Into the Metaverse: Your Guide to Crypto and Virtual Worlds
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The metaverse is a hot topic right now after Facebook's decision to rebrand as Meta. But metaverses aren't so new. Facebook -- along with many major companies like Microsoft and Disney -- has been riding the virtual reality train for some time.
But what is a metaverse? And how does it work? Join us as we take a deep dive into virtual worlds.
What is the metaverse?
Metaverses are virtual worlds where people can do many of the things they do in real life. They'll be able to work, have fun, shop, exercise, and socialize. They can set up their own businesses, buy land, make art, and go to concerts -- all in a virtual environment.
Metaverses use virtual reality, augmented reality, social media, and blockchain technology to create places that people want to spend time in. They are virtual worlds with virtual economies, though many are still in their infancy.
In the future, rather than buying clothes for your closet, you might buy clothes for your avatar online. And rather than buying a piece of art to hang on your wall, you might buy a piece of digital art to display in a virtual gallery.
Where does cryptocurrency come in?
Every virtual economy needs money. Cryptocurrencies work like virtual cash in virtual worlds. Transactions are almost instantaneous and the blockchain technology behind them is designed to build trust and ensure security.
Existing metaverses already use cryptocurrency as a form of payment. So if you visit Decentraland, you'll need its token, MANA, if you want to buy anything.
Indeed, metaverse cryptocurrencies like Decentraland, Sandbox (SAND), and Enjin (ENJ) are among the few tokens that might show green this week. Many cryptos are in the red as they drop from the highs of early November.
There's another aspect of blockchain and cryptocurrency that's key to metaverses: non-fungible tokens (NFTs). NFTs can be pieces of art, sports trading cards, in-game items, and much more. They are essentially unique digital items, where the ownership and other information is coded into the token.
NFTs are transforming the gaming industry because they allow people to own and profit from the items they earn or build in the game -- and carry those profits or items into real life. Before, if you participated in a game like Axie Infinity (AXS), the rewards you built up would only have value in that game. Now, Axie players earn rewards in cryptocurrency that have a value outside the game.
It's that idea of ownership that makes NFTs so important for virtual worlds. NFTs mean people can buy and own land in the metaverse. People can buy and create NFT avatars to move around in virtual worlds. They can also create and sell items for their avatars -- like the digital clothes we mentioned earlier.
Should you get involved? And where can you start?
This idea of metaverses is still in its infancy. Indeed, there's a lot of different ideas about what form these digital spaces will take and what role they can play.
Meta (Facebook) certainly has grand plans -- including launching virtual gym equipment and creating spaces for virtual business meetings. Virtual reality technology has come a long way, though there's still a lot of work to be done.
As a crypto investor, there are many ways you can get involved in virtual worlds. The most obvious is to directly buy metaverse crypto tokens, which are available from many top cryptocurrency exchanges. You can also buy NFTs or even consider buying real estate in a specific world.
But if you want to go this route, you'll need to do a lot of research. Start by visiting an existing metaverse to get a feel for what it's all about. For example, you don't need any virtual reality equipment or to spend any MANA to visit Decentraland as a guest. Just log on, create your avatar, and in you go.
As with any investment, don't just jump in because Facebook or another big company or famous person is doing it. Take time to understand how these worlds work and which ones are most likely to survive in the long term. Similarly, there's no point in randomly buying an NFT. You'll need to look at what NFTs suit your interests, which ones you think might be profitable, and how the NFT market works.
Don't forget that many of these crypto-based metaverses are built on ecosystems like Ethereum (ETH) or Solana (SOL), which may offer a less risky way to invest as they are not specific to one sector or one virtual world. If the dream of the metaverse does not come true, Ethereum and Solana will likely still exist.
You may also decide to buy stocks in a company that's involved in the metaverse rather than doing it through crypto. Crypto is one way to get involved, but it's not the only way.
Don't rush into a decision
Ultimately, it's early days and we don't yet know how these metaverses will evolve. There's been talk of developing metaverses for years and so far they haven't come to much. It may well be different this time, but it's important not to get caught up in the hype.
All cryptocurrency investments carry risk, so it's important to only spend money you can afford to lose. And don't be driven by a fear of missing out -- if the metaverse is worth investing in, it will still be there after you've done your research.
Buy and sell cryptocurrencies on an expert-picked exchange
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Emma Newbery owns Ethereum, Solana, Axie Infinity, Decentraland, Enjin, and Sandbox.
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