How Will The Metaverse Change Cryptocurrency?


How Will The Metaverse Change Cryptocurrency?

Did you know that the metaverse ecosystem is estimated to be valued at $1.5 trillion by the time 2030 comes around?

First, let’s ask the most important question that is on everyone’s minds.

What is The Metaverse?

The metaverse is the next evolutionary step forward for the internet. It is a network of virtual 3-D worlds where users can create new lives, run businesses, and communicate with other participants.

That’s right — the metaverse is breaking new frontiers, which will have a tremendous effect on the cryptocurrency world. That’s because crypto is a perfect fit for the virtual worlds of the metaverse, given that both exist purely in the digital realm.

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Cryptos are easily integrated into the metaverse with no payment friction, unlike fiat currencies.

Cryptocurrencies already exist in the metaverse as NFTs, which act as of proof-of-ownership for virtual assets such as real estate, avatars, and in-universe items. Without NFTs, the economy of the metaverse would not even exist in the first place.

So, given that NFTs are primarily-based on the Ethereum network, will this affect other cryptos? Let’s take a look:

  1. Increase Adoption of Cryptocurrencies

Cryptocurrencies have been a hot topic since 2020, with prices regularly breaking new records. However, the market for cryptos has stabilized somewhat, but things can still get crazy.

And with the rising popularity of the metaverse, it should come as no surprise that interest in cryptocurrency has risen once again. This is because the metaverse economy is driven primarily by cryptocurrencies like Ethereum (ETH).

As was mentioned above, metaverse assets exist in the form of NFTs or non-fungible tokens — meaning that such items can only be bought with ETH. Thus, this will likely drive up interest for ETH as new investors start hopping aboard the metaverse bandwagon.

  1. Participation From Financial Institutions

Banks now have no other choice but to embrace the crypto revolution despite all of their efforts, and the same can also be said for the metaverse economy.

While we may still be in the early stages of the revolution, we may even begin to see banks offering cryptocurrency products for users of the metaverse.

Currently, the metaverse is still in the “Wild West” or frontier phase of its life. However, there will be a demand for trustworthy sources or third parties to facilitate transactions with time. And when that happens, banks will have an integral role to play.

  1. Enhance Government Regulation

The decentralized and unregulated nature of cryptocurrencies has always been a concern for governments worldwide. For example, China and other countries have outright banned the use of cryptocurrencies.

And with the expansion of the metaverse, the likelihood of government interference in the world of crypto will increase. The metaverse’s open nature and zero regulations make it a hotbed for financial crime, including money laundering.

Hence, it’s likely to be just a matter of time before governments begin implementing various regulatory requirements.

  1. Spur The Creation of New Cryptocurrencies

While there is plenty of overlap between cryptocurrencies and the metaverse, this may not always be the case.

Given that the metaverse has its economy and systems in place, there’s nothing stopping users from adopting the in-universe cryptocurrency. For example, metaverse games such as Decentraland and Axie Infinity have their in-game tokens, which power the economy.

These tokens are also traded on various crypto exchanges and possess their investor base. Hence, it wouldn’t be a stretch for metaverse applications to move beyond mainstream cryptocurrencies.

Closing Thoughts

The metaverse is an exciting place with plenty to offer, and as it grows in popularity, so will its synergy with cryptocurrencies.

Nonetheless, the role that cryptocurrencies have within the metaverse is still fluid and can shift at any time.