What Is the Metaverse and Crypto?

The term metaverse has been gaining popularity during the last few years thanks to a number of blockchain-based decentralized solutions that allow startups and companies to build crypto-powered virtual environments.

However, there’s a lot of uncertainty surrounding the metaverse concept, and people often wonder what it is, how it works, whether there’s more than one metaverse, and what they’re used for.

In this guide, we’ll answer all these questions and touch upon the relationship between the metaverse and crypto.

How Is Web3 Transforming the Internet?

To understand the metaverse, we need to take a look at Web3 and find out how this new iteration of the web is transforming the way everyday users and companies use the internet.

The Web3 era is essentially decentralizing the internet and introducing powerful tools to let users take ownership of their data and finances with the help of blockchain solutions and crypto. 

Instead of closed networks and centrally controlled platforms, Web3 is based on blockchains. Back when the internet was new to the public in the 1990s, the web consisted of exclusively static pages with which users couldn’t interact in any way.

In contrast, the second era of the internet pioneered interactive platforms that allowed users to create their own content and communicate with each other. However, Web2 platforms are all privately owned companies, and users don’t have control over their content. 

The idea behind Web3 is to leverage blockchain technology to build a truly decentralized internet where no one can just shut down your favorite platform, control your content, or manipulate your data.

Thanks to the convenience of crypto wallets, Web3 platforms – usually referred to as decentralized apps (dApps) – only require users to connect their wallets and start using the platforms. 

There’s no account creation procedure or identity verification in Web3 because every app user is represented as a depersonalized crypto wallet address. Additionally, dApps use numerous decentralized network nodes to operate, which means there’s no single point of failure.

This combination of crypto wallets and dApps allows Web3 to create a more user-centric internet environment.

Additionally, users get to participate in the governance of the platforms they use through various voting systems that require users to hold a certain number of tokens released by the dApp projects in their wallets to get voting rights.

The Metaverse: A Key Product of the Web3 Era

The decentralized, user-centric mechanics of Web3 platforms and crypto wallets allowed developers to go a few steps further and create interactive virtual environments on the blockchain.

The idea was to take the essential elements of Web3, such as crypto wallets, crypto tokens, and blockchain-based decentralized platforms, and create immersive digital worlds that resemble role-playing video games but with a much higher degree of features and possibilities. 

This is how the metaverse was born. There are already numerous metaverse projects with different takes on virtual environments, and the popularity of metaverses is steadily rising. However, it’s essential to understand that although metaverses rely heavily on gamification elements and visually resemble video games, they are actually much more than just games. A metaverse environment allows users to have fun, socialize, and engage in financial transactions.

Essentially, metaverses allow users to engage in numerous real-life activities in a virtual environment, regardless of their real-world location. Furthermore, the metaverse can introduce users to entirely new virtual experiences, such as shopping in the metaverse, going to parties, visiting art exhibitions, or even buying virtual real estate. 

The fact that users can engage in financial transactions in virtual environments opens a whole new range of economic possibilities. People from different parts of the world can meet in a metaverse environment and engage in business transactions with the help of their crypto wallets without any banks or other intermediaries charging them service fees. 

The metaverse allows users to simultaneously meet other people, have fun, play games, listen to music, shop, and conduct business without being controlled by any centralized entity. 

How Does the Metaverse Look Like?

Since there are various active metaverse projects, you might wonder whether their metaverses are all alike and how they actually look. Basically, there’s no strict formula for how a metaverse should look, and there are even metaverse projects that don’t have a digital environment of their own. 

Some of the most advanced metaverses, like Decentraland and The Sandbox, have fully-developed digital environments where users can create virtual representations of themselves. They can design their avatars and select different physical traits to resemble their real-world looks in the metaverse. These environments use 3D rendering for a video game-style look and let users engage in all sorts of individual or group activities.

However, many metaverse projects use NFTs and gamification elements to provide users with metaverse experiences without actual virtual environments.

For example, the famous Axie Infinity blockchain game utilizes NFT mechanics to let users battle each other and earn crypto tokens in a static, very limited 3D battlefield. Still, Axie Infinity is a metaverse project because it combines crypto wallets, NFTs, and digital currency with gaming elements and allows users to interact through battles or on the Axie Infinity marketplace.

The Connection Between the Metaverse and Crypto

Metaverse projects rely on blockchains to host the decentralized apps they use. Some of those apps are gateways to interactive 3D virtual environments, while others are more static, like NFT marketplaces for specific metaverses where users can trade virtual assets. 

In order to facilitate transactions and allow users to connect their crypto wallets, metaverse dApps need to use cryptocurrency. Furthermore, they need to have their own custom crypto tokens to allow users to differentiate themselves from other metaverse communities and participate in the governance of their platforms.

Owning a certain amount of the native tokens of a specific metaverse project shows your dedication to the project and gives you a stake in the metaverse. If the project’s native token rises in value over time, you can benefit financially from holding the tokens.

Additionally, most metaverses reward users with their native tokens for being active in the community, and they have their NFT marketplaces where users can buy or sell assets with those tokens.

