Payments in the Metaverse Part 1: Understanding What the Metaverse Could Be By What It Currently Is
The metaverse has taken the cultural zeitgeist by storm. Ever since Mark Zuckerberg announced the changing of Facebook’s name to Meta, and the company’s plans to make the next phase of the internet an interactive 3D space, the public’s imagination has been running wild with all of the possibilities this new version of the internet, or web 3.0, could hold. How will we use it for entertainment? How will we interact with brands and businesses within it? How will we pay for products and services within it? There are currently more questions about the metaverse than there are answers.
In this blog series we want to look at the questions about how commerce and payments will work in this new version of the web. But, before we get into exploring those questions, we want to use part one of this series to take a look at what the metaverse currently is (you interact with it daily) and what it could become.
The Metaverse and Its Business Potential
What is a Metaverse
A simple way of explaining what a metaverse is, is it’s a vast and integrated virtual world explored and interacted with through a customizable digital version of the user known as an avatar. That’s obviously a very broad definition, so let’s get more granular.
The metaverse, the way Mark Zuckerberg and many others working on it in silicon valley see it, will be a sort of online space that combines virtual reality, augmented reality, the Internet, entertainment experiences, commerce, work, gaming, and more into a multi-platform space that you’ll experience through your customized avatar, and move your assets between.
If you’re still having a hard time picturing this then hopefully pop culture can help you visualize what we’re talking about. At least as far back as 1982, when Tron premiered, movies and tv have imagined a world where we can leave the real world behind and travel into digital spaces where the possibilities for what we want to look like and what we want to do are endless. Think of something like the OASIS from the 2018 movie Ready Player One. Or, what might actually be a closer to reality example, how the internet is portrayed in the tv show Futurama. In the show the characters wear “net suits” to transport digital versions of themselves, their avatars, into a three dimensional version of the internet.
The reality of what the metaverse will look like will probably land somewhere in between Ready Player One and Futurama’s version of traversable digital worlds. Or it could be something completely different than either of those. To get an idea of what the metaverse could be like, let’s take a look at some metaverses we currently use. Yes, you read that right. We currently interact with plenty of metaverses, just not in the ways you’re thinking of.
How You Currently Interact with the Metaverse
You might not realize it, but you and millions of others around the world interact within metaverses on a regular, and oftentimes daily basis. For example, if you’re reading this while your kids are playing Roblox, they are currently interacting with a metaverse. Chinese consumers who use Alipay to purchase goods, schedule doctor appointments, play games, etc., all do so within a metaverse.
If we go back to that definition of the metaverse from earlier—that a metaverse is a vast and integrated virtual world—then technically there are many metaverses that currently exist and that we interact with. They’re just 2D and require us to interact with them through a screen. But just because they don’t look like the virtual world that Meta has promised, doesn’t mean they aren’t technically a metaverse.
Let’s look at Alipay for instance. If you’re not familiar with it, Alipay is an extremely popular Chinese super app. As of October 2021, it has over 669 million daily active users out of the total 2.3 billion Asian super app users.
What makes Alipay different from any other app that North Americans are familiar with is that within this one app a user can make and read social posts, complete banking transactions, schedule doctors appointments, pay for goods or services, order a car ride, play video games, and the list goes on.
Alipay users rarely have to leave the app or switch to another, because almost everything that they want or need to do can be done from within Alipay. The app fits into that definition of a metaverse, it’s just interacted with through a 2D phone screen. But what Alipay currently is, is what silicon valley is aiming for the metaverse to be,with the addition of taking that 2D interaction and making it into a 3D one.
What the Metaverse Could Become
What this 3D, virtual reality version of the metaverse will look like and how it will be used and interacted with is where we can really let our imaginations run wild. This new version of the internet, web 3.0, is filled with limitless possibilities for how we’ll be able to work, play, and interact with each other within it. We will also be able to explore versions of ourselves that we don’t have access to in real life.
Much like in Ready Player One’s OASIS, which itself took inspiration from the virtual online game Second Life, and the customizability of its avatars, users within the metaverse will be able to create or buy different skins, clothes, and accessories for their avatar. NFTs will be able to be worn on avatars or displayed as status symbols in the virtual homes users purchase. The metaverse will allow us to present ourselves in the ways we don’t feel comfortable doing in real life (IRL). It will allow us to interact with people and do certain activities that we wouldn’t normally do in the real world, because of the safety that the virtual world allows us.
The aim that many have for the metaverse is for it to be a collaborative space. A space where we don’t just buy virtual goods for ourselves, but when we purchase those goods we also purchase and own a part of the brand that produced the virtual product.
But how will we pay for things like skins, clothes, NFT’s and virtual homes for our avatars? This is still to be figured out, but blockchain, cryptocurrency, and digital wallets will play a large role in defining payments, currency, and the concept of finance within the metaverse.
The metaverse will bring us closer, if not completely into, a fully digital payment landscape. Allowing for frictionless payments with no financial intermediary required between a consumer and the producer of a digital good. How will those payments take place? That’s a question we’ll dive deeper into in our next blog in this series. So make sure you bookmark our blog and check back regularly.