With Facebook’s recent rebrand to Meta and Adidas and Nike building their own virtual worlds, it’s clear that the metaverse will play a significant role in our future. While what shape the metaverse will take is still largely unknown, it’s more important than ever to understand the fundamental technologies that will power this $800 billion dollar opportunity.
Regardless of your job or background, you’ve likely heard buzzwords like blockchain, metaverse, and Web3 thrown around interchangeably. It’s very important to note that this is incorrect as these are completely distinct concepts. But to further explore the relationship between the three, we must first understand what the blockchain is and how it works.
What is Blockchain?
A blockchain is a ledger of digital records, called blocks, that live across a collection of nodes or distributed servers. These nodes communicate with one another to create a decentralized network capable of sharing data and autonomously facilitating peer-to-peer transactions. Unlike centralized servers, no one single person or third-party authority can control the blockchain. This creates an immutable proof of ownership record, unlike anything we’ve seen before. The blockchain is also an integral component of Web3, the next iteration of the internet built upon the core tenants of decentralization, trustlessness, permissionless, and interoperability.
What Is the Metaverse and How Is It Related to Blockchain Technology?
The metaverse is a collection of immersive 3D virtual worlds designed to revolutionize the way we work, shop, learn, and socialize with others over the internet. While some metaverse environments are accessible through a standard PC, others require special hardware like AR/VR goggles or high-GPU gaming computers. Due to technological limitations around interoperability, or the ability to seamlessly integrate multiple virtual worlds, the current metaverse is still somewhat of a walled garden.
So where does the blockchain come into play?
Simply put, the idea of an interoperable metaverse and the success of the broader Web3 ecosystem are impossible without blockchain technology. The blockchain serves as the underlying foundation of the metaverse by providing the key technological infrastructure needed to spread, store, and preserve massive amounts of data. With the use of digital wallets that connect to the blockchain, we are able to store and carry our currency and data seamlessly across metaverse worlds and decentralized applications.
To date, much of the metaverse is built upon the Ethereum blockchain due to its ability to run self-executing computer programs called smart contracts. By executing once predetermined conditions are met, smart contracts remove the need to trust or rely on a centralized third party for approval. Like internet legos, smart contracts can be easily strung together to build full-fledged decentralized applications for payments, commerce, gaming, identity verification, and more.
As we interact in the metaverse, all transaction records are stored and time-stamped on the blockchain living publicly for the world to see in perpetuity. This proof-of-ownership is critical for verifying ownership for metaverse assets such as cryptocurrency, in-game NFT assets, digital real estate, collectibles, art, and event tickets.
Blockchain Use Cases
Decentralized finance (DeFi) platforms and protocols allow users to send peer-to-peer cryptocurrency payments, borrow and lend money, and earn interest, all without a centralized third-party institution or bank.
All decentralized finance tools are built on top of the blockchain and serve as the backbone for metaverse commerce. We’ve already begun to see early applications with NFT marketplaces like OpenSea and virtual retail stores in Decentraland.
At the crossroads of virtual worlds and social interaction, much of today’s metaverse is deeply rooted in gaming. But unlike traditional gaming where digital assets may hold some in-game value, the blockchain has unlocked a new era of play-to-earn interaction. Centered around the idea of digital ownership, play-to-earn gaming rewards players with digital assets (usually cryptocurrency or NFTs) that carry value in both the metaverse and IRL. Eventually, as tech advances, the goal is for these assets to be carried and used interoperably across gaming environments.
Many play-to-earn games like Axie Infinity and Crypto Raiders use NFTs to represent assets that can be sold within the game or for cryptocurrency on an NFT marketplace. NFTs can also be used as tickets or access keys to metaverse events and communities.
Blockchain-Powered Identity Authentication
As the lines between our physical and digital identities become increasingly blurred, the blockchain can be used to store our public identity information. Identification certificates like passports, birth certificates, and driver's licenses, can all be turned into non-transferrable NFTs.
By verifying proof of identity through the blockchain, we can reduce fraud and speed up identity validation processes. Countries like China and South Korea have already recognized the power of digital identity, as they’ve taken the beginning steps towards creating blockchain-powered smart cities.
Thanks to secondary royalty structures baked into smart contracts, the blockchain allows creators to bypass traditional industry gatekeepers and earn more than ever before.
Take the music industry for example. Normally, record labels and streaming services accrue a large amount of the revenue derived from artists' work. Now, music NFTs allow artists to sell their music directly to their audiences, providing both creators and fans with unique financial incentives.
By removing these centralized third parties, the blockchain has single-handedly upended the legacy value chains across all creative industries including art, publishing, and fashion.
While much of the metaverse's presence in our day-to-day lives remains to be seen, it’s almost guaranteed that emerging technologies like blockchain and NFTs will play a key role. And as the next era of the internet quickly unfolds, the last thing you want for your business is to be stuck in the past. That’s why Touchcast is proud to offer Metaverse-as-a-service for the enterprise metaverse. We offer adaptive metaverse solutions for a range of use cases, including immersive metaverse experiences where enterprise businesses can build digital twins of their offices and retail storefronts, host events, and provide both customers and employees with unforgettable digital experiences.
To learn more about the metaverse, check out the .metaverse podcast on Apple, Spotify, or wherever you get your podcasts.