The Metaverse Will Be the Delivery Vehicle for NFTs' True Purpose
By Christopher Swenor, co-founder and CEO of Reach
Many people imagine the metaverse as a virtual world in which you have a sword or sit in an office with odd-looking avatars, but this is a truly short-sighted reading of the next great technological evolution. Rather, the true metaverse is less about the world itself and more about ownership.
Here’s an example: Say you’re the owner of a brand-new Tesla—hooray! With the vehicle, you also receive an NFT that represents the ownership of the Tesla on Earth, which itself is just a verse in the metaverse. The metaverse, then, is the ability to bring this ownership to different “worlds,” or, put another way, interfaces. You could drive around the Tesla in a virtual world, or show off your ownership by displaying a 2D image of the car on your smartwatch. The idea is that there will be an infinite amount of universes that can represent your ownership in any context.
Although cryptocurrency is what initially excited people about the blockchain, I believe this idea of the metaverse as an avenue for ownership is what will bring the technology into the mainstream. The biggest hurdle there, however, is people’s lack of understanding around the metaverse and NFTs.
It’s understandable why Meta (formerly Facebook) CEO Mark Zuckerberg explained the metaverse as 3D spaces experienced in virtual and augmented reality to socialize, work, and be entertained. But this type of clarity is the reason why most people wrongly think that NFTs are images you can buy and own. That's not what NFTs are—they are a data structure where one of the variables is an ownership ID. When you think about it that way, it opens your mind to what an NFT is. Because if an NFT is a data structure, with ownership as one variable, can there be more variables? Can we create rules around what it means to own something? Can we put rules around what it means to transfer this ownership to somebody? The answer to all three questions is, yes, of course.
When you buy something in the real world, you're actually buying two things: the actual thing and its ownership. In the NFT world, you're not buying the asset, just the ownership of the asset. That means, in the case of images, anybody can right click and save as. The asset could exist in an infinite amount of places, but the ownership of that thing cannot. That is what truly has value in the digital space.
What we'll see in the future is that through smart assets, there will be rules around images, like say, attaching royalties to them. There could be extra variables that point to a document that describes the copyrights or the ownership rules of the thing. The great part about this is the self-sovereignty exists in the entity itself, so it doesn't have that extra overhead that would be required without blockchain.
Looking at NFTs this way, it’s clear to see why fashion brands and larger IP brands are excited. The metaverse will allow for IP holders to license their properties to the lowest level abstraction. Right now, it doesn't make sense to do that, because of how much overhead it would take to monitor. When there are NFTs that have everything built into them, running on an environmentally friendly proof-of-stake blockchain, IP holders have the ability to grant licenses to the end user. All brands have to do is build worlds that attract people to use IP in their world.
This is when we'll start seeing Captain Kirk shake hands with Bugs Bunny, because the individual users will own the IP that will allow for them to meet in the metaverse. The best part, baked into the NFTs themselves, is that the world would be able to receive a piece of the royalties. They will be incentivized for this IP to exist in as many worlds as possible.
While Meta will present its own version of the metaverse, I believe the vision presented here will be the alternative reality that blows up, thanks to the smart NFT. People love NFTs because it generates a sense of belonging and community. When those rules are baked into the NFT itself, it'll create multitudes of opportunities. Because of this, we’ll see pretty much every single retail outlet starting next year have their own version of smart NFTs, with baked-in royalties, rules of what it means to own things, who they can be transferred to, and how (my company, Reach, has built developers tools that make it easy to do these things).
Until then, those of us in the blockchain technology industry will have to contend with people’s preconceptions of NFTs as a $1 million picture of an ape. There's a joke I saw on Twitter that I think of when I hear people talking about this. At a border crossing, there's a smuggler and a customs agent. Every day, the smuggler drives up, the agent searches the vehicle and doesn't find anything. This happens for 30 years. One day, the smuggler drives up and says, “This is my last day. I'm retiring. You'll never have to see me again.” The custom agent replies, “I promise I won't prosecute you. Please tell me what you've been smuggling?” The smuggler’s answer? “Trucks.”
The reason why I bring this up is that people don't see the real underlying value of NFTs. They see these images that people are buying for hundreds of thousands of dollars. The innovation is in the actual structure those images are riding in on—the trucks, so to speak. This is what makes the rise of the metaverse so compelling—it's set to usher in a future where NFTs don’t just represent an image, but revolutionize ownership and value as we know it.
About the Author
Christopher Swenor is the co-founder and CEO of Reach, the fastest, safest, and easiest way to build blockchain applications on Algorand and other networks.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.