What is Metaverse?
The Metaverse is an iteration of the Internet part of shared virtual reality, often as a form of social media, The metaverse in a broader sense may not only refer to virtual worlds operated by social media companies but the entire spectrum of augmented reality The term arose in the early 1990s, and has come to be criticised as a method of public relations building using a purely speculative, “over-hyped” concept based on existing technology.
Understanding Zuckerberg’s Idea
To understand why Mark Zuckerberg thinks “the metaverse” is the next frontier, consider the case of Sam Peurifoy. The 27-year-old chemistry PhD from Columbia University left his job at Goldman Sachs at the height of the pandemic and is now seeking out his fortune in crypto by playing video games.
He has recruited dozens of people from Mexico to the Philippines to a “Guild” that plays under the command of “Captain” Peurifoy. In exchange, he ponies up the funds needed to enter Axie Infinity, a game where players collect Smooth Love Potion — a digital token that can potentially be converted into real money.
The metaverse of Zuckerberg’s dreams is the sort of place where everyone’s plugged into a virtual reality, able to teleport, make things happen merely by thinking about them and effectively step beyond the limitations of the physical world into a brave, new digital one. The billionaire concedes this is still “a long way off.”
This world is filled with dangers though, and is far from altruistic. Investors and bankers have profound disagreement about how cryptocurrencies will shake out in the end, but what they do know is that prices have been extremely volatile. While Bitcoin, Ethereum and others are gaining more Wall Street acceptance, the larger universe is populated by an ever-expanding number of new and untested meme coins.
Axie Infinity Boom
Axie — which is at the forefront of this “GameFi” trend — has already generated more than $2.5 billion in trading volume. Several other rivals offering games that lure players with the promise of crypto are also gaining popularity. Venture capitalists and hedge funds are trying to cash in on this new online gold rush in which they predict billions of people will swipe, crush, shoot or kill in the hope of earning digital tokens.
Axie isn’t much to look at next to the many startlingly realistic games out there. It centers on Pokemon-like characters that fight and breed in a simple game of strategy. What sets it apart is the fact that aside from earning stars or hearts or crushed candy for winning this game, players get something much more valuable, at least theoretically: Smooth Love Potion.
In Axie’s corner of the metaverse, primitive as it may be now, players must buy NFTs — the blobby monsters called Axies — before they can play. The ante: a minimum of three Axies, at roughly $300 apiece, paid for in Ethereum, the №2 cryptocurrency after bitcoin. In other words, it takes nearly a grand to start playing, with no guarantees of success.
The result: Axie has become the single most valuable collection of NFTs anywhere yet.
For years, players like Peurifoy have paid the overlords of a $175 billion industry — Sony, Nintendo, Tencent, Microsoft — homage to play in digital fiefs. They’ve watched the fruits of their labor — those stars and hearts earned, levels transcended — vanish into nothing once the game is over. They want something more, something closer to capitalism, with private ownership of the means of production, wage labor, voluntary exchange.
As Axie has lured players, Axie Infinity Shards — another token in the game — have taken off. AXS has soared from $3.22 in June to about $150 now, even as some of the more popular crypto coins have lost value.
Such upside isn’t lost on gamers, particularly those in developing countries. Chat rooms are full of stories about how Axie helped someone get by during the pandemic or even earn enough money to buy a home.
Nick Kneuper is part of the experiment right now. His company is putting out a game called Crypto Raiders — “the World of Warcraft for NFTs,” he calls it. He has a team of about 10 people and about 1,800 players. They initially sold NFT characters for $45 a pop. Within three months, those NFTs were fetching $680.
Kneuper, 31, is the aptly named “head of growth.” But can runaway growth lead to problems for virtual words, the way it can for the real one? The regulated economy of Second Life, a pre-NFT online world that’s been around since 2003, is mostly for fun, not profit. Its virtual currency, the Linden dollar, is rock stable compared to the wild ups and downs in cryptoland.
“The real challenge,” says Kneuper, “is creating a balanced game.’’ Too many players earning too much digital money could effectively crash a game’s economy. What happens if millions want to play Axie tomorrow — or if, for whatever reason, the Smooth Love Potion that gamers have been chasing for hours, days, weeks and months abruptly collapsed?
In that scenario, the gamers’ virtual-world problems start to get real fast. Kneuper says future metaverse economies will have to be managed just like our real one. His prediction: “people with economics degrees are going to get hired by NFT games.”
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