Welcome to the exciting world of the Metaverse, NFTs and DAOs!
If you're new to this space, then this Beginners Guide is perfect for you. We'll take you through everything you need to know about these revolutionary technologies, and how they're changing the way we interact with the digital world.
The Metaverse is a new type of online universe that utilizes blockchain technology to create a decentralized, immersive and interactive experience for users.
NFTs (Non-Fungible Tokens) are unique digital assets that can be used to represent anything from artworks and collectibles, to in-game items and experiences.
DAOs (Decentralized Autonomous Organizations) are online communities or businesses.
INTRODUCTION
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If you're interested in learning about the Metaverse, NFTs and DAOs but don't know where to start, then this is the eBook for you! The Beginners Guide to the Metaverse, NFTs and DAOs walks you through everything you need to know about these exciting technologies in a friendly and easy-to-understand way.
You'll learn about the history and development of the Metaverse, what NFTs are and how they work, and how DAOs can be used to create decentralized organizations. This guide is essential reading for anyone who wants to get started with these cutting-edge technologies.
• Learn about the Metaverse, NFTs and DAOs in an easy to understand format
• Gain a basic understanding of these concepts so you can start using them
• Get ahead of the curve by learning about revolutionary technologies before everyone else does
• Quickly learn everything you need to know about the Metaverse, NFTs and DAOs without having to wade through dense technical documentation.
Barbara Bickham
I am an award-winning CTO and VC Fund Manager with extensive experience in Technology, Entrepreneurship and Fundraising. She is the Managing Director for Trailyn VC, a pre-seed fund investing in diverse deep tech founders. She is also the Founder and CTO of Trailyn Ventures, helping entrepreneurs and investors understand Deep Technology.
Bruce Lee
CHAPTER 1
What is a Dao?
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So, what is a DAO?
A decentralized autonomous organization is exactly what the name says; a group of people who come together without a central leader or company dictating any of the decisions. They are built on a blockchain using smart contracts (digital one-of-one agreements). Members of DAOs often buy their way in, most of the time purchasing a governance token specifically for the DAO that gives them the ability to vote on decisions that are made around how the pool of money is spent and managed. These groups can be made up of people from around the world, who often communicate on Discord channels.
A DOA has a “completely flat hierarchy,” according to Jason Yanowitz, co-founder of crypto trade publication Blockworks. “It’s a way to govern people differently around a shared balance sheet.” Source: digiday.com
What does a DAO do?
Each DAO has a different mission, whether it is single-purpose or part of a larger project, and can be associated with any number of industries.
Some of them are based on personal interests, such as the ConstitutionDAO, which banded together in the hope of buying one of the original copies of the U.S. Constitution from Sotheby’s last year. The group ultimately found out it was not the highest bidder and ended up losing the auction, but members were able to receive a refund of their initial investment.
Others have grander goals that involve essentially operating or running a business as a group. One example is Mantra DAO, which is a community-governed decentralized finance platform that allows people to stake, lend and borrow their crypto assets. Source: digiday.com
Types of DAOs
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It’s important to understand that DAO is a broad term than encompasses a huge number of different types of groups and business. Two collectives can be vastly different, but still both be DAOs.
Here are a few examples of well-known DAOs:
ThePleasrDAOcollects various NFTs and invests in other assets.
TheHerStoryDAO collects and funds projects by Black women and non-binary artists.
TheKomorebi CollectiveDAO funds women and non-binary crypto founders.
TheFriends with BenefitsDAO is an exclusive social club which you pay to enter.
TheMetaCartel VentureDAO is a for-profit business that invests in early stage decentralized applications. Source: cnbc.com
Why do we need DAOs?
Starting an organization with someone that involves funding and money requires a lot of trust in the people you're working with. But it’s hard to trust someone you’ve only ever interacted with on the internet. With DAOs you don’t need to trust anyone else in the group, just the DAO’s code, which is 100% transparent and verifiable by anyone.
This opens up so many new opportunities for global collaboration and coordination. Source: ethereum.org
How DAOs operate
To understand DAOs, you first need to understand the technology behind them. Most DAOs rely on blockchain technology and smart contracts, which are collections of code than run on the blockchain.
A blockchain is a decentralized, digital ledger. While they are commonly known to publicly document transactions of different cryptocurrencies, like bitcoin, and other digital assets, like NFTs, blockchains can also be used in a number of other ways. For DAOs, the blockchain can act as a backbone, keeping the structure and rules of each on-chain.
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In traditional organizations, there’s typically a hierarchy. A formal board of directors, executives or upper management determine the structure and have the power to make changes.
DAOs, on the other hand, are decentralized, which means they aren’t governed by one person or entity. The rules and governance of each DAO is coded in smart contracts on the blockchain and cannot be changed unless voted upon by the DAO’s members.
Instead of a select few having the majority of say, members of each DAO can vote on decisions together, typically on equal footing.
For example, PleasrDAO members collectively decided to buy the Wu-Tang Clan album. After doing so, they created an NFT to represent a deed of ownership to the album. The members of PleasrDAO co-own the NFT deed, and in turn, share ownership of the album.
Sometimes, in larger DAOs, teams may form to tackle different aspects of the organization with leaders that have been voted in. That way, not every single member is needed to vote on every nuance.
The most important aspect of DAOs is transparency, Turley says. Every decision within the DAO is pitched, discussed, voted on and documented publicly. Source: cnbc.com
DAO structure
Each DAO is structured differently, but usually, when joining a DAO, you agree to the code in place. It isn’t easy to change that code, and any changes typically require a vote between members.
DAOs are “very participatory,” says Aaron Wright, co-founder and CEO of OpenLaw, a blockchain-based protocol for the creation and execution of legal agreements. Wright has helped launch several DAOs, including FlamingoDAO, which collects NFTs.
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“You don’t have to wait for a quorum or a sufficient number of people to vote in order to make a decision. It kind of runs and operates like the internet, through rough consensus,” Wright explains. “If there’s more people that support a project, a decision is made.”
