At a Huobi Research Institute-organized webinar held Jan 26 2022, blockchain industry experts debated the hype surrounding NFTs and the future of the Metaverse.
The year 2021 saw a bull run of sorts in the blockchain market driven not just by cryptocurrency prices but DeFi, NFT, and blockchain gaming. This was quite unlike the bull run of 2017 to 2018, which comprised fewer tangible elements.
These same elements that drove blockchain’s bullrun last year will likely also play important roles in the upcoming and oft-discussed metaverse.
What are the elements that make up the metaverse?
Co-chairman of the Singapore Blockchain Association Chia Hock Lai views the metaverse as comprising DeFi, NFT, Gamify, and Virtual Reality (VR) technology.
Large firms have already signaled their intentions to join the metaverse fray — and in significant ways. Facebook has invested $10 billion in its metaverse division and expects to continue to increase its investment in the coming years. Microsoft’s acquisition of gaming giant Activision, to the tune of $68.7 billion, is also widely viewed as a bid to not only dominate the video games space but also the metaverse.
It’s not just tech firms who have expressed interest in the metaverse — fashion brands Adidas and Prada have partnered for a community-contributed NFT art project in the metaverse. Other similar projects are expected to be announced in the coming year.
Such significant investments into the metaverse will more likely than not accelerate its launch, and its potential for many industries, including entertainment, gaming, and social media should not be ignored, said Chia, indicating the blockchain will serve as the metaverse’s economic layer.
NFTs, already a significant aspect of the blockchain industry, are expected to occupy an important role in the metaverse, although Senior Financial Analyst and Insights Lead at EmergentX, Esme Pau, recommended buyers exercise caution if considering NFTs as an investment avenue.
“There’s a major Fear of Missing Out (FOMO) sentiment around NFTs right now,” said Pau.
NFTs are gaining popularity for several reasons, which we outline at the institute’s annual report titled Global Crypto Industry Overview and Trends: 2021–2022.
NFTs are unique because they satisfy all requirements for digital property rights, facilitating efficiently-run marketplaces. They also fulfill an important social function, that of an enabler for self-expression, creativity and ownership.
The coming year will likely witness a ‘natural selection’ of sorts in the NFT space, with unsuccessful projects exiting the ecosystem and projects with stronger communities gaining a stronger foothold, said Pau.
“The metaverse will be about technology and communities,” says Pau, adding investments will likely be funneled toward developing technology for metaverse interoperability, enabling players to transfer in-game assets across different metaverses.
“It’s an interesting use case that can also bolster the notion of ownership with regard to NFTs,” stated Pau.
Current IP laws will also be insufficient for the upcoming metaverse and changes to existing laws will likely take place in the coming two years.
“As more deep-pocketed institutions enter, we’ll likely see tussles over IP rights in various jurisdictions. It’s an interesting space to watch,” Pau said.