Metaverse Will Change Cryptocurrency and DeFi - PerfectionGeeks
How The Metaverse Will Change Cryptocurrency and Defi
May 02, 2022 01:30 PM
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Metaverse Will Change Cryptocurrency and DeFi - PerfectionGeeks
May 02, 2022 01:30 PM
Despite experiencing unprecedented growth in value and usage in 2021, cryptocurrency remains volatile and is not yet mainstream. The emerging Metaverse will change all that. It will include VR, AR, and other immersive technologies that will eventually lead to regulation, wide-scale adoption, and stability for cryptocurrency.
Meta was more than a name change. We all know that rebranding transformed the company's role into one that helps make the crypto space more inclusive.
This inclusivity allows you to connect the virtual world with real-world problems, exchanges, and issues. Metaverse makes it easier to trade digital art and FinTech products on the blockchain. You may be wondering what important uses Metaverse, NFT, and Defi can have. Let's look at some of their real-world use cases.
The Metaverse is a virtual reality space that allows for full immersion. This virtual environment will allow avatars to interact with each other and navigate in a more participative way. It will allow users to socialize beyond just sharing documents and images. The Metaverse lets you do everything, from pre-screening real property properties by viewing them in virtual reality to purchasing homes using tokens. Due to their popularity, Metaverse tokens such as MANA, GALA, and many others are growing in popularity. These tokens can be traded in virtual marketplaces within the Metaverse environment.
NFT, or Non-Fungible Tokens, are more than just about buying and selling digital artwork. There are many real-world uses for NFTs. Fashion brands and corporate companies have begun to distribute their NFTs. Social media posts, such as Jack Dorsey's first tweet, sold for $2.9million? NFTs allow you to trade any item, even celebrity assets. Gaming platforms have seen a renewed life thanks to NFTs. Players have begun to "play to win". Games can now help players earn NFTs, which can be traded on markets for higher prices. NFTs can be used in the same way as Metaverse. Metaverse coins can be used to trade NFTs for gaming assets.
To use the Metaverse tokens or coins, you must first purchase them. It's possible to do this by using a network of bank intermediaries and fiat currencies. However, this will ruin the purpose of a decentralized trading system. Decentralized finance, or Defi, is what comes into play. Defi networks allow you to easily purchase or sell Metaverse tokens via smart contracts, P2P transactions, etc.
The Metaverse and cryptocurrency appear to be concepts that go hand in hand - virtual worlds with virtual money to spend.
They are an integral part of what's being called "web3", the third internet generation. It follows web1 - world-wide-web and web2 (social media). This version of the internet is expected to be more immersive and engaging. It will use virtual and augmented realities (VR/AR) to create 3D environments.
As we have seen with Bitcoin, the Metaverse and cryptocurrency can coexist independently and happily coexist without one another. It has utility both in the real and virtual worlds. Many visions of the Metaverse, including Mark Zuckerberg's only, tangentially include blockchain solutions and crypto.
The ideas can work together. Shopping is a favorite pastime of many people. It was a major feature of web1 and 2, so it's not surprising that Web3.0 will also include shopping. It is becoming more obvious that while no one knows what the Metaverse will look like, it can significantly impact the evolution of cryptocurrency and its impact on society.
The best thing about the virtual world is the lack of friction. We can click a link or press a button to get there. You don't need expensive and cumbersome transportation infrastructure, passports, or luggage packing.
The same applies to cryptocurrency. Traditional money, also known as "fiat", is transacted in by crypto enthusiasts. It requires an extensive network of banks and regulators who act as clearinghouses, intermediaries, and custodians. To transact in cryptocurrency, however, you will need software that runs on standard computers.
We shouldn't ignore the fact that the software used to crack the cryptography behind currencies works uses much energy. Protocols are continually being improved, and new technologies are being created to reduce energy consumption. The newer proof-of-stake cryptos are, according to some, far less harmful than the older proof-of-work currencies such as Bitcoin.
The Metaverse is becoming more popular, and we will require frictionless ways to pay for virtual goods. We might want to use it to buy virtual land if we want to have our piece of digital land to entertain friends and build a business.
The Metaverse could add substantial value to the global economic system - up to $1.5 Trillion by 2030. Many of these values could be realized through cryptocurrency. As more people become more comfortable using cryptocurrency as a payment method, this could lead to cryptocurrency becoming mainstream.