To obtain voting power or membership in a DAO, you typically buy governance tokens, which are cryptocurrencies that are tied to a certain project. In some DAOs, governance tokens can only be obtained in structured funding rounds, and occasionally, demand exceeds the amount of tokens available. By holding these tokens, members are typically able to own equity in the DAO and help shape the DAO’s future.
While it varies from DAO to DAO, the weight of a member’s vote usually depends on the amount they contributed to the project.
If a DAO doesn’t use governance tokens, it may accept investment of other forms, like in ether, the second-largest cryptocurrency by market value, Wright explains, since the Ethereum blockchain powers most DAOs. But, again, each DAO has its own system.
Beyond voting power, members can also work for their DAO. There are typically a number of internal jobs, including positions in token distribution and treasury management.
“Working for ownership means working for tokens,” Turley says. For example, he’s mainly compensated for his work on DAOs with governance tokens, but can also receive ether or USDC. Source: cnbc.com
The principal-agent dilemma
The main advantage of DAOs is that they offer a solution to the principal-agent dilemma.
Problems can occur in some situations, with a common one being in the relationship between stakeholders and a CEO. The agent (the CEO) may work in a way that’s not in line with the priorities and goals determined by the principal (the stakeholders) and instead act in their own self-interest.
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Another typical example of the principal-agent dilemma occurs when the agent takes excessive risk because the principal bears the burden. For example, a trader can use extreme leverage to chase a performance bonus, knowing the organization will cover any downside.
DAOs solve the principal-agent dilemma through community governance. Stakeholders aren’t forced to join a DAO and only do so after understanding the rules that govern it. They don’t need to trust any agent acting on their behalf and instead work as part of a group whose incentives are aligned.
Token holders’ interests align as the nature of a DAO incentivizes them not to be malicious. Since they have a stake in the network, they will want to see it succeed. Acting against it would be acting against their self-interests.
Source: cointelegraph.com
Fully Functional DAOs
DAOs need the following elements for being fully functional: A set of rules to which will operate, a funding like tokens that the organization can spend to reward certain activities to their members, and also to provide voting rights for establishing the operation rules. Also, and most important, is a well and secure structure that allows every investor to configure the organization.
One potential problem with the voting system is that even if a security hole was spotted in its initial code, it can’t be corrected until the majority votes on it. While the voting process takes place, hackers can make use of a bug in the hole of the code. Source: forbes.com
A famous example
MakerDAO – MakerDAO's token MKR is widely available on decentralized exchanges. So anyone can buy into having voting power on the Maker protocol's future. Source: ethereum.org
And the DAO downsides?
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Members of a DAO typically receive a “non-fungible token” or NFT in return for their investment. Put simply, non-fungible means that it can’t be exchanged for anything else, unlike cryptocurrencies, which like traditional currencies are designed to be exchanged for something.
Holding an NFT means you are recognized as a member of a DAO and therefore eligible to vote on how it should be managed. But, as writer Geoffrey Mak found when he investigated several DAOs for The Guardian, not all tokens are equal when it comes to voting rights.
One DAO he investigated allowed one vote per token. But, as tokens were also allocated based on the number of likes given to a member’s posts in its chatroom, it was possible for one individual to accumulate a larger number of tokens than other members.
The vulnerability of DAOs to hackers was spectacularly demonstrated in 2016 when a pioneering investment DAO, known simply as The DAO, was hacked. A flaw in the DAO’s code allowed a hacker to extract $50 million in the cryptocurrency Ethereum. Source: weforum.org
CHAPTER 1
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In this post, we'll define what the metaverse is, show a few examples of how the metaverse is used, and provide several ways to think about the metaverse.
Gartner expects that by 2026, 25% of people will spend at least one hour a day in the Metaverse for work, shopping, education, social media and/or entertainment. Source: (gartner.com)
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The metaverse is a shared, virtual space where people can meet, interact and do business. It's a bit like the internet, but with more user interaction and richer content.
There are many different types of metaverses, but they all have three things in common:
1. A shared, virtual space: Metaverses are created by computer code and designed to be inhabited by humans (or avatars, which are digital representations of humans).
2. User interaction: In a metaverse, users can interact with each other and with the environment around them.
3. Rich content: Metaverses are designed to be immersive and engaging, with rich 3D graphics and audio.
While the term has been floating around for the last few years, the word “metaverse” was actually coined by author Neal Stephenson in his 1992 sci-fi novel Snow Crash. In his book, Stephenson referred to the metaverse as an all-encompassing digital world that exists parallel to the real world. But in 2022, experts still aren’t sure whether the metaverse IRL could evolve into something similar.
“The metaverse is a 3D version of the Internet and computing at large,” Mathew Ball, a venture capitalist and angel investor who’s written a series of essays about the potential and structures of the metaverse, told VICE.
According to Ball, there are two ways to place this in the current context.
“When these two technologies (internet and computing) first emerged, all interactions were primarily text-based (emails, messages, usernames, email addresses). Then they slowly became more media-based (photos, videos, livestreams). The next elevation of user interface and user experience is into 3D. Secondly, if we think of mobile as placing a computer in our pocket and the internet being available at all times, think of the metaverse as always being within a computer and inside the internet.”
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Many experts look at the metaverse as a 3D model of the internet. Basically, a place parallel to the physical world, where you spend your digital life. A place where you and other people have an avatar, and you interact with them through their avatars. Some also argue that the metaverse in the truest sense of the term doesn’t actually exist yet.
“It’s not real at this stage, and won’t become real until people have a single location they can go to to get into in a virtual world they could live in,” Ibrahim Baggili, a cybersecurity expert and the founding director of the Connecticut Institute of Technology at the University of New Haven, told VICE.
Essentially, the metaverse is supposed to be a 3D version of the internet that is seen as the logical next stage of development, and would ideally be accessed through a single gateway.
