Blockchain Boons: NFTs, Cryptocurrency, and the Metaverse
A silent revolution is happening that could potentially change the way we interact with the internet. Not many people are aware of the potential of a Web3 metaverse, and even fewer understand the technology that makes it possible. Even Mark Zuckerberg realizes the potential of the metaverse, going as far as to rebrand his company from “Facebook” to “Meta”.
Understanding the technologies and trends behind the metaverse will help you position yourself in a manner that maximizes your potential benefits. Blockchain technology is what makes Web3 possible.
A blockchain refers to a digital database that is shared among the nodes of a computer network. A blockchain is what allows for a secure decentralization of cryptocurrencies because the technology guarantees that the record of data is accurate, secure, and decentralized. While many types of data can be stored on a blockchain, its most prominent use is that of a public ledger for cryptocurrency transactions. This ledger authenticates who owns what, and how much they own.
How Does a Blockchain Work?
The primary function of a blockchain is to record and distribute digital information permanently. This is what makes the blockchain an immutable ledger. This is achieved by a series of checks and balances between nodes in a network to determine if the buyer and seller both have enough of the assets that they are trading. When a node is able to validate the transaction, a new cluster of non editable data is formed into a “block”.
This block is then added to a chain of blocks that form a long history of all related permanent transitions. All blockchain users are kept anonymous while their ledgers remain visible to every other user. This is what keeps the blockchain decentralized, but secure. No single entity holds a monopoly over the system and over the data that is stored on the blockchain.
How Does Blockchain Technology Influence the Metaverse?
To understand how the blockchain can influence the metaverse, it’s important to understand the differences between Web2 and Web3.
The internet as we know it is currently at the web 2.0 stage, where users are able to interact with information online. This is evident in social media and content creation platforms. Unlike in Web 1.0 where users used the internet as a means to access information, Web 2.0 enables users to contribute to the wealth of information on the internet.
With Web 3.0, users will be able to actually own property on the internet. While the prospect of owning something intangible yet valuable may be far-fetched, you need only look at how companies have managed to turn user data into a commodity.
Blockchain technology is what will enable users to claim ownership over an asset on the internet. The fact that the blockchain is decentralized also protects from data loss. This is what makes the ledger truly permanent, therefore making ownership of online assets something that’s already happening.
A cryptocurrency refers to a digital currency that is backed up by blockchain technology. While these assets took a long while to gain mass adoption, the increased adoption of Bitcoin over recent years is a mute but eloquent testament of its viability.
Cryptocurrencies are not issued by any centralized body. This is what makes cryptocurrencies immune to interference (and monopoly) from governing bodies. These assets not only prove that true ownership of digital assets is viable, but also that there is a significant desire for people to move their assets into a decentralized platform.
However, cryptocurrencies are not without their problems. It’s important to understand that cryptocurrencies are relatively new. While the cryptoverse is not the wild west that it once was, these assets are highly volatile compared to other asset classes like stocks. Cryptocurrencies also require a lot of energy to run the equipment necessary to keep them operational, and they are sometimes used for criminal activities.
Cryptocurrencies are going to play a vital role in the future. This is also why it’s important to take time to understand this new asset class. Resources like this Crypto glossary will serve as a great reference as you learn more about the cryptoverse.
Non-fungible tokens are unique assets that cannot be destroyed or altered (unless developers create a burning mechanism to this effect). NFTs can be anything digital. They can come in the form of art, game assets, and the like. Like cryptocurrencies, NFTs also hold value. However, unlike cryptocurrencies, the value of NFTs is often derived from their perceived value, much like art. They serve no purpose other than being tradable and limited.
The disruptive nature of Web3 can change all manner of interactions on the internet. This change will bring about new benefits and new dangers. Understanding these technologies is essential so that we are better able to adapt to these changes in the near future.
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