NFTs are an important element of the metaverse because they allow developers and users to tokenize different virtual objects in the form of unique artistic blockchain assets. For example, in Decentraland, users can create various accessories or unique furniture and clothing in the form of NFTs, while Axie Infinity requires users to hold Axie NFTs to battle each other. 

Instead of using fiat currency for transactions, metaverse projects rely heavily on their native crypto tokens.

How Can Individuals Use the Metaverse?

• Users can have fun in the metaverse by completing games and missions that earn them crypto rewards. This way, they can purchase NFTs or simply earn money by exchanging the project’s native tokens on a crypto exchange. 
• Metaverse projects with fully-developed virtual environments enable users to attend virtual events, such as concerts and festivals.
• Users can engage in financial transactions with each other on metaverse marketplaces or directly with their crypto wallets.
• Metaverse dApps don’t require users to provide personal details. You just need to connect your crypto wallet to access the platform.
• The metaverse is decentralized, and platform users get to participate in the governance of their favorite projects.

How Can Companies Use the Metaverse?

• Companies can create virtual stores in selected metaverse environments to let users shop in the metaverse.
• When conducting business in the metaverse, companies can directly receive crypto from their customers without using any intermediaries.
• The metaverse and NFTs are growing in popularity, which means companies that join the metaverse on time may see considerable financial benefits in the future.
• The metaverse allows companies to launch digital projects such as NFT collections that give their customers unique benefits (e.g., access to limited-edition products or virtual events).

Popular Metaverse Cryptocurrency Projects

Let’s look at some of the most prominent metaverse crypto projects and their key characteristics. 

Decentraland (MANA) and The Sandbox (SAND)

Two of the most famous crypto metaverse projects are definitely Decentraland (MANA) and The Sandbox (SAND). These projects have the largest market capitalization when it comes to metaverses, and they both have fully-developed 3D virtual environments. 

Within these virtual spaces, users can create 3D avatars, choose clothes and facial features, and create all kinds of accessories as NFTs. They can purchase virtual land plots and then use them to build virtual real estate objects.

Also, users can engage in numerous fun games created by the platform’s developers or by the community. This feature is especially important in The Sandbox because it has a builder platform that makes it easy for users to design and mint NFTs. Additionally, users can create their own mini-games and upload them for the whole community to enjoy.

These two projects are also the most popular among companies because businesses can open virtual shops in the metaverse and engage in various marketing activities. What’s more, Decentraland and The Sandbox are already the go-to metaverses when it comes to virtual parties and concerts.

Enjin Coin (ENJ)

Enjin Coin (ENJ) is a metaverse crypto project focused on the bigger picture compared to simply having a 3D virtual environment.

In fact, Enjin Coin doesn’t have an Enjin metaverse. Instead, the coin is part of the Enjin blockchain gaming ecosystem, which includes hundreds of gaming communities. Some of these communities are pretty small, while others have tens of thousands of members.

Enjin started out as a video game ecosystem that entered the blockchain scene a few years ago by launching the ENJ cryptocurrency, which works as a metaverse token that allows members of the numerous Enjin communities to make crypto purchases.

ENJ acts as the intermediary crypto for Enjin ecosystem gaming communities, and many of those projects have their own digital environments with metaverse elements, such as in-game economy, NFTs, and a high degree of interaction between users.

Essentially, Enjin is a metaverse gaming ecosystem that can easily connect numerous metaverse environments through the same blockchain infrastructure and the ENJ cryptocurrency.

Illuvium (ILV)

Illuvium (ILV) is a highly-advanced blockchain gaming platform that combines detailed 3D graphics and animations with NFT and crypto mechanics.

The platform already has three published games called Overworld, Arena, and Zero. Overworld has a massive open-world metaverse environment that lets users explore different landscapes and areas with the possibility of engaging in battles and interacting with other players. Arena is a more team battle-focused game, while Zero is a strategy game that lets players build and manage their own industrial complex and cooperate or compete with other players.

All three games include crypto rewards that can be used on the Illuvium marketplace, where players get to buy and sell NFTs that represent different in-game equipment, accessories, weapons, and upgrades. 

Axie Infinity (AXS)

Axie Infinity (AXS) is one of the earliest crypto metaverse projects that managed to reach widespread popularity.

The idea behind the project was quite simplistic. Users buy NFTs of fictional beings called Axies and create their team to battle other players on static, animated battlefields. Players get crypto rewards for winning battles and get to upgrade their Axies through battles as they gain experience and their characteristics become stronger. 

With the growing experience levels, the value of a player’s Axies grows, and players get to sell them for a higher price on the Axie Infinity marketplace. In some parts of the world, such as the Philipines, Axie Infinity became extremely popular because players realized that they could earn considerable income by playing the game. 

This is one of the earliest examples of people actually working in the metaverse and earning real-world money by cashing out their crypto rewards into fiat currency. 

Conclusion

The metaverse is a relatively young concept, and the fact that there are different ideas and understandings of how it should function and look shows its high development potential. 

While gaming and entertainment are among the main characteristics of most existing metaverse projects, the financial crypto element and the decentralization provided by blockchain technology show that the metaverse can go far beyond.