While still young, long gone are the days in which “Metaverse” sounded like something out of a Sci-Fi movie. Rest assured, the Metaverse is going to be very real, and, with the right knowledge in hand, very profitable.
In fact, everyone in and around fintech is figuring out how to get in on the Metaverse action.
In this article, we’ll go over some Metaverse trends that all financial services stakeholders should be aware of, including what things look like now and what the future holds, with a special focus on advertising and payments.
Let’s dive in.
What Is the Metaverse?
As the Metaverse is still in its infancy, its definition is open to interpretation.
Although perhaps not the most technical introduction, Hiro Protagonist has the first word here: “When you live in a s***hole, there’s always the Metaverse, and in the Metaverse, Hiro Protagonist is a warrior prince.” What was, in fact, first coined in Neal Stephenson’s novel Snow Crash 30 years ago, has now become reality—virtual reality, that is.
The most exhaustive and (in our opinion) accurate Metaverse analysis that we have found is the work of Matthew Ball. A seasoned venture capitalist and pioneering theorist of the Metaverse, his book The Metaverse And How It Will Revolutionize Everything, offers the following definition:
“The Metaverse is a massively scaled and interoperable network of real-time rendered 3D virtual worlds which can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of data, such as identity, history, entitlements, objects, communications, and payments.”
According to Ball, the Metaverse will eventually serve as the gateway to most (if not all) online experiences.
Currently, the Metaverse consists of a lot of hype around online-gaming worlds that may have a cryptocurrency focus for their online transactions. This makes sense, given that we can trace the concept of a “virtual world” to popular online games like Second Life, Minecraft, and, most recently, Fortnite. Thanks to these games, we all know what it’s like to create our own avatars and participate with other (virtual versions of) people over the internet.
But here’s the thing: the Metaverse is a concept that goes way beyond gaming. It’s the new, upgraded version of the internet itself. It’s a virtual place where not only gaming, but shopping, social interaction, sports, and work will happen–all together, and all at once.
We won’t sit in front of a computer and stare at the Metaverse… we will live in it.
Another key aspect of the Metaverse is its sheer size. If we take gaming platforms as a reference, common online games support up to few hundreds of players. The Metaverse will hold tens of thousands (eventually millions) of “players” at a time.
Advertising in the Metaverse
As you might imagine, the numbers surrounding the Metaverse are massive.
In 2021 alone, Metaverse-related companies raised $10.4 billion. Earlier this year, Epic Games (creators of Fortnite) partnered with Lego to raise $2 billion, earmarked to develop a kid-friendly Metaverse. Today, the market size of the Metaverse is over $38.5 billion.
With so much money floating around, it’s perhaps no surprise that advertising in the Metaverse has become a top priority for businesses. Here are some of the trends that fintechs should be aware of.
Native + Out-of-Home = In-World Advertising
To understand how advertising in the Metaverse will work, let’s first go over different ways in which we’ll physically experience it.
- On existing flat-screen devices, like mobile phones.
- On virtual reality devices like Meta Quest or HTC Vive.
- On augmented reality devices, like Google Glass, Microsoft HoloLens, and the long-rumored Apple product.
Advertising strategies change according to where ads will placed. Now, imagine a typical scenario from real life.
You’re walking down the street, and suddenly you get a craving for chocolate. While you’re munching down on the bar you just bought, you realize you got the idea from the billboard you saw three blocks ago. This is known as out-of-home advertising (i.e., literally advertising experienced outside of the home).
With the advent of the digital age, out-of-home advertising transitioned to digital advertising. This type of advertising was created to add value to the user’s digital experience by seamlessly integrating into the context of online consumption. In plain English? These ads matched the look, feel, and function of the digital media format in which they appeared.
Now, as augmented reality comes to dominate the digital experience, we are seeing out-of-home advertising and native advertising come together to form something we can call “in-world” advertising—where the virtual world connects with the real world.
Imagine, you’re walking your Metaverse avatar down the middle of a crowded virtual boulevard. In the middle of your lazy stroll past Snoop Dogg’s house, you come across a shiny 3D billboard offering a discount on that jacket you need for the real world’s fast approaching winter. As a billboard, this clearly is “out-of-home.” And yet, as it is occurring within a virtual world, it can also be considered “native.”
As we continue to bridge the gap between our physical and digital worlds, we can expect this new category of advertising to evolve in parallel with new payments technology (more on this below) and immersive in-world experiences like Metaverse events.
Specific Item Advertising
Brands are already exploring digital products via NFTs (non-fungible tokens) that can be purchased within the Metaverse.
You could, for example, buy a pair of Nike shoes and get a digital copy (most likely an NFT) for you to use in the Metaverse. Actually, this isn’t a hypothetical, it’s already happening. With Nike’s recent acquisition of virtual sneaker designer RTFKT, it is now producing virtual sneakers, including a collection of 20,000 sneaker NFTs known as the Dunk Genesis Cryptokicks collection.
The over-the-top product placement in Wayne’s World is just as real in the Metaverse, too.
Think about influencers—their avatar selves will also be hanging around the Metaverse, just like you and I, sporting brands and advertising products in fit-for-audience experiences. A great example is the recent collaboration between Hasbro and Roblox to bring Nerf guns to the Metaverse. If you are a Hasbro fan of a particular age (and perhaps income level), don’t be surprised to see another avatar (perhaps an influencer, perhaps a Hasbro sales representative) walking near you with a t-shirt that promotes Nerf guns.
First we had markets, then we had online marketplaces, like Walmart or Amazon.
In the Metaverse, we get whole worlds dedicated to a single brand, or market. In 2021, Gucci unveiled a two-week virtual art installation within Roblox: the Gucci Garden. Users could go in, try on, and buy a number of products.