“The internet was described as an ’information superhighway’ in the 90s, but it was more of just a term to refer to a potential future with networked computers rather than an actual highway,” said Timoni West, a vice president who oversees the AR and VR departments at Unity Software, a company that builds graphics engines for game development. “As it develops, the metaverse will also have equivalence to the real world and be much more distributed, democratic, fluid and varied,” she told VICE.
While the discourse on defining the metaverse differs from case to case, it is, in the simplest terms, a shared virtual space that is interactive, immersive and hyper-realistic. It would also include your own customized avatar and digital assets, which will likely be recorded on a blockchain. Source: vice.com
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The metaverse is often seen as the next step after web3.0, or the third generation of the internet. While web3.0 is focused on decentralization and data ownership, the metaverse is a more immersive and interactive digital world that would exist parallel to our physical world. In order to access the metaverse, users would likely need to create their own avatar, which would be stored on a blockchain. NFTs (non-fungible tokens) could also play a role in the metaverse, as they could be used to represent digital assets and experiences.
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Alongside a three-dimensional VR metaverse, there's another similar concept that's gaining traction: Web 3.0. Leslie Shannon, Nokia's Head of Trend Scouting, mentioned this in a VRARA Global Summit talk, speaking about the importance of the metaverse or a spatial internet.
Meanwhile, Deloitte already has a framework in place for the spatial web and Web 3.0, concepts closely linked to the metaverse.
Further, Mark Zuckerberg referred to the metaverse as an “embodied internet” in his Founder's Letter announcing Facebook's rebrand.
All of this points in one direction: the metaverse could be the next major online destination where global users congregate, engage, buy, sell, play, and work. It will start out as an alternative to social media and eventually come to encompass the world wide web as we know it.
2. Work and collaboration will consistently move into the metaverse.
Already in 2020, VR adoption for work, collaboration, and learning/education has increased.
Spatial that provide a VR alternative to Zoom saw a 1000 percent uptick in usage in this period, and Facebook came out with its own offering called Oculus for Business.
As companies recalibrate around employee expectations and requirements during the new normal, VR will be an important enabler. It will help workers transition to hybrid work and ensure that remote employees enjoy the same degree of engagement and access as their in-office counterparts.
In a recent survey , nearly 2 in 5 respondents said that they are very excited for AR/VR-enabled learning in the workplace. And, as Zoom fatigue sets in, the metaverse could be a compelling alternative for many.
3. There are exciting investment opportunities to be had.
The metaverse will inspire a bustling new economy at every level. For content creators and VR developers, it means another source of monetisation.
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A crypto-based economy would also allow fairer incentivisation of content and regular royalties. Apart from this, venture capitalists are also eager to get in on the early action in the metaverse market and invest in promising startups. Any one of these startups could be your new Facebook, and early investors could shape progress for several years to come.
Once the metaverse is executed, there will be new opportunities through advertising, digital events, e-commerce, etc. – a $1 trillion opportunity by expert estimates Finally, let's not forget the job creation potential of the metaverse. Facebook announced that it would create 10,000 new job openings in Europe alone to build its vision for the metaverse.
Nike has started hiring for virtual material designers for its own “ Nikeland ” and there were active vacancies mentioning the metaverse in October 2021. Professionals, in future, will find it difficult to ignore this trend.
4. The metaverse has major legal and regulatory implications.
Just like tech giants now dominate the global conversation around user privacy, data rights, cybercrime, and regulations, the metaverse could be the next minefield.
Right now, early WIPs of the metaverse suggest several risks while also being extremely exciting. NFT fraud is a very real possibility, land rights in the metaverse could be in question, and avatars – an extension of your real identity – open up challenging questions.
Today, even if you aren't a Facebook or Twitter user, it is difficult to avoid concerns around data privacy and misinformation. The same will be true for the metaverse a few years down the line.
That's why organisations, regulatory bodies, advocacy groups, and individual users need to consider this as a “big deal” to pre-empt similar or even more complex repercussions later down the line.
5. Governance
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The metaverse will need rules of engagement for users, rules for how the metaverse itself can change over time and enforcement mechanisms, including for tax collection, data governance and regulatory compliance. Early movers may be able to help set these rules. Security will be paramount, as a new, decentralized digital world may offer malicious actors a new world of entry points for attack. Authenticity and trust more broadly should also be front and center, to reduce the disinformation that has often plagued the internet.
6. Persistence
A true metaverse should reflect in real time the changes made in it by different participants, entering and leaving it in different ways, in different places, at different times. When you take your metaverse headset off, the metaverse and other participants will continue their activities uninterrupted, with (for example) smart contracts enforcing agreements and trading assets. This persistence will likely require a new approach to digital assets and activities, including services and applications that are portable, dynamically configurable and extensible.
Since no true metaverse exists yet, but many of its concepts are already business-relevant, many companies would benefit from taking six measured actions. The first three focus on opportunities and use cases available today. The next three will help build the capabilities that will help support metaverse success tomorrow.
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7. Near-term actions
Get up to speed. Most companies even many technology companies lack institutional familiarity with the metaverse's concepts, which are evolving quickly. Many may also lack the skills and processes to truly understand and trust their digital transactions and investments. Assign at least one resource or source of knowledge (such as a group) to understand key concepts such as cryptocurrencies and decentralized autonomous organizations and their relevance to your company, and to follow the metaverse as it evolves.
Develop a strategy. Identify gaps to close and long-term opportunities to build from the metaverse and its key concepts, then work on foundational measures. Many companies, for example, will likely benefit from recruiting digital native employees already at home with the metaverse's key concepts, as well as technical measures such making services extensible, developing plans for security and identity, and publishing application programming interfaces (APIs) to core systems so others can connect.
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Test the waters. Select a few opportunities available within the metaverse's underlying trends today. Lower-risk use cases include selling digital versions of physical goods, offering virtual tours of virtual products or facilities, and launching NFTs to enhance brand awareness and connections to customers. Companies may also wish to consider buying or leasing digital real estate for sales, advertising and customer support. Digital real estate is likely a higher-risk option, since no individual digital worlds have yet proved that they will have lasting relevance, but it may be a reasonable choice for some companies to consider. Source: pwc.com
8. It will be entirely democratized for all users
Metaverse platforms will have a democratized architecture, meaning that no single individual, group, or organization has ownership over its operations. Anyone with a stake in the platform's cryptocurrency will have a say in daily decision-making.
