The metaverse is a vague phrase that refers to virtual environments in which individuals, in the guise of avatars, may game, work, play, socialize and trade. In October, Facebook said it was changing its name to Meta and would be focused on constructing virtual worlds, which it argued represent the future of the internet.
Decentralized, crypto-focused game metaverses such as Axie Infinity and The Sandbox have been bringing in players of late. They let users to manufacture and exchange objects in the form of non-fungible tokens, or NFTs — forms of secure crypto collectibles — and feature in-game economies that employ cryptocurrencies.
Goldman’s analysts said crypto technology must be at the core of the creation of metaverses since it enables users to safely hold assets or goods, and transfer them across multiple platforms without the requirement for a central party’s approval. For example, The Sandbox operates on the ethereum crypto network, which allows players to purchase and sell in-game land and NFTs on exchanges outside the metaverse, such as OpenSea.
“We predict that the metaverse is likely to be an amalgamation of numerous 3D locations and that users would travel between them constantly,” Goldman added. “If any virtual products or services are unable to travel from one area to another with the user, we feel their value is likely to be more limited.”
The experts added: “With respect to the metaverse, blockchain is the only technology we see that can uniquely identify any virtual item independent of a central authority. This capacity to identify items and subsequently monitor ownership will be vital to the operation of the metaverse whenever it ultimately materializes.” A blockchain is a digital record of transactions, which is supervised by all participants of the network rather than by a single entity.
Blockchain technology drives bitcoin, where users called “miners” have to solve cryptographic challenges to validate transactions, keeping the network safe.
Although Facebook/Meta has deployed early versions of its metaverse, it’s unclear yet if the firm expects decentralized blockchain technology will play much of a role. Many crypto aficionados are fearful that the company’s financial strength and dominance in social media means it might grow to dominate the metaverse and tightly regulate production and trade.
Meanwhile, skeptics are very suspicious of the entire premise of the metaverse, pointing that prior virtual worlds such as Second Life have been there for years and that virtual reality gear have never truly taken on. Goldman’s statement was optimistic on the blockchain in general, but the bank argued it was too early to draw out clear investment strategy around it.
The researchers claimed blockchain “has considerably deeper and far-reaching implications for decentralized identity and ownership of both digital and physical items.” They claimed the technology might boost privacy on the internet and do rid of the need for centralized control in a number of businesses, such as supply-chain management.