From virtual reality to metaverse tokens: What is the metaverse?

The metaverse promises a virtual escape from our physical reality—a parallel world where (almost) anything is possible. Above all, it’s a place that will completely upend how we use the internet.

And, it may soon be an increasingly important part of our lives, especially because of the popularity of the blockchain technology that acts as its foundation. But what exactly is the metaverse? Will we use cryptocurrency to make payments there? And which companies are already working on this new, digital reality?

Read on for everything you need to know about the metaverse and where you can go to start exploring it.

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"The next evolution of social connection.” That’s how Meta, formerly Facebook, describes its vision of the metaverse. Still too abstract? Let’s untangle it further.

In simple terms, the metaverse is a three-dimensional, digital world. It reflects our reality, but it also enables actions and interactions that would be impossible for us in the real world.

The word “metaverse” combines the Greek word “meta,” which means “beyond” or “across,” and the word “universe.” You could translate it as “the universe beyond”: greater than anything we’ve previously imagined, and on a scale that’s almost impossible to define. In the literary sphere, the term “metaverse” was first used in Neal Stephenson’s 1992 sci-fi novel Snow Crash, in which humans act as avatars in a global, virtual reality.

Now, the vision of an internet you can walk through can effectively be brought to life, thanks to blockchain technology, and Web 3.0. Blockchain is fundamental to the metaverse. It provides a decentralized, ultra-secure basis for all kinds of transactions and activities. Also based on the blockchain, Web 3.0 is the next generation of the internet—decentralized, digital, interactive and, most importantly, defined by how it’s used.

Despite all the technologies available today, the metaverse is still in its infancy. People have different ideas of what exactly the metaverse should look like, even though there’s a rough standard concept of this digital space.

So, it’s hardly surprising that the term “metaverse” still sounds abstract. To make it even easier, think of “metaverse” as a concept similar to “cyberspace.” The word “cyberspace” paints a picture of a digital environment with endless possibilities—which is what the metaverse is envisioned to be.

Versions of the metaverse have already crept into our lives, especially in computer and video games. In the well-known online game Second Life, released all the way back in 2003, you can create an avatar and lead a kind of parallel life, in a digital world that looks a lot like our own reality.

More recent examples of metaverse games include Axie Infinity and Roblox, which is particularly popular with kids and teenagers. Then there’s Fortnite, which has already attracted more than 350 million registered players since it was released in 2017—probably the closest thing we have to a metaverse right now. But the online survival game isn’t just for hardcore gamers: you can also use its virtual world to chat, hang out with your friends, or attend digital events, like Ariana Grande’s interactive concert.

A place with endless possibilities also means mind-boggling financial potential for companies across all kinds of sectors. Estimates put the metaverse’s market value at US $800 billion (€740 billion) by 2024. To put that in context, in 2020, it was “only” US $46 billion (€41 billion).

So, it’s no surprise that the biggest tech companies—Facebook, Microsoft, and co.—are already working on their own visions and versions of the metaverse, investing billions in the process. Facebook changed its name to Meta in late 2021 to emphasize their new focus on all things metaverse. The company says that it’s developing a holistic metaverse concept to encompass every area of our reality.

Microsoft, meanwhile, says it’s already working on a metaverse for the world of work where you can meet colleagues as avatars in virtual meeting rooms. In late 2022, Microsoft’s chat service, Teams, will integrate virtual- and augmented-reality glasses, creating a “metaverse lite” for the workplace.

However, it’s not just tech heavyweights that are investing in the metaverse. Walt Disney Co. is working on an augmented reality concept to offer visitors a personalized experience across its Disneyland theme parks. There are even plans for a fully virtual Disneyland in the metaverse.

Game development companies like EpicGames and Tencent have been involved in the metaverse for years with games like Fortnite. Now, they’re using this head start to their advantage and looking to expand their games into even larger metaverses, with events, concerts, festivals, and much more.

If you look at the investment patterns of companies that are betting on the metaverse, one thing is clear: it’s a massive new industry.

