Businesses and individuals regard the metaverse as the internet’s next iteration that links the physical and digital worlds together. The metaverse industry had a $14.8 trillion market capitalization in 2021. This amount suggests that the metaverse has become a large-scale economy.
That figure is only for Web 2.0, the current stable version. With Web 3.0 at the internet’s doorstep, this new version is a potential treasure trove of new metaverse opportunities.
The metaverse can also enable digital marketers to flourish. Creators and businesses that are eager to know how they can benefit from digital marketing in Web 3.0 can get a free diagnosis of their ad campaigns by visiting this page.
What advantages do users and businesses get from transacting in the metaverse? Can metaverse improve financial transactions? What new features does the metaverse offer for financial transactions?
This article explores the financial transactions in the metaverse, including the advantages and the new features of such transactions. This article also discusses the financial instruments that users can utilize for transacting in the metaverse.
What Is New With Financial Transactions in the Metaverse?
The media describes the metaverse as a transformative opportunity that will open new venues for digital connectivity, virtual reality (VR), and e-commerce.
Large tech companies see this opportunity as a way to boost their position, especially in the interactive entertainment field.
For instance, the tech giant Microsoft purchased Activision Blizzard, which is a game development company, for $68.7 billion in January 2022.
Microsoft said the metaverse has significantly influenced the company’s decision for this acquisition.
However, the internet does not stay still and continues to improve and introduce new features. And now, Web 3.0 is looming right around the corner.
Web 3.0 has no standard definition as this iteration is still in its early stages. However, its notable features include:
- Decentralization: This core principle of Web 3.0 involves storing content-based information in multiple locations simultaneously rather than in a single, fixed location.
For internet tech giants like Google and Meta, this feature can break down their massive databases and hand greater control to its users.
- Permissionless and trustless: Web 3.0 will be permissionless, which means individuals can participate without a governing body’s authorization, and trustless, in which participants can interact without going through a trusted intermediary.
These features allow Web 3.0 applications to run on decentralized peer-to-peer networks, blockchains, or both, rather than from a single server.
- Connectivity and ubiquity: Information and content on Web 3.0 are more connected and ubiquitous, meaning users can access such content through multiple applications and an increasing number of devices.
- Machine learning and artificial intelligence (AI): Current AI and machine learning efforts focus more on targeted advertising.
With Web 3.0, these features can achieve new heights by enabling computers to produce more relevant search results faster in areas like new materials or drug development.
These Web 3.0 features can enable the metaverse to transform how individuals connect, grow their businesses, and make a living through content creation.
Web 3.0 brings new opportunities to buy and sell digital products and services for individuals who are transacting digitally through the metaverse.
Creators can now monetize their content using tokens or virtual coins, opening new avenues for exchanging value and community participation.
What Is the Advantage of Transacting in the Metaverse for Users and Businesses?
The metaverse offers the following beneficial opportunities to businesses and creators:
- Transaction: Around $54 billion is spent each year on virtual goods. This figure is almost double the amount that’s spent on purchasing music.
- Socialization: Users in Roblox, a Web 2.0 online gaming platform and game creation system, exchange approximately 60 billion messages daily.
- Creation: The gross domestic product (GDP) of Second Life, a multimedia platform set in an online virtual world, was $650 million in 2021, and customers paid creators nearly $80 million.
- Ownership: Non-fungible tokens (NFTs) are cryptographic blockchain assets one can own, sell, and trade. NFTs had a $41 billion market capitalization in 2021.
- Experience: Around 200 strategic partnerships exist within The Sandbox (an online game for Microsoft Windows and mobile phones), including the Warner Music Group that will initiate a music-themed virtual world.
What Are the Potential Instruments for Financial Transactions?
The metaverse provides the following payment methods for conducting financial transactions:
- In-platform virtual currency (Web 2.0)
- Cryptocurrencies and tokens (Web 3.0)
Examples of virtual currencies include the Robux (Roblox), Linden dollars (Second Life), and V-bucks (Fortnite). Users can convert real money into these in-platform currencies, which players can use to purchase in-game items.
Meanwhile, cryptocurrencies include Bitcoin, Ethereum, USD Coin, Binance Coin, Dogecoin, and Solana.
Bitcoin, in particular, is the trendsetter that became the standard for all the other cryptocurrencies built on decentralized peer-to-peer networks.
How Can Metaverse Improve Financial Transactions?
The metaverse provides a massive potential for business-to-consumer (B2C) and business-to-business (B2B) enterprises.
Take a manufacturer buying new parts for its equipment, for example. At present, the procurement process involves receiving a physical or digital brochure with static images. In the metaverse, the buyer can immediately test the products in a virtual environment at a low cost.
The internet has opened up access to products and services that were previously challenging to reach. The metaverse also provides an opportunity to expand marketplace access for consumers from emerging and frontier economies.
From a corporate perspective, retailers can build a global hub in the metaverse to serve millions of customers without the company needing to set up physical stores in every major city.
The metaverse can also speed up the shift in gaming, sports betting, and gambling from cash to crypto transactions. For instance, various companies have built an infrastructure to support cashless digital gaming for casinos and live sports.
To enable the metaverse’s full potential for engagement, self-expression, community building, and commerce, individuals and businesses must further develop and mature in the following key areas:
- Commercial infrastructure
- The workforce of the future
- Privacy and identity
- Accounting, tax, regulation, and social infrastructure
Businesses, teams, decentralized autonomous organizations (DAOs), financial institutions, and technology providers should consider the areas mentioned above to flourish and collaborate in a vibrant ecosystem.
- Market capitalization of the metaverse, Facebook and gaming worldwide as of October 2021
- Web 2.0 and Web 3.0
- 10 Important Cryptocurrencies Other Than Bitcoin