HomeWhy Is Crypto The Ideal Money in the Metaverse?

Why Is Crypto The Ideal Money in the Metaverse?

Cryptocurrencies represent the next age of finances, much like the Metaverse is the next step for Internet technology.

Mark
Updated: January 16, 2023

Cryptocurrency may have started on rocky grounds with Bitcoin’s first appearance nearly a decade ago. However, Bitcoin and other digital currencies have since gained traction among investors, financial institutions and the common person. As of writing, one Bitcoin is more than $16,000 – a huge difference from $0.90 per coin in July 2010!

Of course, Bitcoin is only one of these digital coins. There’s also Ethereum, the second-largest cryptocurrency on the planet. You also have Dogecoin, which began as a joke but skyrocketed in value during the pandemic. Chances are, whichever coin you prefer, they’ll be accepted in the Metaverse as a payment medium.

For now, these digital currencies are the main payment modes that entities in the Metaverse are willing to accept. Some people may find it peculiar that Metaverse marketers prefer these coins to fiat or real money. The answer is – they have attributes that make them ideal as “virtual world money.”

They Are Decentralized

First, it’s important to define decentralization if we want to understand how it is beneficial to the Metaverse. Simply put, decentralized currencies represent the polar opposite of the financial system we’ve grown up with and have an intimate understanding of.

In the traditional banking system, financial institutions act as intermediaries between a buyer and a beneficiary. Whenever one party wants to initiate a transaction, the third party will process the payment according to its established procedures. While supposedly secure, this modality also results in slow processing time and lots of red tape.

Decentralized systems, and currencies, remove the presence of that third party. What takes their place instead is a peer-to-peer network in which individual computers contribute their power to verify the transactions. As a result, deals between members of the network go through the system within just minutes.

Another significant advantage of using peer-to-peer transactions in the Metaverse is affordability. The fees imposed are significantly lower than what you’d have to pay when you process payments through traditional banking methods.

Cryptocurrency Networks Are Transparent

Financial transactions involving cryptocurrency are stored in a public ledger called a blockchain. When the peers successfully verify a transaction by solving a mathematical problem, the data for that deal enters into a “block.” The block is then added to the existing chain of records, hence the name “blockchain.”

All of the data in the blockchain can be viewed by anybody over the Internet. If you have the unique transaction ID, you can search for the details of the process on the ledger. This feature makes it easy for involved parties to trace their transactions and build their own records for their personal reference. There’s no danger of an identity breach because the blockchain does not display the real names of the parties, only their usernames. 

While public, all the data in the blockchain are read-only. In other words, nobody can alter any details of any transaction once it is embedded in the blockchain. It’s like being written in digital stone; all you can do is just read the data, not write over it.

Bitcoin

They Promise Smooth Commerce in the Metaverse

Proponents of the Metaverse say that it will give its virtual citizens a truly immersive experience in a three-dimensional world that’s fully detached from the real world. The lengthy transaction times that characterize traditional banking will not fit into this scenario. Instead, users will only feel frustrated at the length of time needed for payments to push through.

Any disruption will only distract users from the “escapism” that they’re entering the Metaverse for. Thus, a hitch-free transaction system is mandatory if the digital realm is to fulfil its promise of immersion. For this concern, the blockchain and the peer-based verification system is more than perfect – it’s tailor-made for this particular need!

With blockchain and cryptocurrencies, you can expect the payments done in the Metaverse to be faster than what you’re used to with traditional banking. It may even be faster than how your nearby supermarkets process your purchases.

A look into how Walmart in the Metaverse could look

Conclusion

Cryptocurrencies and the blockchain may be challenging to grasp for those that are used to traditional banking. However, if you take the time to understand the technology and grasp its benefits, you’ll understand why crypto is perfect for the Metaverse!

For starters, the lightning-fast transaction times ensure that any deals in the Metaverse are done in seconds. Users don’t have to park their avatars for several minutes just to wait for confirmation that the payment has been pushed through. They can focus on exploring the 3D world promised by the Metaverse, with occasional stops for e-commerce along the way.

Second, all of the transactions in the blockchain are publicly available. At the end of the day, users can visit the blockchain’s website after exiting from the Metaverse if they want to check on their transactions.

Although they are two separate concepts, the blockchain and the Metaverse will be two of the vital pillars of the combined technologies that will usher in the next age of the Internet!

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