The metaverse economy
What non-fungible tokens can do to facilitate the development of societies in virtual worlds that are completely immersive
An average day spent in the virtual world, a shared immersive virtual reality – could in the near future closely resemble our everyday world in. We’ll go to shopping centers and drive around towns, have a chat in cafes and share information in ways that appear to be real, thanks to the rapid advancements in virtual reality and 5G technology.
Metaverses exist for a long time as online multiplayer online games. However, we are about to enter an age where we can experience an immersive experiences that is hardly different from our actual world. They are bringing about new forms of interaction for both gamers as well as non-gamers.
Metaverses that are prototypes for the next generation like Decentraland as well as Somnium Space already show the beginnings of real society where people settle the land, engaging in social interactions trading goods, and asserting ownership rights. Every social system (physical and virtual) requires a functioning economy. In Metaverses, economic activity relies on the authenticity of digital assets like your metaverse home vehicle, car, farm furniture, clothing, and books. To be successful, it requires the ability to travel and trade with ease between realms which may have different laws and regulations.
Non-fungible tokens – the records of digital ownership that are stored on the blockchain will become the foundation of the economic metaverse through the ability to authenticate possessions, property , and even identity. Because each NFT is protected by a cryptographic key that is unable to be copied, deleted or destroyed, they provide the secure decentralized verification of one’s digital identity as well as their digital possessions essential for metaverse societies to thrive and connect in a way with the other societies of metaspace.
Beyond the hype surrounding multi-million dollars in digital art sales the real value of NFTs could be in the enabling of an authentic human society, founded by free markets (for items, services, and ideas) with independent ownership as well as social contracts to flourish within the realm of metaphysics.
“NFTs were initially introduced in the realm of digital art. However, it’s going to become much more effective,” says Eric Anziani the COO of Crypto.com. “It will become the tool that can represent any digital form of asset in the virtual world going forward. The applications are incredibly powerful.”
Real estate development is a bold new world
While strolling through Decentraland, see people talking around fountains, shoppers in trendy boutiques, strollers along seaside promenades and casinos Croupiers who invite guests to high-stakes poker.
The interactions described above are result of the development of virtual real estate by those who have bought the land and constructed environments which have caught the imagination of others in Decentraland.
The experience isn’t real-world (and Decentraland creators themselves say that the world is still within it’s “Iron Age”). However, even in the early versions, the potential is evident. Similar to the physical world, individuals are drawn to fascinating locations in the virtual world. The popularity of these places naturally increases what is worth of virtual property – just like it does have happened in Paris and Beverly Hills.
One of the most important economic concepts in Decentraland along with other Metaverses is the adjacency of land. Each metaverse parcel is contiguous to each other at a specific position within a finite geographical area. This results in scarcity because of the small quantity of property available. The scarcity of property allows its value to fluctuate according to universal laws of demand and supply.
The framework is then developed to support, in accordance with the Decentraland manifesto, “a social experience with an economy driven by the existing layers of land ownership and content distribution”.
NFTs are a key component in the property transactions that fuel the metaverse. They provide a reliable evidence of ownership that will be safer than land title.
“For metaverse property rights, you simply cannot fake it because of the way smart contracts are defined, and the NFTs programmed,” Anziani states. “You recognize that you are the owner of an asset, and you can prove the ownership of the asset completely. Based on the conditions and terms of the virtual environment you then have the right to claim your ownership rights.”
A property sale that is that is worthy in London, New York or Tokyo
Already, the ramifications of the real estate revolution have been felt a resounding way. In June, the digital Property investment company Republic Realm bought a parcel of land in Decentraland at a price of more than US$900,000. Republic Realm, owned by investment firm Republic which is transforming the land into a virtual mall known as Metajuku that is modeled on the Harajuku district of Tokyo.
These trends suggest that the future is not far away when REITs that invest in real estate (REITs) start looking for opportunities in the universe of metaphysics. The value of property is in line with the economic growth that is also on the rise in Decentraland. This is exactly what the creators of Decentraland envisioned when they first launched their virtual world in the year 2017.
“Decentraland’s value proposition to application developers is that they can fully capitalise on the economic interactions between their applications and users,” the metaverse’s manifesto declares. “To allow those economic interactions, the platform must allow three things to be traded: currency, goods, and services.”
Fashion was among the first industries to recognize the potential economics in NFTs as well as the metaverse. Luxury brand Burberry developed NFT accessory for its Blankos Block Party video game and Louis Vuitton launched its own NFT-studded video gamecalled Louis the Game.
In the meantime, RTFKT – bespoke shoemaker for the metaverse – has designed limited edition NFT shoes that are wearable in virtual worlds. The company already has amounted to million of dollars worth of sales.
With this kind of growth in the Iron Age of the metaverse, the business model for virtual worlds based on NFT technology – can promise immense economics of magnitude.