The decentralized nature of the Metaverse will entirely transform how the digital world operates. For instance, it may no longer be possible to roll out a sweeping algorithm change without user consent.
9. A lot of the Metaverse will be open-source
Although startups and companies are mostly building the Metaverse, a lot of its source code is available as open-source through Metaverse projects on GitHub and even VR world creation platforms like Vircadia.
Even global tech giants such as Meta have also embraced open source in a big way with its technologies for image synthesis, hierarchical visibility, AI, and others, available to developers.
10. It will transform how we interact with information
Today, we interact with online information in a two-dimensional format. There are texts and visuals, a 2D screen, and a passive user who enjoys limited interactivity through input peripherals that have been in use for decades.
The metaverse is the first major revolution in input-output exchanges since the invention of the mouse. A combination of hand controllers, eye tracking, and voice commands will allow users to interact with visualized data as if it were the real world.
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11. It will have major implications for accessibility
The Metaverse could make the internet more accessible to all and has particularly important implications for those living with a disability. For example, users with mobility impairment in the lower limbs can move around freely inside the Metaverse through different forms of gestures.
AI-based captioning and auto-translation could also help overcome hearing impairment and language barriers. However, more research is required for these solutions, and VR hardware has to factor in accessibility needs.
12. The Metaverse could advance scientific research
The Metaverse could leapfrog scientific research by several years, especially in healthcare, aerospace, manufacturing, and a host of other fields.
For instance, professionals in the pharmaceutical field can simulate the molecular structure of a vaccine in 3D, and then meet with project stakeholders in a VR environment. The Metaverse can fast-track approvals, boost error detection, and increase success rates.
13. It can become the universal digital destination
The Metaverse could eventually become a digital destination where all of us “hang out,” just like with social media today. It will determine friendships, relationships, and interpersonal dynamics, and could enable people from across the world to meet face-to-face without having to travel.
As a result, brands and marketers could also leverage the Metaverse for high-traffic advertising. Source: xrtoday.com
14. Economy
Companies will need to transition their marketing strategies from online ad buys to existing in a shared, virtual economy. Companies will need to do market research on their new customers in the metaverse. How people act and what their preferences are in the metaverse could be totally different than how they behave and what they shop for in real life. Add to that the layer of business to robot to consumer, where virtual assistants and robots own the relationship with the consumer and it all starts to make sense.
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While there are sure to be ads in the metaverse, brands can actually be part of creating the metaverse itself. Frederic Descamps, CEO of Manticore games said, “Even in ‘Ready, Player, One,’ who actually made the Metaverse there? It will be all about the act of creation.” Brands should approach this with responsibility and ethics and not make our world one giant ad. This is of the utmost importance. Source: forbes.com
15. Linking digital assets to real-world economic activity in the metaverse
The metaverse is also expected to have a strong connection with the real-world economy – and eventually become an extension of it. In other words, the metaverse must have the ability for companies and individuals to participate in economic activity in the same way they do today. Simply put, this means being able to build, trade and invest in products, goods and services.
To a certain extent, this may rely on non-fungible tokens (NFTs) as the foundation for value creation. A NFT is a claim of ownership for a unique, non-interchangeable digital asset that is stored on a blockchain. If NFTs become a commonly adopted tool for trading such goods, they could help accelerate the use of XR ecosystems as places people go to combine elements of the digital economy with their offline lives.
One way to think of this process is how the App Store encouraged businesses to digitize their operations, so that consumers could experience (and pay for) their products and services from any location. This legitimized the idea that retail and digital need not be separate, paving the way for a whole host of use cases that might not initially have made sense.
For example, it is plausible that Peloton, a company producing exercise equipment and video-streamed fitness classes, would not exist without the App Store. Without a widely adopted medium for digital consumer experiences, a service literally grounded in physical activity would have a weak business case for going online.
A successful vision of the metaverse sees transformations like these taking place at an accelerated pace and universal scale. Source: weforum.org
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How do NFTs fit into the metaverse?
Nonfungible tokens (NFTs) figure to play a big role in the usefulness and popularity of the metaverse. NFTs are a secure type of digital asset based on the same blockchain technology used by cryptocurrency. Instead of currency, an NFT can represent a piece of art, a song or digital real estate. An NFT gives the owner a kind of digital deed or proof of ownership that can be bought or sold in the metaverse.
Metaverse Properties bills itself as the world's first virtual real estate company. The company acts as an agent to facilitate the purchase or rental of property or land in several metaverse virtual worlds -- including Decentraland, Sandbox, Somnium and Upland. Offerings include conference and commercial spaces, art galleries, family homes and "hangout spots."
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While the metaverse has created opportunities for new companies such as Metaverse Properties to offer digital goods, established brick and mortar companies are also jumping in. For example, Nike acquired RTFKT -- a startup that makes one-of-a-kind virtual sneakers and digital artifacts using NFTs, blockchain authentication and augmented reality. On its website, RTFKT said it was "born on the metaverse, and this has defined its feel to this day."
Prior to the acquisition, Nike filed seven trademark applications to help create and sell virtual sneakers and apparel. Nike and Roblox also partnered on "Nikeland," a digital world where Nike fans can play games, connect and dress their avatars in virtual apparel.
"NFTs and blockchain lay the groundwork for digital ownership," said Nick Donarski, CEO of ORE System, an online community of gamers, content creators and game developers. "Ownership of one's real-world identity will carry over to the metaverse, and NFTs will be this vehicle." Source: techtarget.com
Epic Games
Epic Games, makers of the popular online shooter game series Fortnite -- with some 350 million users -- and the Unreal Engine software for game developers, planned to stake a claim in the metaverse following a $1 billion round of funding in 2021. This included $200 million from Sony Group Corp.
