Metaverse Economy
How do NFTs fit into the metaverse?
Non-fungible tokens (NFTs) figure to play a big role in the usefulness and popularity of the metaverse. NFTs are a secure type of digital asset based on the same blockchain technology used by cryptocurrency. Instead of currency, an NFT can represent a piece of art, a song or digital real estate. An NFT gives the owner a kind of digital deed or proof of ownership that can be bought or sold in the metaverse.
Metaverse Properties bills itself as the world's first virtual real estate company. The company acts as an agent to facilitate the purchase or rental of property or land in several metaverse virtual worlds –– including Decentraland, Sandbox, Somnium and Upland. Offerings include conference and commercial spaces, art galleries, family homes and 'hangout spots'.
While the metaverse has created opportunities for new companies, such as metaverse properties to offer digital goods, established brick and mortar companies are also jumping in. For example, Nike acquired RTFKT –– a startup that makes one-of-a-kind virtual sneakers and digital artifacts using NFTs, blockchain authentication and augmented reality. On its website, RTFKT said it was 'born on the metaverse, and this has defined its feel to this day.'
Prior to the acquisition, Nike filed seven trademark applications to help create and sell virtual sneakers and apparel. Nike and Roblox also partnered on 'Nikeland', a digital world where Nike fans can play games, connect and dress their avatars in virtual apparel.
'NFTs and blockchain lay the groundwork for digital ownership,' said Nick Donarski, CEO of ORE System, an online community of gamers, content creators and game developers. 'Ownership of one's real-world identity will carry over to the metaverse, and NFTs will be this vehicle.'
Metaverse properties?
'The term Metaverse is used to describe a combination of the virtual reality and mixed reality worlds accessed through a browser or headset, which allows people to have real time interactions and experiences across distance.
'Right now, what will become the Metaverse is actually a series of disconnected metaverses, like the ‘walled gardens’ of the early internet [darpa.net, bit.net, or aol.net] that eventually came together to form the internet as we know it today. The current set of metaverse worlds each has its own access, avatars, interactions, and currency. Fortnite, for example, is separate from Roblox, which is separate from Decentraland and others.
'… The current increase in attention to the Metaverse is partly driven by the very recent ability to fully "own" virtual objects, experiences, or land. Blockchain, the "crypto finance hub", makes it possible to precisely define a virtual thing so it can be bought and sold. There are entire metaverse worlds based on this new economy. Decentraland and Sandbox, for example, are both metaverse worlds that sell virtual land to businesses that build virtual buildings. Sotheby’s, the nearly 300-year-old auction house, has a building in Decentraland that your avatar can walk around and view what is being auctioned. Republic Realm, a company that develops land in the Metaverse, recently paid $4.3 million for a piece of virtual land in the metaverse-world Sandbox.
'If paying real money to own virtual land sounds a bit crazy, remember when most of us thought that purchasing domain names was crazy. But then, suddenly, it wasn’t crazy … [and many] people made a lot of money selling coveted domain names.'
Why should leaders care?
'If you’re trying to reach an audience of 15-30-year-olds they’re probably not on the internet or on social media any more, they’re probably in the Metaverse.
'Nikeland, a place to hang out, play, and dress your avatar in virtual Nike products, opened in Roblox last year. By early this year, nearly seven million people had visited Nikeland. In 2020, 12.3 million people attended a single virtual concert by rapper Travis Scott, hosted in Fortnite. When you watch the video of that concert (available online), you realize after a short while that the dancing figures … were all real people, connecting from locations around the world.
'There are things you can do in virtual reality and augmented reality that you just can’t do in real life across distance. You can mimic being together in ways that aren’t possible over Zoom. You can point to something to explain, use hand gestures (in some platforms), draw on a piece of paper, go places together. Think about the incredible possibilities, such as a collaboration between surgeons, or creating a clay model for a new-car design. These and all sorts of other collaborative activities are all easy in the right metaverse world, which eliminates the impediment of distance.
'For organizations, a virtual or hybrid meeting feels as close as you can get to being together in a room. Of course, it’s not the same as in person, but it’s second best. My team is set up to have collaborative meetings this way. And when we need a work break, we have 15-minute one-on-one get togethers to play virtual ping pong with colleagues from all over the world. It’s the virtual equivalent of an office coffee break; it creates a real connection and builds social bonds.'
When is it coming?
'Within a couple of years, we’ll see "massive adoption and uptake,"' she predicted. 'It’s just a matter of time.'
What should leaders do about it right now?
Organizations, Woolsey said, need to consider three metaverse categories:
1) Customer or consumer-facing. 'If your target market is 15-30-year-olds you need to be there. You need to deliver an experience that engages your audience and is consistent with your brand. You could build a store that sells virtual goods or connects to your e-commerce offerings, or you might choose to deliver an event or other type of engagement.'
2) Employee facing. 'Metaverse experiences are perfect for hybrid meetings, multi-location training programs, and institutional events. Any time you have a team that is dispersed, there are opportunities to use this technology to bring them together, building community, affiliation and engagement.'
3) Internal operations. 'Metaverse technology can be used to explore industrial or operational scenarios that would be far too expensive to build in real life. Auto companies already are designing in "digital twins", doing their first dummy crash test in a metaverse world, and collaborating on model modifications in augmented reality.'
How do businesses get started?
'Don’t do Metaverse for the sake of doing Metaverse,' Woolsey cautioned. 'Think through carefully where you are most likely to find value in each of the three categories I described. Go there now and experiment. Start small and test with your intended audience so you can understand the actual value both qualitatively and quantitatively. Based on what you learn, find the path that delivers strategic value and plan to scale.'
The ability to create value through the Metaverse needs to be one of many tools available to your organization to meet its strategic goals.
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