02.12.2022

Blog: What is Metaverse?

Blog: What is Metaverse?

Metaverse is a term that you might have read recently. The world's largest companies are currently exploring the opportunities offered by metaverse, and the well-known social media giant Facebook even changed its name to Meta. This text tells the reader what the term metaverse means.

              
Metaverse in practice

The internet has developed at a steady pace since its inception. The next step in the evolution of the internet is generally considered a distributed Web3 infrastructure based on blockchain technology. Distributed ownership based on blockchains also plays a key role when talking about metaverse.

Metaverse is a concept that is, in principle, relatively challenging to define. It can mean virtual worlds or spaces where it is possible to travel and do different things together with other people. In practice, metaverse is, above all, a virtual reality, where it is possible to do similar stuff than in physical reality.

When talking about the metaverse, an entity called NFT(Non-Fungible Token) emerges from the world of cryptocurrencies. NFT is a unique digital asset on the blockchain, the ownership of which can be proven in a fast and reliable way. NFTs allow the sale and decentralized ownership of various assets in metaverse. The ownership of NFT can always be verified from the blockchain, making it possible to verify the authenticity of the assets.

Metaverse's vision is typically to create a decentralized digital world that allows people to interact with other people in a real-world way. In the metaverse, people can see each other, participate in various virtual events, and play a variety of games and trade. All this is possible without leaving home.

The world's largest companies have recently begun to recognize the potential made possible by the metaverse. The best example of this is the technology giant Facebook, which has been rebranded to Meta. Meta has announced that metaverse is the future of the internet, and in the future, the company plans to spend vast sums of money on developing its own metaverse. Meta's CEO Mark Zuckerberg has stated that the economic systems built on the metaverse will one day be at least as big as the real-world financial system we know today.

Metaverse and cryptocurrencies

Cryptocurrencies and blockchain technology are key factors behind the metaverse. Technically, metaverse is an entirely virtual world based on blockchain technology. Just like in the real world, the metaverse often has its own economic system. Most of the required metaverse self-financing system comes in cryptocurrencies and NFTs, which can be objects in metaverse use or plots of land. Often trading in metaverse is based on metaverse's own cryptocurrency. Cryptocurrencies are considered an inherent solution to metaverse value exchange. Cryptocurrencies can not only be used but also earned within virtual reality.

In addition to the traditional virtual reality-based world, metaverse can also be a so-called play and earn. In metaverse like this, a user can earn by playing their game. Typically, the earning mechanism is implemented in it by utilizing metaverse's own cryptocurrency. Meteverse's tokens already have access to the secondary market, which can also be exchanged for cryptocurrencies or traditional currencies such as euros or dollars.

Blockchain technology enables trust and security of the metaverse. The key to the security of the blockchain is decentralization. The distributed blockchain is also very secure, as the data in the blockchain is stored on several different servers. In the traditional centralized model, all data is stored on the same server, and because of that, it is an easy target for hackers. There is no similar problem with the blockchain.

The most popular blockchain on which various metaverses are created is Ethereum. Ethereum is the largest ecosystem in the cryptocurrency market. Using Ethereum, it is possible to build metaverse and DeFi applications, NFTs, and various smart contracts and cryptocurrencies.

Metaverse in the future

The potential of the metaverse is tremendous. It may revolutionize our daily lives in the future and blur the line between digital and physical reality. Currently, especially in the world of cryptocurrencies, several different projects aim to build different types of metaverse.

As a concept, the metaverse has evolved considerably in recent years, and with the corona pandemic, people have also increasingly found their way into different virtual worlds. In the future, the metaverse will undoubtedly have a role in our society. With various metaverses, a whole new level of digital reality is emerging in our society that will change our daily lives and how we interact with other people.

Several different projects in the cryptocurrency market aim to build their own metaverse. The number of projects focusing on metaverse is growing steadily in the market. However, all of these projects have in common is that they are built primarily on the world's most popular blockchain platform, Ethereum. If you are interested in investing in a metaverse and believe that the metaverse phenomenon will increase in popularity in the future, Ethereum is definitely something that you should investigate.

Mikko Soon Head of Private Banking
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Last updated: 02.12.2022 15:00
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