“Even just five months ago we were 100 million users of crypto worldwide. We’re now more than 200 million people,” Anziani says. “We have a strong belief that the next wave to get to a billion or two billion is going to happen through metaverses – the integration of virtual worlds with blockchain tech – in particular NFTs.”
The Metaverse and (near-)infinite economic growth
Many people have been asking me for a blog article about the infinite growth possible in a world with limited resources. Then Facebook changes its logo to Meta and has also declared that it will spend $10 billion this year in virtual reality and augmented reality, dubbed”the “Metaverse”. That is a great opportunity to write a post about endless growth.
The phrase “Metaverse” actually comes from the 1992 Neal Stephenson novel Snow Crash which is widely regarded as to be one of the most important works of cyberpunk science fiction. It’s astonishing the extent that cyberpunk writers were able to anticipate the changes that were to follow – technology, internet connectivity, inequalities and social fragmentation, and the bizarreness of A.I. However, one of the reasons sci-fi is because it inspires the possibilities that people are trying to build, and those in the tech industry are working on filling those remaining gaps in the cyberpunk visions of their young years. One of the most significant remaining gaps is in AR/VR. In many sci-fi stories where characters spend time in virtual worlds. In real life , they also interact with virtual environments however in a different fashion that is, people still interact with the internet using images, text in two dimensions and videos that are displayed on screens. Cyberspace remains an extremely different place from meatspace. It’s a different world altogether. Metaverse attempts to bring two realms more similar. I’m not sure how Facebook or, more accurately, Meta is able to achieve this However, I’m curious to find out what they can come up with.
How do these issues have any connection to the growth of economics and resource use? First, let’s consider the reason why this is an intriguing topic at all. There’s a popular idea that’s known as “degrowth”, which says that the growth of economics is not sustainable due to its impact on the depletion of Earth’s resources. They want governments to stop their plans to raise living standards or cut living standards completely in order to save the environment. This is a terribly bad idea in politics however, it’s also economically unsound. The concept of the Metaverse may assist in explaining the reason.
Before we get started, let’s discuss about what growth in economics does and does not mean. It’s not “growth in resource use”. What it refers to is an increase in the value of the goods and services produced by an economy that is increase in GDP.
GDP isn’t an exact gauge of the quality of life of a human. It excludes all things that aren’t bought and sold on a market such as sun, leisure time and low crime as well as the worth you generate when you tidy your home. It’s not even a measure of happiness among humans. It’s certainly not a measurement of usefulness, in fact even if people can get important items free of charge (like Facebook), it doesn’t count. free (like Facebook), it’s not counted in GDP.
As long as they continue to develop more and more things that people would like, and coming up with ways to get people to pay for it GDP continues to grow. The question is whether this will require a greater the use for natural resources. The degrowthists say yes. claim of “a finite planet cannot sustain infinite growth” is an argument that people repeat online like it’s obvious. But is there any substance to this assertion?
The usual argument of degrowthers is that in the past resource use and GDP have always been closely linked. However, this is simply drawing a line through numbers — it’s certainly no basis for any real theories. In fact the correlations could alter very rapidly. As an example take the following graph of energy use and GDP from 1949 onwards:
If you were in the year 1970 you could take a look at this graph and say absolutely that economic growth will require increase in energy consumption. You’d be wrong. Since the trend will be your friend until the point where you turn.
There’s absolutely no reason for economic growth to require a greater use of any resource physical. The economic value of a product is based on the arrangement of things and not the quantity of things. If you used an axe and smash your phone into pieces and then threw it into a heap of garbage would have the same quantity of silicon , cobalt and gallium arsenide, and so on. However, those resources would not be worth anything. Rearranging resources from a less effective configuration to a more beneficial configuration is what makes value!
There is no place more obvious than with software. Software is pure informationonly 1s and zeros and yet the process of creating the information generates enormous quantities of value. Software products are around 1.3 percent of the world’s GDP, while the entire digital economy accounts for more than 15 percent of GDP.
Today, the digital economy isn’t a free use of resources. You have to construct cables, launch satellites, make chips, operate servers and the list goes on. If the digital economy enables people to make money from information that is in cyberspace, rather than physical objects that exists in real life, then it will increase the GDP while decreasing the use of resources.
Think of the movie classic American Graffiti. George Lucas depicts his memories of the 1950s as a world where young people are having fun, have hookups and gain social status by driving in their cars all day long and night. This can be extremely resource-intensive. Today, children can spend time with their peers by chatting about stories, sharing their experiences, or engaging in video game online. You can use Tinder to connect instead of just cruising around. Additionally, they can earn social status by collecting Likes on Facebook, TikTok views, and Twitter followers. So, younger people are dumping their automobiles in favor of smartphones. This means less fuel burned as well as less aluminum and steel employed as well as other things. However, there is more fun to be having.
