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As non-fungible tokens (NFTs) enter the mainstream, they are approaching an “coming of age”. In this next phase, investors are rapidly discovering new use cases for NFTs beyond the initial turmoil of digital artwork and collectibles. A good example is the seamless connection of NFTs in the metaverse industry, a rapid development that will inevitably shape the application of NFT and further increase adoption in the long run.
Importantly, metaverse holds great promise for a more open and equitable economy that is decentralized and supported by the blockchain. But, in essence, NFTs will serve as the gateway to a metaverse, as they strengthen the identity, community, and socialization on which the metaverse economy is built.
While the first NFT was made in 2015, it is safe to say that recent developments in the metaverse industry today put NFTs on a new path in the future. As a result, many speculative opportunities have emerged for companies, investors and entrepreneurs. Specifically, the metaverse relies on NFTs to perform the following five transformative functions.
Open the next border of the game
The gaming industry has surpassed all other forms of entertainment spending, including amusement parks, cinemas, concerts and live spectator sports. So, it’s hardly surprising that when Mark Zuckerberg announced the Facebook name change, he identified the play as one of the main promoters of the rebrand.
The game has long been associated with virtual reality (VR), so consumers are already familiar with 3D avatars and world construction. Today, VR games are mostly made through standalone apps on a desktop computer, mobile phone, or VR headset. It provides a much more in -depth experience compared to traditional video games. But in a metaverse, which is a unified, interoperable VR space, players can interact with each other and play through human-computer interaction (HCI).
The unique interoperable environment opens up the next frontier of gaming, enhanced by social gaming, play-to-win (P2E), and portable gaming assets. In particular, NFTs hold the keys to unlocking all of these concepts. For example, NFTs serve as the in-game currency for P2E. Basically, the more amount you add to the game, the more you win. In addition, the P2E game itself is largely unbiased and more democratic than traditional platforms. With the ownership capabilities offered by NFTs, players fully own their assets, rather than having revenue controlled by a centralized gaming operator.
Manufacturer’s economic growth
NFTs are intended to roughly represent new or unique properties. Even if not formally a currency, items made as NFTs can be traded and sold on virtual platforms. Armed with this transactional power, NFTs embark on the next wave of the creator economy.
The creator’s economy is technically as old as man himself, built by artists, writers and other creators of physical media. But the term “creator economy” was not officially coined until the digital age. Today more than 50 million independent interior designers, curators and community builders are part of the creative economy in the United States.
With NFTs embedded in the decentralized blockchain, each asset has codes and tools that are unmatched. In addition, the property cannot be stolen and its value is exclusive to the owner. The code may include additional rights and obligations, such as a seller’s fee giving the creator a percentage of any subsequent digital asset transactions. The key mechanisms of “smart contracts” and “copyright tracking” promote intellectual property rights and ownership, solving key problems faced by creators in the cyber age.
The metaverse industry is a huge success for the creator economy, providing a virtual world where content gains value and creators gain equity for their work. These characteristics are only possible because the product is associated with safe, transparent and decentralized NFTs.
NFTs play a prominent role in activating communities, personal identity mechanisms, and social experiences that define the metaverse. For example, users can explore a specific hobby or show their support for a project by purchasing NFT properties. As a result, like-minded NFT owners can come together to form communities, share experiences, and work together to create relevant content.
NFT avatars are also a core concept of the socialization system in a metaverse, representing not only a player’s true self, but also an identity they imagine. Users can use NFT properties to establish this identity and access new experiences in a metaverse.
In a metaverse, NFTs are seen as an extension of our true identity, giving each of us complete ownership, control, and flexibility in creating our virtual persona.
Connecting the physical and digital worlds
It should be noted that social experiences in the metaverse model can also be obtained offline, with NFTs effectively bridging the gap between the physical and digital worlds. For example, the Bored Ape Yacht Club (BAYC), a primate avatar conglomerate created by four pseudonymous founders, is making its way into the connection between virtual reality and physical reality. BAYC NFT owners are welcomed to exclusive clubs and community features, such as first-time access to new NFT collections, NFT upgrades, and even private “real life ”. In November 2021, BAYC hosted an exclusive yacht party and warehouse rave at ApeFest in Manhattan.
Building a virtual real estate market
The metaverse industry is also taking real estate into a new realm, with some “plots” of virtual real estate space valued at millions of dollars. For example, in the browser-based metaverse Decentraland, a virtual real estate asset was recently sold for $ 2.4 million to crypto investor Tokens.com. In addition, in December 2021, a user spent $ 450,000 to become a neighbor of rapper Snoop Doggun’s Snoopverse interactive world that he developed on the Ether -based Sandbox platform.
Essentially, NFTs represent virtual land and allow it to be sold. To keep the value of the digital real estate market out of the meteor, the gap is rather limited. Decentraland, for example, consists of 90,000 plots of land each measuring approximately 50 feet by 50 feet. It maintains ‘digital scarcity’, a concept that has long been discussed in relation to cryptocurrency.
A recent paper on JP Morgan’s position found that the average virtual land space in the four major metaverses doubled in the six-month period from June to December 2021, rising from $ 6,000 to $ 12,000. . The value of virtual land will grow as fast as physical land, but no rise in interest will prevent or slow the price rise.
The metaverse industry is still in its infancy and continues to be shaped by cryptocurrency trends and then undergoing a change in digital behavior. NFTs are on the same path.
Although it may be simple to figure out how NFTs enable virtual ownership and identity, the metaverse model creates an interoperable environment with seemingly endless possibilities for consumers to congregate, socialize, play, get and make transactions. Therefore, in the future, companies will need to shift the needle of their NFT investments from exploration to activation, as NFTs are the cornerstone of value creation and user engagement in the metaverse economy.
Jonathan Teplitsky is the CEO of PipeFlarea platform to help game developers monetize their work.
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