The lust for a couple Italian pies in May of 2010 cost a man nearly $412,860,000 in current day value of Bitcoin. The poor soul’s name is Laszlo Hanyecz and despite this massive loss, his purchase made history as the first ever real-life cryptocurrency transaction. Since that purchase the cryptocurrency scene has gotten increasing more popular and as mentioned before, a fuck ton more lucrative. However, it has not stopped there.
What is an NFT?
A short decade or so after the first real-life purchase with a cryptocurrency, non-fungible tokens, better known as NFT’s, broke through the veil of obscurity. MetaKovan, a cryptocurrency investor, bought an NFT called “Everydays: The First 5000 Days” for over $69 million. Soon after, everyone and their mother was scrambling to get their hands on an NFT. While some people choose to show off their NFT’s through profile picture changes and social media posts, others are throwing virtual ragers in the metaverse.
The last time he bought a Beeple piece, MetaKovan, whose real name is Vignesh Sundaresan, held a party in the metaverse called Origin City in a digital gallery he had designed by real architects. People danced in zero gravity. There was digital champagne. It was basically a scene out of “Ready Player One,” virtual guests mingling together, viewing virtual art at a virtual party in a virtual world in real time.
If the paragraphs above confused you do not fret and please please please don’t skip this article. Technology gets more and more complex every year that it can feel overwhelming to keep up with every little but if advancement. Hell, if we told you I actually knew about anything about cryptocurrencies, NFT’s, and metaverses before writing this article, our pants would be engulfed in flames. In order to help everyone understand a little bit better, here’s a quick overview of what the digital world looks like now and how it may progress in the future. We aren’t experts on this subject, and we certainly won’t make you one, but we can help explain the everchanging world in a more palatable fashion than your crypto-bro coworker Dave.
Most people understand that cryptocurrencies are another form of currency much like the US dollar or EU Euro. Except for the way in which transactions are recorded. Cryptocurrencies use a blockchain to record every transaction made with that specific coin on an electronic ledger that is shared with every device that is connected to the network. Blockchains are able to do this by encrypting every transaction with a complex set of computations—known as a block—that are solved and then voted collectively by the market. If the data does not match between enough of the devices, the block will be moved back in the order of transactions and ran again until it can be verified. Once a block is verified it is added to the chain and also verifies the validity of the blocks before it. The collective agreement of the market decentralizes it therefore ensuring that no single entity is able to affect the ebbs and flows of the market.
NFTs are a product of the cryptocurrencies that attaches works of art, collectables, and other forms of visual media to the blockchain. With the advent of a way to decentralize online currencies other began brainstorming of ways to decentralize the ownership of online objects as well. The idea got bounced around a few times in 2012 and 2013 but never came to fruition until May 3rd, 2014, when Kevin McCoy minted his non-fungible token called Quantum on the NameCoin blockchain. As previously mentioned, NFT’s did not really make their way into the mainstream until spring of 2021. Throughout the 7-year period, some different NFT’s had a brief time in the spotlight of internet culture such as Rare Pepes. Along with gaining the attention of meme connoisseurs, Rare Pepes were some of the first NFT’s bought and sold using the current most popular NFT blockchain, Ethereum. The Ethereum blockchain was the first blockchain equipped with the proper tools to store NFT data without bogging down the speed of transactions and make sure that all the token stored on the blockchain could be properly identified.
Metaverses are an online space where people can compete, socialize, consume, and basically whatever else can happen in the real world. For instance, Counter Strike: Global Offensive, a popular first-person shooter game, has a marketplace where weapons skins hold real value, gambling websites to obtain these skins, and a professional competitive aspect to it. There are plenty of other examples of games that combine different parts of real-life. While video games are considered metaverses they have yet to fully integrate every part of real-life into their platforms.
A number of NFT’s are used in a metaverse that is attached to the token and the blockchain network used to verify ownership. These NFT’s can be applied as clothing for an avatar, a status or power symbol, or just visual displays attached to your account within the metaverse. This integration of real-life value into these metaverse has opened up many opportunities for individuals to extract value from these sources. A metaverse known as Decentraland has already begun selling virtual real estate. These metaverses have virtual stores to by NFT’s, casinos, fashion, and the arts. Clothing brands such as Louis Vuitton, Gucci, and Burberry have already started making NFT’s and may soon be setting metaverse shops to display these NFT’s across multiple metaverses.
Now that there’s a basic understanding of what cryptos, NFTs, and the metaverse has to offer, why should average shmoes like me and you care? There’s an incredible amount of money being poured into all three facets at all times and it’s only going to go up from here. Sure, living a second life to escape the reality of the physical world is nice and is a vice for many people in the way of video games and online personas already. But the idea of living another fully simulated life in a metaverse is enticing as well. Being able to shed the skin of reality and immerse yourself in a truly global and diverse space where the possibilities are endless would allow for those of us that are restricted in reality by monetary issues, exhausting personal relationships, and a slew of other issues to remove ourselves.
An escape like that would surely be nice. Notice I said would because at least for the time being it’s not at all. Metaverses that operate similarly to real life require virtual reality set ups that are $300 and a computer that is powerful enough to run the metaverse as well. It may not seem like you would need that much processing power for a metaverse because it has already been done before on low-grade technology but blockchain technology consumes a massive amount of energy. It’s possible for blockchain verification to happen at the metaverse owner’s server farms but they would still require a lot of power, nonetheless. If owners have to buy more sophisticated equipment and use up more energy than without blockchain technology that will opt to charge consumers more to participate on their platform. The disadvantages don’t only come from an economic barrier too. Blockchain technology is already very energy intensive with Bitcoin using a similar amount of power to countries the size of Poland. The expansion of NFTs has already had an effect on the amount of energy used and integrating them into a metaverse would only add to the energy usage of these systems.
In spite of that, new technology will always continue to get more and more advanced and use up more and more energy. Not to mention that as this technology starts getting adopted by more and more people, the prices will ultimately fall on the behalf of consumers. Know, we aren’t saying that if you are able, you should be rushing to be a part of the first wave of metaverse users. This technology still has a long way to go for it to be rolled out to public on a large scale and the culture for this new social space has not been established. Understanding the technology is just the first step. We are all in a similar liminal space between whether this is the future or not. Patience and time will be the deciders of how this technology will impact the day to day lives of everyone.
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