If capitalists can find ways to charge people for the pleasure they enjoy and increase GDP, that’s a good thing as well. Offshoring, and not dematerialization which is the reason that has allowed U.S. GDP to continue to grow at a constant rate, even though we’ve cut down on our use of fresh water, energy as well as copper, aluminum and various other metals, as well as carbon emissions.
The Metaverse is the result of that process that has been taken a step further. The more enjoyable or helpful activities you can engage in VR -such as business meetings, games or vacations, hanging outsit’s less likely you’ll need to use physical resources in order to perform it in the meatspace. The more you are able to transform your personal world by overlaying it on AR and VR, the less you’ll need to use up resources by transforming your physical surroundings to fit your preferences. Therefore, the Metaverse will help to continue the dissociation of physical resource usage in relation to economic expansion. The most obvious endpoint of this is uploading your personality which is a completely digital environment without the need for physical resource usage, other than what is necessary to support the simulation.
Of course, there’s an end to dematerialization. In the end, you’ll have to move everything online. Then, will the economic expansion begin to require more resource usage — to operate more server farms , to create more virtual environments to the upload of more individuals and so on. ?
Thought experiment: Imagine replicating the growth in economics that is already taking place in the world of Earth.
Imagine that into the distant future using the most advanced technology, we can create an accurate, physically precise model of the planet Earth in the year 1600 A.D., complete with the brains of 554 million digital humans. Then, suppose we play the simulation in the future, as the digital human beings create steam-powered engines and railroads automobiles, tractors and many more.
This is an extremely significant increase in GDP! Digital people are experiencing a better quality of life as they pay for the advancements on the digital market. There’s nothing flimsy about that GDP. A digital vehicle that a user pays for through the digital market place has exactly the same economic value as the real world equivalent.
However, while it is true that the usage of virtual resources within the virtual virtual world is increasing in this case however the usage of real-world physical resources isn’t expanding. It’s unlikely to require any more energy or gallium arsenide, silicon to faithfully recreate the 1900 world as the 1600th century (as as long as you’re sure to model the entire globe, particle by particle).
This model cannot be achieved and we’ll never have the ability to create a simulation as large. The thought experiment illustrates the principle that people in virtual worlds can generate economic value and not put any strain on the existing resources of the planet Earth. There are plenty of more real-world examples of the growth of virtual environments if you wish.
The concept of something like the Metaverse is crucial to this process, as the actual production and sale of products and services within virtual space are likely to require a more immersive virtual environment than what we’ve developed. At present the people be spending their time with friends on Twitter and Facebook and other social media sites, but with the exception of a few they still make and sell things within the actual world. The more intricate and flexible the metaverse that it develops, the more human beings are able to develop new products and services in that. It is likely that all of this will take less physical resources than hopping on a train to the brick-and-mortar workplace and pounding out code with the keyboard of a physical device.
Are virtual worlds able to let innovation and growth last forever, literally forever on the surface of a finite planet? Well, the boring, stupid, angels-on-the-head-of-a-pin answer to that question is “No, because eventually the Universe will decay into heat death”. Another equally boring, unhelpful response to that question is “No, because eventually the sun will explode and melt all the server farms.” The third and most boring and useless response can be “No, because the set of possible quantum states of a planet with finite resources represents a compact set, and thus any continuous function defined on that set must attain a global maximum”.
However, if you think that some of these cutesy responses are relevant to real-world decision-making, you’re an ignorant person and your opinions are not relevant to the policy debate. The real issue isn’t “Can growth go on literally infinitely?” But “Can growth go on for a very very very very very very very long time?”.
The answer to this question to that question is “Who knows?”. This is based on the human desire as well as human creativity and the range of technologies that are possible to develop. They can’t be predicted ahead of time. If you think they could be, ask yourself if even the most imaginative cyberpunk author of 1992 could have imagined that people would pay hundreds of millions for certificates that claim they grant the right of ownership to digital art that others can click and save? (Well OK, Rudy Rucker might had predicted this.) Presently, the rich are growing their GDP and decreasing their use of resources and that’s a good indicator. We hope that developing nations can take this path quicker than today’s wealthy nations, as they’ll have internet access much earlier in their growth.
In the end the situation, we don’t know what growth potential is achievable in the case of a specific quantity of resources. It is necessary to reduce the amount of resource extraction due to reasons of environmental protection however, we shouldn’t think that this will bring about an end to growth. In fact, it is better to anticipate that it will shift production from bending pieces of metal to more subtle ways of enjoying. The more time we spend in virtual worlds and virtual worlds, the less desire to harm the real world. This is why we should be cheering the efforts to build the Metaverse, regardless of whether it succeeds or fails.