Blockchain Blog 19: Metaverse and NFTs
People invest a lot of money buying in-game items when they don’t own anything. Web 3.0 and blockchain are solving this through NFTs — nonfungible tokens. Web 3.0 is the next evolution of the internet, and it’s powered by the blockchain, where you can not only read and write on the internet, you can also own the internet and this is very important for the metaverse. Just like in real life, you can own things. You should be also able to own things on the internet. This magic happens in the middle of the metaverse.
It is not mandatory to have a blockchain or a gaming or mixed reality, but it’s there in the middle in the intersection of these technologies that metaverse happens. And these things are supposed to be interoperable. Just like nowadays, the internet is interoperable. If you have a Yahoo email and I have a Google Gmail email, you can send me an email.
Now imagine that you live in a world where Yahoo users can only send emails to Yahoo and Outlook can only send emails to Outlook. Gmail can only send emails to Gmail, and this is how the internet behaves at the moment.
Regarding the Metaverse, won't it be wonderful if you play Fortnite and you can send your skin to CounterStrike?
NFTs and Metaverse
NFTs are non-fungible tokens, meaning that they are exclusive items on the internet that are recorded on the blockchain. NFTs are these certificates of ownership that allow you to own things on the internet. And why are they important for the metaverse? If you search for NFTs and metaverse, both words come together quite often. NFTs will be key to assessing the metaverse and beyond.
The metaverse is still emerging, but it’s still clear that NFTs will be the key to unlocking many parts of it. NFTs are like going to the notary. Every time you buy a house, you need to go to a lawyer or a notary to do the public registration that you own that house. Now, if we are moving to these metaverse worlds or part of our lives is moving to it, we also need to have this notary system to register our ownership. NFTs in the Metaverse will make you an owner, not just a renter, on the internet.
If you post something on Instagram, you don’t really own it. The Instagram company owns it, in this case, Facebook or Meta.
The major global brands experimenting with NFTs and the Metaverse. Meta’s metaverse will support NFTs, even they are also exploring NFTs and they’re hiring a lot of people for their blockchain crypto team.
Why NFTs are valuable?
You sometimes may be surprised that these CryptoPunks or some NFTs are being sold for millions of dollars just because it is exclusivity and ownership.
For example, below is the Vincent van Gogh’s original painting in the muesum, the Starry Night,
Below you have the print that is sold on eBay, or Amazon,
The original in the museum will be worth in the millions, whereas the print above is worth like a few dollars.
Why? Because the original one is unique. It was the one that was created by the artist, and it’s the one that has a certificate of authenticity, of ownership, while the print one doesn't.
People like to have the original thing, not the copy, and this is what NFTs allow us to do. They allow us to have original things on the internet. So non-fungible assets are unique because they differ in value and properties, and they differ when compared to fungible items.
Fungibility means that two objects are equivalent in design and their individual units can be mutually replaced.
Items are fungible, they are alike, for example, I can send you one bitcoin, you send me one different bitcoin. It’s all the same. They have all the same value. But if I send you a Picasso painting and ask you to send me an M. F. Husain painting, you are going to probably not accept it because they are different items.
So NFTs are digital representations of digital assets and also sometimes physical assets that are unique and scarce and fungible. Thus they are available for investors and collectors. And a crypto collectible, or NFT, is cryptographically unique. They are tokens represented on the blockchain, and they live in smart contracts. They live in Ethereum or Solana or any other network chain.
In the real world, you have provenance through notaries, so you know who owns what by going to a notary or a lawyer and registering in the paper and people sign that paper.
Now in the Metaverse, in the Digital Worlds Web 3.0, you have blockchain and smart contracts, and having a blockchain is like having a thousand notaries verifying who owns what. And actually, it’s much easier to verify if you own something on the blockchain than it is in the traditional world.
Types of NFTs
There are different types of NFTs. There are collectible items, including avatar pictures and profile pictures. These are important for the metaverse. You have virtual lands. Video game items, art, both physical art and digital art, media and music, memes, gaming items, sports moments, real-world assets, and domain names.
There are two types of NFTs that are important for the Metaverse, you have collectible items, including avatars, and have virtual lands. Collectible items are important because you can own, for example, your avatar.
For the people that play games, they often have these avatars, you build your avatar or you build like the way you want to look on the game, but you don’t own that avatar, the game owns that avatar. Imagine that you can own it and you can have your own avatar across different games. This would be very cool and you own it and it’s represented by an NFT.
Then there is virtual land. Virtual land is extremely important in the metaverse. The image here you can see here it’s a parcel of lands being sold on OpenSea. OpenSea is an NFT marketplace, you could own land in the metaverse.
Watch out for this video to know how to buy virtual land on Decentraland?
Enthusiasts see NFTs as the future of ownership. All kinds of property — from event tickets to houses — will eventually have their ownership status tokenized in this way, they believe. For artists, NFTs could solve the problem of how they can monetize digital artworks. They can receive more income from NFTs, as they can get a royalty each time the NFT changes hands after the initial sale. NFTs could also transform music. Kings of Leon’s NFT allows buyers access to limited-edition vinyl or seats at future concerts.
Given that anybody can create NFTs, the scarcity of each piece does not guarantee value. Losses can stack up if the hype dies down. In a market where many participants use pseudonyms, fraud is also a risk.
Time will tell what kind of future NFTs and Metaverse holds in the combine. We will explore more about the Metaverse and technical aspects of the NFTs in the upcoming blogs.
I will leave you with Cleo Abram’s video on NFT:
Read Next Part: Blockchain Blog 20: Metaverse — The Future is here
Entire Series: 28 Blogs on Blockchain and Cryptocurrency
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