Another example is Nike’s recent collaboration with Roblox to create the virtual world called Nikeland. Here, users are able to dress up their avatars in Nike-branded apparel as they check out the brand’s latest product offerings.
But again, these examples are within a single platform. What does the future hold? Think bigger: a single Metaverse, where users don’t have to go in or out of a game or platform. From a single entry point, they gain access to absolutely everything the Metaverse holds.
Payment Rails in the Metaverse
Payments have come a long way since our ancestors got their groceries in exchange for tiny bags of salt.
From cash, to credit cards, to online payments. Now, the Metaverse is taking us further into the future of payments technology. And who doesn’t want to be a part of it, when the global Metaverse market size is expected to reach $758.6 billion by 2026?
So, what does the current payments system look like in the Metaverse? While physical currency has, of course, no place in the virtual world, some “traditional” payments methods are seeing widespread adoption. Currently, different Metaverse platforms already accept payments via:
- Credit/debit cards
- P2P like Venmo and CashApp
These methods still rely on some form of physical standard to back their value up. As such, it can get somewhat cumbersome (speaking in relative terms) to operate with them within the Metaverse. The next Metaverse payments shift will focus heavily on cryptocurrency and NFTs.
Cryptocurrency in the Metaverse
As cryptocurrency continues to evolve, the future economy of the Metaverse will be built on the back of the blockchain. Here we have the likes of Bitcoin—the first and most stable cryptocurrency—and Ethereum, which allows for decentralized finance (DeFi) and NFTs.
And although crypto and Metaverse don’t rely on each other to exist, they certainly bolster each other. In a Metaverse based on crypto transactions, users can very easily “live” online.
Crypto offers the Metaverse the advantage of verifiable, transparent, and frictionless payments. While there is still a lot to be worked out, the widespread adoption of crypto positions the Metaverse to double down on its defining feature: interoperability.
With no attachments to physical standards to determine its value, crypto enables a new way of transacting—one that could move $1.5 trillion by 2030.
NFTs in the Metaverse
Non-fungible tokens certify ownership of a single digital asset on the blockchain. As such, they are unique.
Although technically a cryptocurrency themselves, NFTs hold their own set of characteristics. Namely, three:
- Security: all NFT transactions are recorded on blockchain, so there is no risk of fraud or theft (which can happen with other virtual assets).
- Scarcity: as they are limited, inasmuch as they represent unique items, NFTs make the Metaverse more exciting for users, while generating value for virtual assets.
- Monetization: assets can be bought and sold, and new content can be created. NFTs are also a way of enabling cross-platform transactions.
Of course, NFTs come with their own challenges, such as how to represent asset ownership, or even avoid inflation. However, they are already being used by numerous companies, as we saw in the examples above.
In a sense, we can begin to think of NFTs as the superglue that supports the Metaverse-cryptocurrency development. Think of a plot of virtual land, a ticket to an online event, a piece of digital fashion—they’re all within the Metaverse, and you can acquire them with cryptocurrency. But what exactly do you acquire? An NFT, which proves that you purchased and now own any given asset.
Currently, digital assets like specialized weapons or vehicles in online games are wholly owned by the developer. And while real money is spent on these virtual assets, NFTs are going to enable true virtual asset ownership, which allows for trading, resale, and virtual art galleries. We’ll get into this below.
The Impact of the Metaverse on Fintechs
Yes, new payments technologies in the Metaverse still have to overcome some very real challenges, especially before they’re considered ubiquitous. Challenges include developing hardware to run massively scaled online worlds, the latency of virtual reality devices, and regulations from governments and private enterprises.
But it’s safe to say that the Metaverse is here to stay, and will make a HUGE impact on the way we live our lives and interact with brands. What connects the dots between real-world people and commerce in our soon to be virtual world?
We can think about it like this: pretty much any financial service people need in the real world, they will soon need in the Metaverse:
- Digital wallets
- P2P transactions
- Digital remittances
- Digital lending
- Digital real estate
In the Metaverse, everyone will need a wallet to manage ownership and control over the assets they create, trade, and own.
The top digital wallets right now include Metamask, Coinbase, Enjin, Math, and Alpha, all with their own features and capabilities. One major characteristic that they have in common, though, is their flexibility for using NFTs, which, as we have seen, will prove to be essential within the Metaverse.
P2P transactions in the Metaverse are changing as well.
For example, say you purchased an item in GTA V. Rockstar owns it and can delete it, and it won’t transfer to GTA 6. And yet, one of the keys of the Metaverse is the persistence of digital items. So your item should be able to be transferred from one place to another, from one digital hand to another, seamlessly. This is what happens in Ready Player One, where Wade Watts drives around a DeLorean from world to world.
This is just the beginning. Digital lending for SMBs to build their businesses in the Metaverse, digital remittances, and digital real estate should all experience rapid evolution in the near future. Metaverse real estate, for example, saw a 700% increase in 2021. Yes, you read that right.
Connecting Your Brand to the Metaverse
If you’re in the fintech industry, shying away from the Metaverse (and the inevitable change it will bring) is definitely a bad idea because it will be bad for business. You have the chance to be a part of something that will redefine the way we think about the online world.
And with that, comes big money. Especially in fintech.
At CSTMR, our fintech marketing agency is keeping a keen set of eyes on what the Metaverse is bringing, and what opportunities we find for our customers. If you’re already thinking about getting in, we can help build your digital marketing strategy, to make your brand stand out in a relatively unknown but definitely exciting market.
Feel free to reach out and send us your thoughts on the Metaverse—we’re glad to nerd out on it with you.