Epic Games' vision of the metaverse differs from Facebook's in that it wants to provide a communal space for users to interact with each other and brands -- without a news feed riddled with ads.
"I strongly believe that this aligns with our purpose to fill the world with emotion, through the power of creativity and technology," said Kenichiro Yoshida, chairman, president and CEO at Sony Group Corp. in a statement.
Microsoft
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The metaverse is coming to Microsoft Teams -- the software giant's online meetings competitor to Zoom. Microsoft said it will release Mesh for Microsoft Teams in 2022. The new service lets Teams users in different physical locations join collaborative and shared holographic experiences during virtual meetings.
Microsoft said Mesh will let users establish a virtual presence on any device using a customized avatar of themselves. This builds on the earlier announcement of Mesh for Microsoft, a platform for developers that includes a suite of AI-powered tools for avatars, session management, spatial rendering, synchronization across multiple users and "holoportation." Holoportation is a 3D capture technology that lets users reconstruct and transmit high-quality 3D models of people in real time.
Microsoft has already been working with professional services firm Accenture to create Mesh-enabled immersive spaces. Accenture hires more than 100,000 people every year and uses Mesh to help onboard new employees.
New hires meet on Teams to receive instructions on how to create a digital avatar and access One Accenture Park -- a shared virtual space that's part of the onboarding process. The futuristic amusement park-like space includes a central conference room, a virtual boardroom and digital monorails that new hires use to travel to different exhibits. Source: techtarget.com
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Ready Player One
The virtual world in the New York Times bestselling book Ready Player One is probably the best example of what the metaverse might look like.
In this science fiction novel set in 2045, people find an escape from a real world destroyed by climate change, war, and poverty by taking refuge in OASIS, a massive multiple online role-playing game (MMORPG) and virtual society with its own currency
Curious about what Ready Player One’s metaverse might look like? Get an inside peek at director Steven Spielberg’s vision of the OASIS from the movie trailer:
Fortnite
In the last few years, Fortnite’s CEO, Tim Sweeney, has made overt references to establishing Fortnite as more than just a game. In 2020, 12.3 million people attended a virtual concert by rapper Travis Scott within Fortnite, making it the game’s biggest event ever.
Facebook’s Horizon
Facebook is also positioning itself towards the metaverse with its expanded VR world, Horizon (currently in beta). Facebook describes Horizon as “a social experience where you can explore, play, and create with others in VR.” Get a preview here:
Somnium Space
Somnium Space is a VR world-builder platform that supports virtual real estate trading and ownership. It is built on blockchain architecture and has its own in-app currency called Somnium Cubes that can be used to purchase properties. The sale of VR property acts as the primary funding for the platform, and in-platform real estate can be used for things like social networking, e-commerce, gaming, and events.
IMVU
IMVU is a large avatar-based 3D social network where users can interact with friends, shop, hang out at gatherings, and earn real money by creating virtual products. The platform’s 7+ million users spend an average of 55 minutes a day on the site.
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The metaverse will require countless new protocols, technologies, and innovations if it’s going to work. There won’t be a significant “flipping of the switch” moment where the metaverse explodes into existence. Instead, the metaverse will likely emerge over time as different products and services. But the potential for individuals and businesses is enormous.
If you would like to learn more about the rise of virtual and augmented reality, check out my articles or my book, Extended Reality in Practice: 100+ Amazing Ways Virtual, Augmented, and Mixed Reality Are Changing Business and Society. Source: bernardmarr.com
Gucci – Gucci Garden
Concurrent with the unveiling of Garden Archetypes, an immersive multimedia experience, Gucci teamed up with Roblox to release Gucci Garden, a unique and interactive virtual exhibit. As visitors entered the Gucci Garden, avatars became neutral mannequins. Wandering through the different rooms, each visitor’s mannequin absorbs elements of the exhibition. With every person experiencing the rooms in a different order and retaining other fragments of the spaces, they emerge at the end of their journey as one-of-a-kind creations.
Coca-Cola – Tafi
Coca-Cola partnered with Tafi to design virtual wearables for Coca-Cola’s first-ever non-fungible token (NFT) collectibles in the metaverse to celebrate International Friendship Day. Coca-Cola auctioned an NFT loot box on OpenSea, containing digital apparel that can be worn in the virtual world of Decentraland. The Coca-Cola Friendship Box, a reimagined version of Coca-Cola’s highly collectible vending machine, itself an NFT, once opened contains a futuristic Coca-Cola Bubble Jacket Wearable, a Sound Visualizer to capture the experience of sharing a Coca-Cola, and a Friendship Card inspired by Coca-Cola’s trading cards from the 1940s.
Nike
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In December Nike announced the acquisition of RTFKT, a non-fungible token studio that produces digital collectibles (including digital sneakers) to merge culture and gaming. Previously RTFKT collaborated with teenage artist FEWOCiOUS to sell real sneakers paired with virtual ones, selling 600 pairs and NFTs in six minutes and netting over $3.1 million.
The acquisition follows Nike’s recent filing of seven new trademark applications that indicate its intent to produce and sell Nike-branded virtual footwear, apparel, and accessories for use in virtual environments. Source: practicalecommerce.com
DECENTRALAND
It is a virtual reality platform supported by Ethereum. In this virtual world users can buy plots of land then they can walk around, build on them and monetize them. There is no limit to what users can do. It is the first digital platform that is completely owned by its users.
SANDBOX
It is a virtual open world, based on the Ethereum blockchain, that allows its users to build, play, own and monetize their virtual gaming experiences and ideas.
It was created in 2018 by the US video game development company, Pixowl, building on the idea of two video games with the same name that they designed years earlier: The Sandbox (2011) and The Sandbox Evolution.
Interestingly, both games were successful and, together, generated 40 million downloads on iOS and Android gaming platforms. As a result, its creators decided to take the The Sandbox’ metaverse to a whole another level: blockchain technology.