It will be easier for cryptocurrency users to acquire, store, and handle it as the main means of exchanging money in the Metaverse. It will also be used more often outside of the Metaverse - to send money to family and friends or cross-national borders. This is a problem with a traditional currency that can sometimes incur high fees, if at all.
This will lead to banks and other financial institutions increasing their efforts to support cryptocurrency and blockchain-derived financial models. They will have to improve their infrastructure to be competitive in an age where financial systems are free from middlemen and borderless. Some, such as the chief of the IMF, have predicted that cryptocurrency will eventually end banking as we know it. However, businesses will likely want to retain the protection and regulation that central banks and banks provide to transactional networks. Those open to adopting cryptocurrency will thrive in the new world of peer-to-peer financing, and digital currency will be flexible and forward-looking. PayPal and Mastercard both are payment systems that have begun to embrace cryptocurrency, particularly Bitcoin, fully - and they say it because it is clear that it will be an important part of the future of payments.
Financial institutions must prepare and plan to integrate crypto and the Metaverse into their business models and services, as there are already signs. Otherwise, they could be left out of an important new sector of the economy. Banks' established brands and large customer base will guide them to transition to the crypto-fuelled metaverse economy.
In 2020, the metaverse economy had more than 20 billion in retail sales. This stable coin and crypto trading are increasing by 40% per year. Although many transactions were limited to digital art or virtual luxury fashion products or skins, this is only the beginning of digital assets becoming a store of value. Dolce & Gabbana recently sold a collection of mostly digital-only items for $5.7million. As more people use digital assets within the Metaverse, they will also use them to send money between friends, pay for physical goods, or back up real-world assets. The explosion in crypto use, even in the Metaverse, is why crypto regulation is being discussed. This would undoubtedly bring crypto closer to the mainstream financial system and give it more stability.
Banks should not wait for regulation. Banks should not wait for regulation. They should move towards this new metaverse economy immediately. These are some principles to guide you:
The most trusted institution is the bank, with most respondents trusting banks at a higher rate than the government. Banks have a huge opportunity to tap into their customers' growing interest in crypto and digital assets. It's not just the younger generation that uses crypto. 45% of crypto-holders in the baby boomer generations used it to purchase.
This is a way to assist, as long as regulations permit. Mastercard processes crypto payments. This shows how a traditional financial institution caters to consumers' demand for crypto but keeps them in the network and brand. U.S. U.S. Bank is the latest player to offer custody services. This shows that funds dealing in bitcoin need a bank to back them up.
Banks can prepare for the future by preparing to accept crypto payments and offering custody services. This will allow them to be fully involved in traditional financial transactions such as mortgages, loans, and equities trading.
Banks have another opportunity to leverage their brands in risk management, user verification, and customer authentication. This is especially true as more people depend on peer-to-peer crypto transactions and want to be able to trust payment sources.
The need for digital platforms to process financial transactions in the virtual and real-world is growing with the Metaverse payment platforms and their shopping options. Meta, previously known as Facebook, recently launched a pilot which allows users to send value to other people using a digital wallet. It also offers benefits such as international transfers and no fees.
The financial sector has the opportunity to offer these platforms to their customers or to help them use them. Bank APIs can be opened to enable users to connect to their bank accounts with such payment apps. These emerging apps won't be limited to phones or laptops; they will have to be integrated into various VR and AR systems.
As in traditional fintech, banks are behind many payment applications that don't have banking licenses. They will also benefit from a white-label approach to the Metaverse. Banks can't ignore the value that is being moved in Metaverse.
Connect with VR and AR Platforms to Meet Customers Where They Are Banks need to look at ways to expand their presence in this world and how they can better serve customers who will spend more time there. Customers should use AR and VR technology to improve customer service. Customers will be able, for example, to bank and finance from anywhere with VR glasses. This is a far better experience than what they can do on their phones.
Financial institutions and banks should be aware that millions of people spend time on metaverse platforms. These can be games, virtual concerts, or real-estate selling channels. These platforms are immersive and highly visual, so advertising has new possibilities, including partnerships with celebrities and digital billboards.
Although there are many unknowns regarding the Metaverse's future, it is impossible to predict how it will impact us or what it will look like. Financial institutions will need to be ready for regulation. But they must also figure out how to take their brand recognition and trust and use them in the Metaverse. Banks will be able to successfully navigate this transition by leveraging their brand and trust and meeting their customers' needs.