People can argue about the Metaverse all they want, whether it’s one virtual world or multiple worlds, whether it has intrinsic value or is destined to destroy us. They can also have all the opinions they want about cryptocurrency, whether it’s a terrible investment or an incredible opportunity, it’s the future, or it’s just all the rage. Regardless of how our culture feels about either product (because virtual or not, they’re still products), both are creeping into our lives (albeit more slowly than proponents had hoped), and there’s a good chance one or both will become widespread. be adoption.
Currently, crypto is a reality, even if it is only considered legal tender in two countries, and most consider it an investment rather than a form of currency. On the other hand, in terms of both being definition and the companies building it, the Metaverse is technically still a vision. There are platforms – Dectraland, Sandbox, Roblox – that offer elements, but one virtual world in which people live, work and play parallel to the physical world is still a long way off.
While some experts believe the Metaverse needs crypto to survive, what seems more plausible, at least in today’s reality, is that crypto will have to wait for the Metaverse to thrive as a currency.
This may change. Players and advocates in the crypto space have high hopes for its increasing value, both in the physical and virtual worlds. Promised, 76% of financial institutions say they expect to use crypto within the next three years as it has the right regulatory framework in place. Putting that in place is a daunting task, but one necessary for mainstream adoption.
This is the current situation:
While these statistics make it clear that crypto and the Metaverse have a mutually beneficial relationship, they are not codependent of each other. Remember that consumers shopping in the current development elements of the Metaverse can use a regular credit card to purchase any virtual product. However, in the physical world, at least for now, they cannot use crypto to buy any physical product.
The Metaverse is ground zero for crypto, it’s where people start to feel comfortable using it. As more people begin to explore the Metaverse, they will naturally want to use the currency of their choice in any virtual environment, similar to choosing to convert your home currency to foreign currency when visiting another country, even if it’s just so easy to get a credit card. And as they start putting crypto in their “wallet” and using it to pay for virtual purchases, the chances of it ending up in the physical world in trading increase.
The biggest barrier to adoption is the sheer number of cryptocurrencies on the market. This ultimately creates the most friction. Consumers cannot be expected to have hundreds of currencies on hand, even in a digital wallet, and retailers cannot be expected to accept every currency available. The perceived benefit of adopting crypto will be lost very quickly if interacting with it becomes too cumbersome. Imagine that each brand has a different currency. So when you shop at Walmart, Kroger, Whole Foods, Target, etc., shopping becomes a difficult, confusing task. This is not an experience that consumers will buy.
Another problem is that only a handful of cryptocurrencies on the market actually have value. Just because you create something and assign a value to it, it gives no value. Utility is what gives something value, and some sort of standard has to be established. Just as the European Union has adopted a common currency, the crypto market needs to remove currencies with no value – ideally down to one – but realistically less than five. Without a governing body, however, this will not happen quickly.
So in our current reality the Metaverse is an emerging communication and trading channel, crypto is an investment for most, a payment method for some. The sophistication and maturity of both is low, while consumer skepticism is high. The ongoing market volatility of crypto serves as a constant reminder of how many people and how much money has been lost in the past year.
This hesitation, along with the tumultuous state of the economy, has a latency effect affecting consumers’ desire to experiment with either of the two products. If you look at adoption from a fundamentally human psyche standpoint, consumers are more concerned about inflation and how much they’re paying at the gas station than they are about buying a fancy virtual Adidas sweater that they can only wear in the Metaverse.
Some experts will continue to argue that crypto will never go mainstream, but given the current pace of change in our world, it’s clear that something is happening. Consider the many economic forecasts from countries around the world predicting cashless societies by 2030 at the latest – and it’s getting even clearer that we’re heading in that direction. What cashless actually means is that all currencies will be digital and crypto will be a digital currency.
In the US, the widespread adoption of crypto will most likely come down to grassroots consumerism, not whether Mark Zuckerberg’s The Metaverse’s vision blossoms and the masses immerse themselves in it. As history has repeatedly shown us, when American consumers decide they want something, they will do just about anything to get their hands on it. So whether they find an indispensable product in the Metaverse or in the physical world that can only be bought with cryptocurrency, they will not shy away from turning their hard-earned money into whatever kind of money it takes to own it.
Michael Scholz is the Vice President, Product & Customer Marketing at commercetools.