How Metaverse Can Transform Fintech?
What do we know of the Metaverse and how can it transform the financial world?
How will this benefit businesses and individuals operating in the virtual world?
Table of Contents
Metaverse is not an altogether new concept. The past year has transformed social media along with social behaviors. It has impacted human life as we know it and has changed it significantly leaving a mark on different areas of our lives and its impact continues to generate transformation around the world.
The pandemic forced things to change in a certain direction, the increased interest in virtual spaces, blockchain, and cryptocurrency is a manifestation of that. The focus has shifted towards the creation of a digital presence and digital assets for both businesses and individuals. It makes all the more sense when we consider the constant frenzy and uncertainty around Covid and how the world is one variant away from getting locked.
The rebranding of Facebook allowed the transformation to be a quick one, the virtual reality entered the lives of many rather quickly than anticipated. This hasn’t happened in a vacuum as the perception was created with innovative technologies such as augmented reality, VR headset technology, and the concept of a virtual world. With Facebook’s rebranding, the phenomenon picked up and became the last striking point of digitization.
The world of fintech is eagerly at the expansion and take-up of this virtual reality and how fintech and fintech solutions can adapt to this world to serve the interest of businesses and individuals alike.
What Do We Know of the Metaverse?
Metaverse can be torn into multiple parts to better explain and understand the term. Meta simply means “beyond”. The verse is the same as Universe and Metaverse collectively mean “the creation of a universe beyond the existence of the physical world as we know it” and it is based on blockchain technologies.
The space is shared by virtual reality, the real world, and augmented reality. This new virtual world is will be a collaborative effort of new and upcoming innovative technologies.
Read more on: WHAT IS METAVERSE: USE CASES AND BENEFITS
Some of the commonly known characteristics of the Metaverse
- It is not bounded by time and space.
- The participants will be interacting in the physical world while they are interacting in the virtual world.
- The platform will promote inclusivity and accessibility. Anyone with a connection will be able to join and share the space.
- This world will allow monetary exchange and transactions through a newly introduced value chain system that will be recognized by others. This is in continuation with the cryptocurrency currency.
How Will Virtual Space Impact the Fintech World?
The focus of the metaverse seems to be on virtual reality, digital assets, blockchain, cryptocurrency, and video games as most people understand by now. In reality, it will much more comprehensive and immersive than that while encapsulating more areas than the few mentioned above. It is expected to become a platform that will assist businesses and individuals including finance.
Fintech solutions for digital payments and transactions and financial data management have already revamped the traditional methods of money exchange and transactions. These newly formulated methods are far more secure and transparent as well as convenient. The Metaverse will be relying on these methods to make it as indispensable as it is in the physical world.
A world where businesses like real estate, textile, workspaces will be in constant interaction with each other. People in their avatars will be able to buy and sell things and trade in digital currencies, this will form a huge economic ecosystem.
Even though the metaverse is in its ideation phase, people and businesses are eager to become the first ones to have position themselves as the pioneers of embracing change and facilitating it. As the Korea Times noted in August 2021, brokerages and banks in Korea have already begun to create active virtual environments for their clients.
Fintech Solutions in the Metaverse
Facebook recently launched its digital wallet app, Novi, in the US and Guatemala. This is a hopeful confirmation that Facebook will be looking at blockchain technology to support transactions in its metaverse.
The technology is already in use and some of the examples are:
The use of cryptocurrency in video games
Videogames have captured the center stage even before the ideation and initiation of the metaverse. The gaming world makes the digital world more engaging and fun for users. During the pandemic, games have kept people busy in isolation and let them enjoy a world that let them interact with the outer world when there was hardly any connection left.
Developers are increasingly looking at cryptos to conduct in-game transactions because they can boost sales via a play-to-earn model and conveniently function cross border with the use of digital currencies.
NFTs and metaverse
Twitter is planning to facilitate NFTs artists and creators by allowing them to share NFTs on the platform by connecting them with their crypto wallets. A key feature of the metaverse is that NFTs will let creators sell their content without intermediaries and build online communities thereof.
Facebook, with its new name Meta, has already invested $50M in funding non-profit groups to fuel the ‘build the metaverse responsibility’.
Facebook hasn’t just changed its name for nothing but is embracing the meta-reality giving it the credibility it needs. Novi, the new digital wallet technology, Facebook is opening up paths for financial services to integrate with the metaverse.
There’s not much to distinguish between digital wallets, blockchain wallets, and metaverse wallets. They all offer almost the same features as to develop or distribute their digital assets by receiving, storing, and transferring tokens.
The Future of Fintech in the Metaverse
The space is still very much nascent and it will take time for it to mature.
- As Facebook has taken the lead in embracing the new meta-universe, fintech startups can benefit from integrating their solutions into its ecosystem and offering services to businesses and individuals alike.
- Alternatively, major fintech players may explore the option of creating their own exclusive metaverse: Coinbase’s upcoming NFT marketplace, for example, will include personal feeds based on each users’ interests to help foster connections between like-minded people for greater cooperation.