Source: cronuts.digital
Burberry Designs a Game Heroine's Outfits, Then Sells Them to Consumers
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Product placement in the media has been going on at least since the 1920s . This strategy embeds products seamlessly in ongoing stories, such as a character that happens to drink Coca Cola while she's already at a restaurant. According to a 2019 study , “prominent product placement activities – especially verbal placements – are associated with increases in both online conversations and web traffic for the brand.” In 2021, Burberry took this strategy to the virtual world. It designed two outfits for the protagonist of the Honor of Kings game. The outfits included Burberry's logo, so gamers were able to identify the brand. They could then search for these outfits online or in Burberry's brick and mortar stores… and buy them for themselves.
Louis Vuitton Creates a Virtual Game that's Basically a Brand History Course
Louis Vuitton also ventured into gaming, but it actually created its own game. To celebrate its 200th anniversary, it introduced Vivienne, the game's protagonist, who travels across the virtual globe in an attempt to find 200 birthday NFT candles. Players who join her can collect NFT candles and unique accessories themselves, and even win some awards.
But what's that got to do with the brand?
Each NFT candle Vivienne finds during the game unveils milestones of the Louis Vuitton story. Kinda like a gamified brand history course.
Source: teamworkcommerce.com
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While the metaverse is still in its infancy, dismissing it would be economic suicide for any business. Beyond tech giants like Microsoft and Facebook, other large brands have been making forays into the metaverse. For instance, fashion heavyweight Gucci launched a virtual gallery recently, while JP Morgan recently opened a building in Decentraland.
As an immersive virtual-reality world, the metaverse has a lot of business potential.
Profits from Virtual Products
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The virtual economy is booming. Sales of digital assets on virtual platforms like Decentraland, Fortnite, Roblox, and the Sandbox run into millions of dollars—representing a viable business opportunity. Brands can create virtual lookalikes of real-life products to metaverse residents and unlock new streams of revenue.
The list of companies already selling things in the metaverse is long. Earlier this year, Ralph Lauren launched a collection of wearables and has sold over 100,000 pieces already. Other luxury fashion houses, such as Gucci and Dolce & Gabbana, have also started creating virtual clothing lines.
Even sports apparel makers are getting in on the game. American sportswear giant Nike acquired RTKFT, a company noted for creating virtual products and has filed patents that’ll allow it to exclusively sell Nike-themed wearables, like Air Jordan sneakers, in the metaverse.
Smaller businesses can benefit from this trend, too. For example, a glasses manufacturer might offer buyers a pair as an NFT, while encouraging them to buy the real thing. As long as a product can be represented in virtual reality, there’s going to be a market for it.
Gucci “Virtual 25” shoes are created exclusively for AR worlds.
Richer Customer Experiences
The introduction of eCommerce changed the way people shopped for products. However, customers are quickly outgrowing staid online shopping sites. They want an experiential buying experience where they can feel, see, and touch products before buying.
Companies can provide new ways for consumers to interact with products and services using augmented reality (AR) and virtual reality (VR) technologies. Instead of staring at static images, buyers can use products and see if they like the experience. If an individual feels good trying on virtual glasses, they’re more likely to buy the real product.
Some brands are already launching virtual malls, where anyone can come in and interact with branded items. Such innovations will greatly accelerate the buyer’s journey, reduce acquisition costs, and increase overall revenues.
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Virtual malls may become the new shopping centers.
Global Reach
Just as the Internet broke down geographical boundaries, the metaverse will do the same—but better. An ideal metaverse is a place where anyone can enter and interact with a brand, regardless of their location. For brands, the metaverse facilitates the creation of universally accessible experiences for customers across the world.
Often, global companies will launch different campaigns in various countries to compensate for distance. However, the metaverse world would allow a brand to house its campaigns in one place, which users from different regions can access at any time. It’s global expansion for a fraction of the cost! Source: businesstechguides.co
The metaverse is a vast, immersive virtual reality world with immense business potential. Brands can create virtual lookalikes of real-life products to sell to metaverse residents, providing a new stream of revenue. Additionally, the metaverse allows for richer customer experiences and global reach for companies. To learn more about the metaverse and how your brand can take advantage of this new technology, contact us today.
CHAPTER 1
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In this post, we'll define what an NFT is, show a few examples of how an NFT is used.
Non-fungible tokens (NFTs) are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other. Unlike cryptocurrencies, they cannot be traded or exchanged at equivalency. This differs from fungible tokens like cryptocurrencies, which are identical to each other and, therefore, can serve as a medium for commercial transactions. Source: investopedia.com
NFTs and cryptocurrencies rely on the same underlying blockchain technology. NFT marketplaces may also require people to purchase NFTs with a cryptocurrency. However, cryptocurrencies and NFTs are created and used for different purposes.
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Cryptocurrencies aim to act as currencies by either storing value or letting you buy or sell goods. Cryptocurrency tokens are fungible tokens, similar to fiat currencies, like a dollar. NFTs create one-of-a-kind tokens that can show ownership and convey rights over digital goods. Source: businessinsider.com
Non-fungible tokens are an evolution of the relatively simple concept of cryptocurrencies. Modern finance systems consist of sophisticated trading and loan systems for different asset types, ranging from real estate to lending contracts to artwork. By enabling digital representations of physical assets, NFTs are a step forward in the reinvention of this infrastructure.
To be sure, the idea of digital representations of physical assets is not novel nor is the use of unique identification. However, when these concepts are combined with the benefits of a tamper-resistant blockchain of smart contracts, they become a potent force for change.
Perhaps, the most obvious benefit of NFTs is market efficiency. The conversion of a physical asset into a digital one streamlines processes and removes intermediaries. NFTs representing digital or physical artwork on a blockchain remove the need for agents and allow artists to connect directly with their audiences. They can also improve business processes. For example, an NFT for a wine bottle will make it easier for different actors in a supply chain to interact with it and help track its provenance, production, and sale through the entire process. Consulting firm Ernst & Young has already developed such a solution for one of its clients.
