NFTs And The Metaverse: What You Need To Know
Non-fungible tokens (NFTs) have gone from vague concept to headline-splashing news over the past couple of years. If you need a refresher, an NFT is a unique, collectible, digital asset. Now, a new term has come into play: the metaverse. What is the metaverse, and how does it relate to NFTs? Simply put, the metaverse is a virtual world (or worlds) where you can live vicariously and interact with other people in nearly limitless ways. The combination of NFTs and the metaverse is creating an exciting new world with unlimited social and economic potential.
The Breakdown: NFTs, Blockchain Technology, And The Metaverse
We know that NFTs are attached to a digital asset that represents a file or a real-world item such as artwork, music, in-game items, videos, fashion wear, and more. They are typically created (or “minted”) and held on the Ethereum blockchain, but there are other blockchains that will support them. The NFT establishes your ownership of the digital asset on the blockchain. Every NFT has a unique digital signature, so they are not worth the same as, or equal to, other tokens. This is what drives NFT scarcity and, in theory, value: no two NFTs are identical.
Blockchain uses distributed ledger technology (DLT), a digital database network composed of various nodes (the electronic devices connected to the network that possess an IP address) spread out over a diverse location of networks. Each mode is independent and interconnected with each other. It’s essentially a very fast, decentralized, peer-to-peer network. The immediacy with which information is shared among the nodes lends transparency to a transaction (such as the purchase of an NFT) which protects the authenticity and ownership of the asset during the exchange. Because the data is shared immediately with every node, once the block is stored it is immutable—meaning it cannot be changed—protecting your digital asset from any future attempt to hack or alter it.
Now that we’ve gotten through the nitty-gritty, we get to the good stuff. The metaverse provides a digital environment to showcase, sell, and use digital assets. How it does that is where the real fun begins. You can display your NFTs in a virtual gallery, or, use them as you explore the digital world of the metaverse.
Using NFTs In The Metaverse
Inside the metaverse, your digital self is represented by an avatar of your own creation, or with a unique NFT avatar that you purchase. Your avatar represents both your actual self and the one you imagine; self-expression truly peaks in the metaverse. NFTs from fashion brands such as Adidas, Nike, and even Gucci let you trick out your avatar with a fresh, unique set of sneaks or other gear. But NFTs can do much, much more than simply outfit your avatar in the metaverse.
Moving around and interacting with other people is enhanced with virtual reality (VR) and augmented reality (AR) technology, but you can interact with the metaverse on a screen as well. NFT event passes to virtual events, concerts, private parties, and more have started to take off. Virtual reality platforms such as Decentraland (where Graycraft spaceships can currently be displayed and eventually flown) and The Sandbox are creating gaming worlds in the metaverse that are truly ground-breaking, experiencing massive buy-in before they fully launch.
You can even purchase a plot of virtual land in the metaverse, with the NFT acting as the “deed” to your property. Virtual land closer to digital roads, event arenas, and other areas with high “foot traffic” has higher value and economic potential.
Making Money In The Metaverse With NFTs
The metaverse is creating entirely new virtual economies. For example, you can rent out your virtual land with the use of smart contracts. Creators can earn royalties when their NFTs are sold or resold on secondary markets. Investors can earn passive dividends when they own all, or a portion of, a digital space where virtual events (such as gaming or event arenas) take place.
Gaming is a natural component and perfect application of the metaverse. The play-to-earn (P2E) model has introduced the use of NFTs as rewards, including NFTs of gaming assets and components that can be used in play. The creation of gaming guilds that act as intermediaries are purchasing in-game NFT resources then lending them to players to use and earn yields, of which the guild collects a share.
The limitless boundary of imagination that is the metaverse provides you with an optimal and exciting way to use your NFTs. And the ownership and uniqueness of each NFT provides you with a valuable asset in the metaverse. Like you, we can’t wait to see this new realm of possibility unfold!