Fintech in the Metaverse

“Metaverse” is the hottest buzzword right now, but it is much more than a fleeting hot topic. With Metaverse likely set to become Web3 in the not-so-distant future, this far-reaching vision of next-generation technology will inevitably transform the real world into a virtual one. It is estimated that the Metaverse will have 5 billion total users by 2030.

So, what is the Metaverse?   

The metaverse may be hard to explain unless you’ve experienced it firsthand, but it’s essentially a digital universe. A metaverse, at its most basic, is a three-dimensional virtual universe that mixes augmented and virtual reality with social media technology to create a digital environment. Already, the metaverse is morphing into a parallel universe to our own, with entire realms being created that are only restricted by the imaginations of developers and users. Virtual land, for example, is a genuine commodity in the metaverse, where individuals create their own worlds that may or may not resemble real-world events.   

From the metaverse to the finverse?   

Metaverse is predicted to grow in importance as a digital platform for personal and business interactions, including financial transactions. The capacity to manage finances and transactions is vital to making this new environment immersive and realistic. A metaverse financial transaction is fundamentally the same as a real one. Anything Fintechs can do to ease the processing of metaverse transactions will be popular, and early adopters may benefit the most. If the metaverse lives up to its hype, Fintechs will have to step up and provide services like payment processing, vehicle loans, and mortgages.   

In reality, the most essential indicator of making the metaverse as indispensable as real life will be financial data management and techniques for managing financial transactions supplied by fintech solutions similar to real life. However, Fintechs may have an advantage over traditional banks in terms of mobile technology, user-friendliness, and the ability to handle crypto transactions. Financial services will most likely become a highly competitive business in the metaverse, opening up more opportunities for fintech startups that can leverage blockchain in ways that we haven’t even imagined yet.   

Banks entering the metaverse 

There are financial players who rushed into the meta world in order to establish themselves as forerunners of the digital finance future. JP Morgan has become the first bank to enter the metaverse, opening a lounge in Decentraland, a popular blockchain-based metaverse. This marks the banking giant’s entry into the metaverse, as it eyes the potential financial gains of an estimated market value of $1 trillion. 

According to JP Morgan’s study report, the metaverse provides the potential to: 

Socialize – Almost US $60 billion in messages are sent every day on the online game platform, Roblox

Transact – Every year, US $54 billion is spent on virtual products, which is nearly double the amount spent on music. 

Create – In 2021, Second Life’s GDP was estimated to be over US $650 million, with nearly US $80 million paid to creators. 

Own – NFTs now have a market capitalization of $41 billion USD. 

Experience – The Sandbox has formed 200 strategic alliances to date, including one with Warner Music Group to develop a virtual environment based around music. 

With JP Morgan taking the plunge, it raises the question of how long it will be before others follow the suit.   

Is it Possible to Make Real-World Financial Transactions in the Metaverse?  

Yes, you can buy everything in the metaverse, from land to structures to unique avatars. Property and other purchases in the metaverse are real investments, and many of them have already increased in value dramatically, reaching seven-digit levels in some cases. For example, pieces of land in Decentraland, a significant metaverse project, were recently selling for $17,000, with some going for as much as $575,190. By the time you read this, the figure might be considerably higher. CryptoPunks‘ “alien punk” sold for $7.58 million, and it’s currently on the market for $142.4 million. In a nutshell, there are lots of large-scale, real-world financial transactions taking place in the metaverse.  

NFTs as a byproduct of the metaverse and fintech   

Although the metaverse has yet to be explored, such linkages could assist financed businesses. Larger fintech firms might invest in developing their own metaverses, similar to how Coinbase did with its NFT marketplace. The number of people interested in the acquisition and selling of NFTs will dramatically increase in the near future due to their simplicity and availability. 

While users can purchase NFTs directly from developers, a thriving online community of NFT markets has emerged where buyers can browse through numerous types. Time Inc., Walmart, Fox Entertainment, the New York Stock Exchange, and Gucci have all issued or announced plans to issue NFTs. Individuals and organizations can now use NFTs to monetize both physical and digital assets that they already own or can easily produce.

Summary 

The Metaverse team plans to work with regulators and offer an open cross-blockchain platform rather than simply a digital currency built on public blockchain technology, which offers significant competitive advantages over any private blockchain. This kind of forward-thinking mentality could mean big things for Metaverse, and for the future of cryptocurrency innovation as a whole.