Is Metaverse the Future of Fintech?
The past few years have seen an exponential growth of terms like Web 3.0, NFTs (non-fungible tokens), the metaverse, cryptocurrency, blockchain, and more. With tech giants such as Facebook and Google gradually edging towards this industry, it has become crucial for the bystanders to get their bearings right and understand what this jargon-filled world encompasses.
Web 3.0 is rightly said to be the third generation of the internet. The first generation saw the emergence of basic HTML company websites, imparting information about companies where the user’s involvement was restricted to reading. Web 2.0 evolved into a more interactive interface, which led to the dominance of social media and interactive websites, which allowed users to interact with webpages and other users. However, in Web 2.0, most decisions related to the technologies and market were taken up by big companies and governments, restricting the engagement and power of the users. This is how Web 3.0 surfaced.
The third generation of the internet is yet to blossom completely, leaving a trail of ambiguity about its future. The primary intention of Web 3.0 is to disrupt the centralized system of the internet.
The onset of Web 3.0 suggests a decentralized method of operating the internet, where the better half of the control would be in the hands of the users. However, this notion has found a place in the list of conundrums governing the internet space currently.
The metaverse has become a quintessential augmentation of the internet that has been subjected to love and hate equally, meaning that its warm welcome has also received some backlash.
To start with, what is the Metaverse?
For everyone familiar with video games, the understanding of what the metaverse is might just become a tad bit simpler. In uncomplicated terms, the metaverse is our world in a virtual setup; which means that humans, objects, nature, and everything else, exist in a virtual space in virtual forms.
The concept of virtual reality is not new; VR first emerged in the 1980s, when Jaron Lanier developed goggles and gloves that would enable people to enter and feel virtual reality. This concept successfully found a niche in the video game world. Roblox games used the concept of virtual reality, where children could devise their virtual ‘avatars’ and hang out with friends in a virtual world, doing pretty much anything. The VR used in video games gradually transpired into a more amplified version opening the gates for the emergence of the metaverse.
The metaverse has become a popular space that is continuously getting explored and created by people globally. Starting with virtual personalities, the concept of virtual reality has reached a stage where people are going heavy with their investments in properties, assets, and artworks to build a more secure, comfortable, and fancy virtual reality for themselves.
To achieve this security and comfort, people have created and bought stadiums, houses, and pieces of land in this virtual space. The prices of these assets, the digital avatars, and other objects being created and bought in the metaverse are influenced by factors such as their demand, the brand value, the ability to recreate it, and the complexity of its creation process, etc.
Impact of Metaverse on Fintech
Like other sectors that have been influenced by the emergence of the metaverse, fintech has also witnessed a few changes. Here, come the roles of cryptocurrencies and blockchain technology.
Cryptocurrencies are decentralized currencies used as investments or to make purchases. The term ‘decentralized’ means that these currencies are not governed and influenced by any company, individual, or government, and blockchain technology follows the same supremacy.
Blockchain is the platform where all cryptocurrency dealings are performed and stored. All purchases, transfers, and transactions related to cryptocurrencies, are automatically stored in this digital and decentralized platform.
The metaverse involves both virtual and augmented reality, to access which one doesn’t necessarily require VR or AR technology. Some aspects of the metaverse involve cryptocurrencies and, in turn, blockchain technology.
The financial aspect in the metaverse is where and how fintech comes into play. As the metaverse exclusively exists digitally, all the financial activities associated with this space are accounted for in the fintech industry. When people purchase NFTs or other digital assets in the spectrum of the metaverse, the financial dealings are carried out digitally, suggesting an urgent need for fintech.
As the confluence of the metaverse with fintech deepens, it opens doors for more innovation in both industries. According to a report, the trends in the fintech industry have suggested that its investments in developing technology, applications, etc., to meet future consumer requirements could shoot past $1 trillion in VR.
With metaverse gaining more popularity among the masses, the level and frequency of investments have also increased, resulting in a more pronounced need for fintech capabilities to cater to this advent of new technologies.
The Future of Metaverse in Fintech
The most powerful augmentation by the metaverse in the fintech spectrum would be monetary exchanges that would allow users and participants to engage in monetary transactions in a singular dimension employing decentralized media. Such opportunities would prompt fintech companies to remodel and innovate the financial sector to cater to the virtual world more efficiently.
Another implementation of VR and AR would be like the addendum of remote working, where users can attend meetings or their offices in a virtual setup, making the best of both worlds. In this particular concept too, fintech can have the opportunity to reshape the virtual fintech world very differently from how it is shaped in our reality.
Such innovations and ideas allow immense freedom for creativity and growth, accelerating the overall evolution. By making use of the right opportunities at the right time, the fintech industry can reap the most benefits from the metaverse.
