The metaverse is evolving into a massive economy, and we're witnessing institutional investments driving growth in ways we haven't seen before. This growth is redefining how we view digital ownership and what it means to be a part of this digital world. But is it all sunshine and rainbows? Let's dive deeper into what the open metaverse entails and how it could shape our future.
What is the Open Metaverse?
The open metaverse is a combination of decentralized digital experiences, where property rights are granted to participants and holders—something that was largely absent in earlier internet iterations. Thanks to Web3 and blockchain tech, true digital ownership is more than just a buzzword. If you own any fungible or non-fungible tokens, you’re already a part of this open metaverse, a sprawling universe filled with capitalist economies made up of virtual worlds and millions of users.
Institutional Investment: A Double-Edged Sword for Crypto Assets
Increasingly, institutional investors are eyeing the open metaverse and Web3 technologies. Their involvement could provide the necessary financial backing to bring a decentralized metaverse into reality. According to a KPMG survey, many are optimistic about its potential and see value in investing now, even if mass adoption seems far off. This funding is critical for developing the technologies and infrastructure that will make a decentralized metaverse viable, like blockchain and interoperability standards.
However, institutional investment could also lead to centralized power within decentralized systems, and it’s essential to strike a balance to maintain the ethos of decentralization.
Economic Opportunities: From Gaming to Real Estate
The open metaverse opens up a variety of new economic opportunities. The concept of play-and-earn games was gaining traction before the 2023 crypto winter made it seem unrealistic. Yet, these opportunities still exist and are especially beneficial in less affluent regions.
A 2024 article from the New York Times highlighted how players in the Philippines could earn more than twice the local minimum wage by converting in-game tokens to pesos. In other words, these digital economies can offer more than local physical economies.
Real estate tokenization through cryptocurrency is another avenue with promise. It allows fractional ownership of virtual properties, making real estate investment accessible to a wider audience. This could democratize real estate and create new income streams for property owners.
NFTs: Changing the Game in Crypto Asset Management
NFTs are unique digital assets in the metaverse—from virtual land and artwork to game items and beyond. By owning an NFT, you own what’s stated in the smart contract—whether it's an image, a game item, or commercial rights to an asset. This represents a shift in how we think about ownership online, moving away from licensing to outright ownership.
NFTs are also beneficial for creators and owners. They receive nearly all proceeds from sales minus a marketplace commission and gas fees, in addition to creator fees/royalties for future sales.
Challenges Ahead: Regulatory Hurdles and Technical Issues
However, there are challenges in relying on institutional investors to spur Web3 growth. A major one is the lack of comprehensive regulations specifically designed for Web3. This gray area can create legal and compliance headaches.
Web3's decentralized governance models also come with their own set of challenges. Decision-making and accountability can become complicated when relying on decentralized consensus mechanisms and token-based voting.
Interoperability is another hurdle. Different decentralized applications and platforms may not easily communicate or transfer assets, raising potential security concerns.
The Future of the Open Metaverse
Despite a tumultuous 2023, the open metaverse is still growing. Web3 companies have been building during the downturn, positioning themselves for future success. As noted in a recent Animoca Brands investor update, they’re in solid financial shape.
The Web3 market is filled with successful launches, and I expect that 2025 will be a pivotal year for Web3 and the open metaverse. We're witnessing a shift towards the notion of property rights in our online lives, and the growth in digital ownership is becoming a reality.
