using blockchain expert decentralized applications. These dApps will support a number of user-owned crypto assets and data that will remain anonymous. But what will the main currency be?
A Currency To Connect The Masses
As we start to move into Web 3.0, each metaverse has a cryptocurrency of its own. These currencies can be used to purchase land (in the form of NFTs), trade with other players and buy other in-game assets. However, there’s one problem- they’re all different. This means that users must transfer their metaverse cryptocurrency into another cryptocurrency before it can be used. So what cryptocurrency could unite each metaverse? One strong advocate is Ethereum.
Ethereum is a smart-contract blockchain designed to build a secure, decentralized environment that can host a range of applications. Throughout the DeFi industry, Ethereum has become a place to host marketplaces for trading and lending cryptocurrency, as well as a place to buy Non Fungible Tokens (NFTs). However, it’s held back by one thing- high fees. If the blockchain could introduce a second-layer platform and decrease its costs, it would be able to reduce fees as well as introduce decentralized social media platforms.
Changing Currency Altogether
Although cryptocurrency is still a new concept, protocols and investors are measuring their portfolios against cryptocurrency (in particular ETH) instead of the USD or other stablecoins. This shows that cryptocurrency has the potential to become the next currency we base our transactions on. With this in mind, Ethereum could potentially become the key currency in the metaverse, with other currencies measuring against it.
However, this creates another problem, how do we regulate a decentralized cryptocurrency? It’s no secret that scams are common in the world of cryptocurrency. Rug pulls, hacking and other malicious activity continuously make headlines, creating skepticism around the future applications of cryptocurrency. As a result, the mass adoption of cryptocurrency has been slowed, let alone the adoption of a whole new web. Despite this huge challenge, new projects are looking to overcome this problem. One such project is DLTify
DLTify is a centralized digital assets provider that holds EMD and DLT3 licenses in both the UK and EU. They aim to support decentralized ecosystems by providing them with centralization in regard to regulation. This would not only allow users to remain safe, but would also create a range of features that would be crucial to metaverse developments.
For example, bank accounts could be issued to metaverse users, who could update their currency using direct debit fiat transactions. Alternatively, payment cards could be provided to users in a particular Metaverse.
DLTify would also provide DAOs with the ability to issue proof of reserves and proof of real-world assets. This would allow users to engage with lending and merging activities that are secured by real-world assets.
Despite the metaverse being a decentralized new platform, the regulation would be needed for a central currency. Whether this currency was to become Ethereum or another cryptocurrency will be determined by factors such as fees, ease of transaction and most importantly, consumer protection. With a centralized body offering regulation-sensitive activities alongside this cryptocurrency, regulatory services and e-Money services to the metaverse, its likelihood of mass adoption would dramatically increase as users would feel safe.