Importance of NFTS and Blockchain in Metaverse?

The metaverse, as The Economist would put it, is the limitless successor to the internet. Yet, within the scope of that loose definition, it could be anything: a virtual, three-dimensional world; a multiplayer online game; or a confluence of VR, AR, and MR. This blog post will discuss the connection between the metaverse, the blockchain, and the NFTs. It is fascinating to learn how these nascent yet powerful technologies work together and change how we look at things.

If you have been following this space, you would know about the Decentraland—a metaverse blockchain. In simple words, Decentraland is a decentralized ecosystem—created more like a virtual world with blockchain as the underlying technology. This metaverse blockchain has NFTs in it—exclusive digital collectibles that allow users to do certain things in the ecosystem. Mind you, this is just one way the metaverse, blockchain, and NFTs are connected.

Let us delve deeper to understand how blockchain and NFTs play a significant role in the metaverse scheme of things.

Metaverse, crypto, and blockchain: What is the connection?

Blockchain is the key to unlocking the metaverse. Let us see how.

Consider the metaverse a virtual world. Well, we can put one together using some code, virtual reality tools, AR resources, and some good old graphics engine. But the question is: how do we make it decentralized? With Web 3.0 skewed towards decentralization and autonomy, it is preferable to rely on a technology that allows businesses to be transparent.

For instance, a metaverse built using blockchain means no interactions and responses are deleted or tampered with. Everything is visible, traceable, and immutable. But that’s not all. The blockchain-powered decentralization allows creators to contribute, connect, and interact with the metaverse in an open and democratized manner. That’s the power of blockchain and some really fun metaverses are exploring the same.

Some of the top metaverse blockchain ecosystems include The Sandbox, Decentraland, Axie Infinity, and Gala Games. But wait, where does crypto come into this mix?

What Is The Importance of Metaverse Crypto?

Blockchain-powered metaverses are like virtual worlds. But finance is the lifeblood of any universe, physical or digital. Just as fiat currency powers much of the world, crypto assets propel the virtual world. For instance, a metaverse blockchain like Decentraland has MANA as the native crypto, allowing participants to buy stuff relevant to that virtual world. Likewise, Axie Infinity has AXS, The Sandbox has the SAND, and Gala Games has GALA as their native crypto assets.

Relationship between NFTs and blockchain in the metaverse

Now that we have established the blockchain-metaverse connection, it’s time to bring the NFTs into the mix. With blockchain, the metaverse can become smarter. From setting up automatic modes of transactions to making the metaverse identities more exclusive, blockchains can help these virtual worlds achieve a lot via smart contracts.

Smart contracts are nothing but chunks of code that can help an ecosystem become autonomous. Coming to the metaverse, every participant would need a proof-of-ownership at some point—either to attend a concert in the virtual world or even trade things within the ecosystem. NFTs or non-fungible tokens come into play at this stage, allowing metaverse participants to use them as and when they deem fit. In short, the underlying blockchain technology provides NFT support to the metaverse.

Nfts and Blockchain: How Do They Contribute to Metaverse?

NFTs and blockchain are integral to the metaverse, as we have seen. Now let’s understand the specifics.

Let’s start with NFTs:

1. NFTs make metaverses more operational—allowing you to own pieces of the virtual world. Much like owning an exclusive hand-drawn painting in the real world.
2. NFTs help set up a virtual marketplace inside the metaverse.
3. Some NFTs function as real-estates in select metaverses, helping the participants establish their ownership within the realm. One such example is LAND tokens in Decentraland.

Blockchain technology complements the metaverse in many ways:

1. Blockchain-driven smart contracts can help counter issues related to hate speech inside the metaverse by automatically flagging specific words and actions.
2. As a blockchain is handled by multiple nodes, every metaverse can have several contributors and creators.
3. Unique assets/NFTs can be created easily with blockchain technology. Plus, it is easy to track the provenance of these assets.
4. Blockchain helps a metaverse stand out from other AI-backed virtual worlds/games like Grand Theft Auto —which are primarily controlled by centralized bodies.

Simply put, blockchain takes the “Me” out of the metaverse and makes it decentralized, open, transparent, and immutable.

What are the benefits of using NFTs in the metaverse?

You will find NFTs useful in many ways as you immerse yourself in the metaverse.

• NFTs can help make the metaverse become more interactive, allowing participants to buy and sell exclusive stuff, ownership, and virtual concert tickets.
• NFTs help access the metaverse better, like making the metaverse land more scarce as people keep buying.
• NFTs help monetize the metaverse, thereby helping the creators raise funds and develop it better and bigger.
• NFTs are the bridges between the virtual and real worlds, helping build social experiences and even specific metaverse communities like avatars, access rights, and more.

Challenges of using NFTs in the metaverse

While NFTs and the metaverse share a special bond, NFTs can play spoilsport.

• The NFT-metaverse connection is often driven by sentiments. Hence, the non-fungible assets are prone to shilling and artificial price jack-ups.
• Some NFTs can outgrow their respective metaverse as they become popular. In other words, NFTs are at risk of becoming the most important part of a metaverse, owing to their tradable characteristics. The value of the metaverse itself might drop as people might just use the platform just to trade.

Where do we go from here?

The close relationship between blockchain technology, the metaverse, and NFTs is poised to expand as each complements the other. Gaming metaverses work as DAOs, blockchain technology lends the structure, and NFTs popularize their wares. With new virtual technologies coming up and the NFT sales volume expected to rebound to its buoyant self by 2023, the metaverse looks set to fly higher.

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