Non-fungible tokens are also excellent for identity management. Consider the case of physical passports that need to be produced at every entry and exit point. By converting individual passports into NFTs, each with its own unique identifying characteristics, it is possible to streamline the entry and exit processes for jurisdictions. Expanding this use case, NFTs can serve an identity management purpose within the digital realm as well.
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NFTs can also democratize investing by fractionalizing physical assets like real estate. It is much easier to divide a digital real estate asset among multiple owners than a physical one. That tokenization ethic need not be constrained to real estate; it can extend to other assets, such as artwork. Thus, a painting need not always have a single owner. Its digital equivalent can have multiple owners, each responsible for a fraction of the painting. Such arrangements could increase its worth and revenues.
The most exciting possibility for NFTs lies in the creation of new markets and forms of investment. Consider a piece of real estate parceled out into multiple divisions, each of which contains different characteristics and property types. One of the divisions might be next to a beach while another is in an entertainment complex, and yet another is a residential district. Depending on its characteristics, each piece of land is unique, priced differently, and represented with an NFT. Real estate trading, a complex and bureaucratic affair, can be simplified by incorporating relevant metadata into each unique NFT. Decentraland, a virtual reality platform on Ethereum’s blockchain, has already implemented such a concept.
As NFTs become more sophisticated and integrate into the financial infrastructure, it may become possible to implement the same concept of tokenized pieces of land (differing in value and location) in the physical world. Source: investopedia.com
There are a few reasons for the popularity of NFTs. First, they offer true ownership of digital assets. Second, they are scarce and unique, which makes them valuable. And finally, they are easy to use and trade.
Most NFTs come with unique properties and can be made from any kind of digital content like photographs, art, music, GIFs, or a video clip they are so versatile that they can even include tweets and memes in the NFT marketplace. Thanks to the NFT marketplaces that act as auction houses they have made it easy for trading in NFTs and offer support on how to sell an NFT. Source: smallbiztrends.com
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The growing popularity of NFTs has promoted active discussions regarding NFT security. Since it is a novel technology, the level of NFT safety is not high enough to guarantee the absolute security of investors' assets.
One of the main NFT risks threatening investors and projects is scams. Malicious actors impersonate popular platforms, exchanges, or wallets to steal users' private data required to get access to their virtual assets and thereby affect NFT security.
A significant NFT risk is related to possible purchase of fake non-fungible tokens. Malicious actors may impersonate well-known creators and sell fake certificates of ownership. For example, this Summer, a collector known as Pranksy purchased fake Banksy NFT for 244,000 GBP . Thus, a serious NFT vulnerability is attributable to NFT trading. Artists even do not know that their works are sold without their consent. The fact that anyone can tokenize the content created by other people makes the question “Are NFTs safe” so actual for the global blockchain community.
NFT security heavily depends on the ability of centralized platforms to protect the private keys of all assets stored on them. Even when platforms apply the most advanced security measures, a serious NFT risk is related to the failure of their users to securely store their passwords and other private data by accessing which malicious actors can steal their non-fungible tokens.
In some cases, NFTs purchased by individual art lovers may become inaccessible. When a user purchases an NFT, he actually gets a reference to the file where the artwork is stored. This artwork is not actually logged into the blockchain, it can be stored anywhere. NFT platforms may decide to close their windows whenever they want. As a result, a user cannot display his file although it still exists.
NFT security also depends on the ability of users to apply critical thinking. Malicious actors like organizing so-called giveaways offering users NFTs for free. However, to participate in these giveaways users need to send the specified amount of cryptocurrency/ies. Of course, in most cases, users do not get any NFTs. Source: hacken.io
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Beeple’s collage, Everydays: The First 5000 Days, sold at Christie’s. Image: BeepleNFTs can be classified into three broad categories:
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Physical NFTs: These are NFTs that represent physical assets. For example, a physical NFT could represent a piece of land or a building.
Financial NFTs: These are NFTs that represent financial assets. For example, a financial NFT could represent a debt instrument or an equity stake.
Digital NFTs: These are NFTs that represent digital assets. For example, a digital NFT could represent a piece of art or a video clip.
POAPs (Proof of attendance protocol). If you contribute to ethereum.org, you can claim a POAP NFT. These are collectibles that prove you participated in an event. Some crypto meetups have used POAPs as a form of ticket to their events.
Etereum.org use NFTs to give back to their contributors and we've even has their own NFT domain name.
ethereum.eth. This website has an alternative domain name powered by NFTs, ethereum.eth. Our .org address is centrally managed by a domain name system (DNS) provider, whereas ethereum.eth is registered on Ethereum via the Ethereum Name Service (ENS). And its owned and managed by us. Source: ethereum.org
The NFT world is relatively new. In theory, the scope for NFTs is anything that is unique that needs provable ownership. Here are some examples of NFTs that exist today, to help you get the idea:
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Since the value of art is dependent on a range of factors including the authenticity, age and number of owners, it makes perfect sense to store it as an NFT on the Blockchain. Artists often have problems proving the authenticity of their work, especially with digital art. However, the use of the Blockchain and NFT’s can help solve this problem. Currently, an artist may publish their artwork on their website, social media or a blogging site, however, this doesn’t prove ownership, many of these platforms often don’t even offer a reliable date stamp. However, through the use of Blockchain and NFT’s artists can upload their art to a website that adds these details to the Blockchain. This means that the author’s details and authenticity of the art can be stored on the tamperproof and secure Blockchain. As everything is recorded on a public ledger it becomes possible to trace the art to the owner and the first date it was published. Source: uxsequence.io
2. Music
Digital art is not the only thing that can be turned into NFTs. For example, many NFT marketplaces also support music files. While music has been fungible for decades, some artists decided to end music distribution as we know it. Moreover, musicians usually earn only a small percentage of their royalties. With NFTs, they can earn way more and earn close to 100%. Plus, the NFT technology allows them to create unique musical pieces that change every time their owner comes back to hear them. Musical NFTs are usually safe to hold when they’re sold by an original owner. Unfortunately, some platforms were accused of stealing music from musicians and selling it as NFTs without permission.