Meta and Microsoft aren’t the only innovators in the metaverse sector. Other companies in this field are producing important components for future metaverses, like augmented- and virtual-reality gadgets or devices linked to the Internet of Things, plus artificial intelligence software, cloud systems, and much more.

And for all these technologies, we need hardware and software solutions, like chips, graphics processors, devices, and software programs. Companies with stocks in these areas could become just as interesting as the big names.

So, if the metaverse is a virtual copy of our reality—and, by extension, our economy—then how do we pay for things in the metaverse?

Well, first, cash is out the window! And even though payments with credit cards or providers like PayPal may be possible, transactions using cryptocurrencies are the most likely bet.

Because different companies are working on their own versions of this technology, each metaverse also has its own cryptocurrencies, known as metaverse tokens or coins. Many metaverse tokens already exist and are based on the Ethereum blockchain. Depending on the success of individual tokens, they could have an impact on the price of Ethereum’s own cryptocurrency (also called Ethereum).

While Meta and Microsoft are still working on their metaverses, other firms are further ahead. There are extremely popular metaverse games that have launched successful metaverse coins, too—like Decentraland, The Sandbox, and Axie Infinity.

Decentraland describes itself as the first fully decentralized virtual reality world. You can move freely around Decentraland as an avatar and do things you enjoy doing in normal life, like going shopping, attending concerts, and meeting people—similar to Second Life back in the early 2000s.

If you want to buy or sell a virtual plot of land in Decentraland, you pay for it with Decentraland’s currency, MANA, based on the Ethereum blockchain. There are currently 1.8 billion MANA coins in circulation, corresponding to a market capitalization of around €3.9 billion.

The Sandbox is another exciting metaverse concept. This virtual world lets anyone create, own, or even monetize their game experience or digital assets in the form of non-fungible tokens (NFTs).

The currency in The Sandbox is called SAND, again based on the Ethereum blockchain. You can use SAND to buy virtual plots of land and real estate as NFTs, just like you can in Decentraland.

One of the most popular and highest revenue-generating games on the blockchain is the NFT game Axie Infinity. In this play-to-earn game, you grow and sell mini-monster pets, similar to the augmented-reality game Pokémon Go. Your Axies get stronger and more valuable by fighting with each other, which is then reflected in the skills and value of their offspring. Playing can win you AXS tokens, also known as “Axie Infinity Shards,” which you can swap for NFTs on the Axie marketplace. What’s particularly exciting is that Axie Infinity is based on the Ethereum blockchain, so AXS tokens can be swapped for Ethereum coins.

Many companies are taking their visions of the metaverse very seriously—none more so than Facebook’s founder and CEO, Mark Zuckerberg. In October 2021, he changed the name of his social media company from Facebook to Meta, signaling the future position of the entire company and his vision of what he calls the “next evolution of social connection.”

In an interview just before the name change, American business, technology, and media analyst Ben Thompson talked to Mark Zuckerberg about Facebook’s metaverse plans and how Zuckerberg himself envisions the metaverse. Many critics have asked: how will it be possible to transport goods or transact between different metaverse worlds? And wouldn’t it be easier for a single company to build the entire metaverse framework and then make it available to others?

Zuckerberg’s response was emphatic. “We don’t think about this as if different companies are going to build different metaverses. We think about it in terminology like the Mobile Internet,” he told Thompson.

He continued, “You wouldn’t say that Facebook or Google are building their own internet and I don’t think in the future it will make sense to say that we are building our own metaverse either. I think we’re each building different infrastructure and components that go towards hopefully helping to build this out overall, and I think that those pieces will need to work together in some ways.” You can read Thompson’s entire interview with Zuckerberg here.

Whatever’s ahead for us in the metaverse, one thing is clear: the most influential tech companies are working hard to build “the universe beyond.” 

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The metaverse is exciting—and a little crazy, too. With new innovations and possibilities emerging almost daily, it’s only going to become more important and influential. Want to keep up with the times and learn more about crypto staking, tokens, or the blockchain? Then check out the rest of our blog! We’ll bring you up to speed on important financial topics and trends, so you’ve got the information you need to know, all in one place.