Why Are NFTs So Important in the Metaverse?
Non-fungible Tokens, or NFTs, are a game-changing technology for producing and tracking one-of-a-kind digital objects on blockchain networks. They're also key to the advent of another significant development: the Metaverse.
If you pay attention to what Facebook (now Meta), Microsoft, and Adidas are doing, you'll notice that the Metaverse is a crucial technology for the future. This is immersion: the Metaverse transforms a virtual environment into one that seems as natural and dynamic as a real one.
The Metaverse will have a significant impact on how we navigate the world. The epidemic, for example, has accelerated the shift to remote work culture, but the required Zoom sessions sometimes feel two-dimensional and inadequate compared to the office. The Metaverse will create shared virtual worlds that reintroduce a sense of location in their place.
But what role do NFTs play in this new digital world? Here are four reasons why NFTs are crucial to the Metaverse's development.
NFTs, give digital objects their individuality.
What are Non-Fungible Tokens (NFTs), and why are they non-fungible? When something is fungible, it loses its individuality and can be traded 1:1 for something that looks just like it.
How about works of art? Can we trade Picassos for Rembrandt if I have a Picasso and you have a Rembrandt? No, because paintings are one-of-a-kind objects with no fixed value or equivalency. Physical reality is distinctive because it is unique – some things are unlike anything else and cannot be duplicated.
Developers have struggled to create effective borders around digital items since the birth of the digital age. As a result, they own digital objects the same way we hold physical ones, which has been impossible. As a result, the discussion on creating an effective economy for digital goods has come to a halt.
Until now, that is. An NFT is a blockchain-based act of ownership that establishes a digital object's uniqueness. In other words, NFTs act as receipts, proving who owns what and allowing owners to freely buy, sell, and store their possessions on the blockchain.
For the first time, we can trade digital items like generative art, in-game items, 3D sculptures, and digitally mirrored actual objects in the same way that physical commodities can. As a result, NFTs are the ideal vehicle for metaverse ownership. That's also why multibillion-dollar NFT marketplaces like OpenSea are prospering presently.
NFTs, like the Metaverse, are a global phenomenon.
Because metaverses are shared virtual environments in the digital domain, they are not bound by national citizenship schemes. However, if the Metaverse is to be worldwide, then the technology for enabling and establishing ownership in the Metaverse must be global.
NFTs come to the rescue in this situation. Remember that an NFT is a token that keeps track of the unique existence of digital items and who owns them. NFTs exist on global blockchains, which are permissionless networks that host and exchange data without the use of intermediaries like large corporations.
Furthermore, blockchains such as Ethereum are already being used to create metaverses. Users can bring their NFTs to a metaverse developed natively on a blockchain. Interoperable bridges exist to connect distinct blockchains that host different metaverses.
Assume that the traditional world is all about establishing boundaries. In that situation, the Metaverse provided by blockchain and NFTs is all about destroying them to integrate the many networks and their assets correctly.
The Metaverse's Most Secure Form of Ownership Is NFTs
When you own something, it's natural to want to keep it safe. Your automobile is equipped with a security system, your front door is locked, and a passcode protects your phone. What about the digital items you've created? How do you keep them safe?
Emails, passwords, photographs, and birth dates are all digital assets you own yet leave to centralized authorities to protect. However, it appears that they are losing these items to hackers daily. You'd be forgiven for being wary about entrusting your metaverse objects to the same company for protection, given that track record.
NFTs, on the other hand, are constructed differently. You and no one else will hold and store them on blockchain networks. The blockchain requires a massive 51 percent commitment of the network's consensus resources to approve each block of transactions. Any potential bad actor would have to generate an incredible amount of liquidity — think billions — merely to snag an NFT from your wallet with such a massive commitment.
There is no other viable alternative for cracking a blockchain's security protections other than following the 51 percent route. The strength of NFTs for keeping security is that each NFT on the blockchain contains the protection of the entire network. Which begs the question: is a blockchain nearly hard to hack more secure than the lock on your front door?
NFTs Will Be Important in Metaverse Economy
There is currently no other technology that produces, ensures, and secures digital ownership and object scarcity the same way NFTs do. Look no farther than the Axie Infinity game for a great example of how an NFT-based metaverse economy operates.
Players own everything in the Axie universe. Every game aspect is built on unique 1-of-1 scarcity, including your character (called an axie), the land your axie walks on, and its weaponry. You'll find a bustling scene in the Axie Marketplace, where gamers sell enhanced axie characters, unique weaponry, developed land, and other valuable stuff.
The Sandbox is a thriving Ethereum-based metaverse with a fully functional virtual real-estate economy. Every day, Sandbox players add businesses and venues like nightclubs to their plots of land. Those plots of property — and the enterprises that have grown up on them — are put up for sale, just as in real life. That land can sometimes command millions of dollars.
Today, everyone is developing a metaverse, even companies like Chevron and Budweiser. As more notable brands join the metaverse bandwagon, a considerable shift in the global economy toward digital item ownership is becoming apparent.
However, such a transformation is impossible without NFTs like MonsterArmy, so blockchain networks like Ethereum, Tezos, Polkadot, and Solana are critical infrastructures for tomorrow's virtual reality.