3. Video Game Items
Video games have been quite popular for a while, and avid gamers will do anything to get new shiny armor or a unique character, including purchasing an NFT. Once a virtual in-game asset gets transformed into NFT, it can’t be deleted or changed in any way, which guarantees ownership to the player. Furthermore, since in-game items are NFTs, they can have unique properties that no other in-game item has. This increases the level of excitement among gamers who are eager to collect the item or use it to win. Like with other types of NFTs, in-game items are as safe as the platform they’re on. If the platform suffers a breach, NFTs can go to the wrong hands.
4. Trading Cards and Collectible Items
People were collecting cards even before the NFTs became popular. However, today, collecting physical cards got replaced by purchasing a rare NFT card. The cards remain the same; it’s only the tech that changed. Plus, once a person gets the card they were looking for, they know nobody else has it, and they can decide to keep it or sell it. Additionally, anything that can be considered a collectible can be sold as NFT for as long as the items are properly formatted and posted on the marketplace. When it comes to collectibles, hackers can get very sophisticated in targeting their victims. Ape_NFTs is the prime example of how hackers used a screen sharing feature to get access to his wallet and wipe out his whole collection.
5. Memorable Sports Moments
The NFT technology allows sports fans to create and sell memorable sports moments. These are short videos of the best moments in sports history, like game-changing touchdowns or slam dunks. These videos last for about 10 seconds and might sell for up to $200,000. Besides the coolest sports moments as NFTs, there are sports NFTs that come with physical memorabilia that guarantees the item’s authenticity. The security of the memorable sports moments also depends on the platform they’re posted on and their owners. These NFTs can also be stolen if the owner makes a mistake, or the platform suffers an attack.
6. Memes
The internet is filled with memes, and they’re everywhere, including the NFT marketplaces. What’s more, sometimes, the person on the meme is the actual seller of the NFT, which makes it even cooler to purchase and own. Some popular NFT memes include Nyan Cat, Bad Luck Brian, Disaster Girl, and others. These sell from $30,000 to $770,000, and the Doge meme sold for an astonishing $4 million. Regarding the security of meme NFTs, it’s the same as with digital art – nobody can download a JPEG and sell it as an NFT as the original will remain on the platform.
7. Domain Names
Domain names are possibly one of the strangest things people can purchase on the NFT marketplace. However, they’re quickly becoming commodities found on NFT marketplaces. One of the recent examples of domain names that sold for a high price of $100,000 is win.crypto. Usually, the domain name is registered at a third-party company that manages it. However, the NFT marketplace cuts out the middleman and provides immediate ownership of the domain. There’s also no need for a renewal fee—the domain is purchased only once. NFT domains are stored in a crypto wallet, meaning they’re as safe as any other funds in the same wallet. However, crypto wallets can still be hacked, which means that NFT domains aren’t perfectly safe either.
8. Virtual Fashion
NFTs entered multiple industries, including fashion. At the moment, Gucci, Reebok, and Puma are experimenting with virtual fashion, which is one step away from turning products into NFTs. Some fashion NFTs are also tied to a physical item. For example, NFT-based fashion brand Overpriced dropped a physical hoodie that comes with a code that shows an NFT. If this hoodie gets stolen, the brand will send a new one to the owner with a completely new NFT code, and Overpriced will invalidate the previous code. Source: globalsign.com
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One of the most popular non-fungible tokens in recent days is NBA Top Shot, a partnership between Dapper Labs (makers of the CryptoKitties game) and the National Basketball Association (NBA). The NBA licenses individual highlight video reels, among other content, to Dapper Labs, and they digitize the footage and make it available for sale to consumers. Each reel shows a video clip, such as a famous player's basketball dunk, some featuring different angles and digital artwork to make them unique. Even if someone made a perfect copy of the video, it can be instantly recognizable as a counterfeit. The venture has already generated $230 million in sales, and the company just also received $305 million in funding from a group that includes Michael Jordan and Kevin Durant. These video reels are selling at high prices.
Among the most popular:
LeBron James “Cosmic” Dunk: $208,000
Zion Williamson “Holo MMXX” Block: $100,000
LeBron James “From the Top” Block: $100,000
LeBron James “Throwdowns” Dunk: $100,000
LeBron James “Holo MMXX” Dunk: $99,999
Steph Curry “Deck the Hoops” Handles: $85,000
Giannis Antetokounmpo “Holo MMXX” Dunk: $85,000
LeBron James “From the Top” Dunk: $80,000
These unique NBA moments are minted and released into the marketplace via “pack drops.” The most common sell for only nine dollars, but more exclusive packs can sell for much more. Source: simplilearn.com
Can I make my own NFT?
Yes! Anyone can create their own NFT. All you need is a digital file and an Ethereum wallet.
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How do I buy an NFT?
Yes, you can buy an NFT with the help of a cryptocurrency exchange. You will first need to create an account on the exchange and then deposit funds into your account. Once you have done so, you can use the exchange's trading platform to buy an NFT.
What does owning an NFT mean?
Owning an NFT means that you own the digital asset that is represented by the NFT. This can be anything from a piece of art to a tweet. Unlike traditional assets, NFTs can be easily traded and transferred without the need for a middleman.
How do I sell an NFT?
If you want to sell your NFT, you will need to find a buyer who is willing to pay the price you are asking for. You can do this by listing your NFT on an NFT marketplace.
What is an NFT marketplace?
An NFT marketplace is a platform that allows you to buy and sell NFTs. These marketplaces act as digital auction houses and provide a place for buyers and sellers to connect.
Can a NFT be deleted?
Yes! The only way to delete an NFT is to destroy all copies of the NFT. This means that if you want to remove your NFT from circulation, you will have to make sure that no one else owns a copy of it.
The future of NFTs is very exciting. With the help of blockchain technology, NFTs can revolutionize the way we trade and interact with digital content. We can expect to see more NFT marketplaces popping up in the near future, and the technology behind NFTs will only become more sophisticated. As more people become aware of NFTs, we can expect to see even more innovation in this space.
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