Cryptocurrency and the metaverse: Is crypto key to enterprises in a virtual world
Sheer coincidence or otherwise, Friday the 13th (of May) marked when the crypto market nosedived. More than $200bn was wiped from it in a single day, prompted by the collapsing value of terraUSD and apprehensions about Bitcoin. TerraUSD founder Do Kwon – who mocked an economist for being ‘poor’ – found the value of his tokens fell from $1 to mere pennies.
Crypto devotees clasped their assets with topaz hands, believing that the fundamentals of blockchain technologies remain sound. But companies who are dipping into the NFT area – mainly using the Ethereum blockchain to mint their collections – wavered in the gusts of speculation. The dip raised questions on the ‘necessity’ of crypto within the metaverse. The next era of spatial computing is already nebulous, with definitions flying across the virtual sky, with no consensus in sight. Microsoft asserts that the future will bring multiple metaverses, while Meta is quietly assisting with the construction of a monolitic and singular vision.
One or many, its actual form is still under discussion and debate – with the role of blockchain technologies at its heart. It is, perhaps, the most fundamental question in metaverse discussions: will payments and ownership be tracked by a decentralised blockchain, or will fiat currencies reign supreme? The very bedrock of a hypothetical metaverse is at stake. Decide poorly, and companies will build on unsteady grounds that will collapse, sinking everyone with a stake.
In response, companies are taking considered steps, as small toes into the pond – but few wish to dive in. Companies experiment with no consensus, and early examples point toward using the hype to reach new customers. Nearly all cases demonstrate an entrepreneurial spirit where brands skim the surface of the metaverse. None drive home that crypto is necessary.
Take Gucci, a pioneering force in metaverse marketing. Alongside buying plots of land in The Sandbox and launching NFT collections, the fashion company recently announced that select stores will accept bitcoin and ethereum (among other currencies).
The motivation is customer-based, to serve the needs of (likely wealthy) customers who hold a collection: “Gucci is always looking to embrace new technologies when they can provide an enhanced experience for our customers,” said Marco Bizzarri, Gucci president and CEO. No reliable statistics exist for the number of people who use crypto wallets, but it is certainly in the millions – a bustling pool of new customers to reach. But note the CEO’s wording. Gucci isn’t offering crypto because it is used in the metaverse; it is a customer-first approach as the fashion label recognises that potential customers hold cryptocurrencies that they are willing to spend.
Other companies use it to continue their work on already-moving initiatives. “We’re so excited to be able to champion female representation once again in the metaverse,” said Sam Helligso, brand director of Boohoo, as the company unveiled a collaboration with four talented artists.
Again, the company taps into the conversation without any meaningful discussion on its necessity in the metaverse. The focus is more narrow: “Our aim is to allow our customers to enter the NFT space effortlessly and affordably,” said the brand director.
Marketing fluff, not technological stone
The initiatives work. Nike, another fervent fan of metaverse moves, recently announced that its Roblox land had seven million visitors, a remarkable milestone for the brand. Like Gucci and Boohoo, many companies use the metaverse as part of a marketing strategy and seeing some successes. The number of companies making ‘metaverse plays’ irks select marketing journalists that I have spoken to. But the initiatives are surface-level rather than structural. During Retail Week Live, one company privately told me that their metaverse moves were largely campaign plays, as soft initiatives while they scan the market for further opportunities.
You cannot blame anyone taking cautious steps. With such a new and emerging area, unregulated by financial authorities, it warrants a careful approach that falls into the realm of marketing, not technology. But it also difficult to argue that crypto is necessary for the metaverse. In fact, crypto and the metaverse are often conflated in unnecessary ways. I recently argued in TechInformed that the two ideas do not need to be tangled together, as one can exist without the other. We may see a system of verifiable ownership crest the digital horizon, evolving from today’s blockchain technologies. But until then, the market is still fiddling with the details and particulars of the networks that exist today.
Quietly, players like Yuga Labs and Meta are building their own web3 propositions, where brands may call (or buy) a home in the years to come. Until the full plans are revealed, blockchain technologies are used as a useful excuse to tap into new and passionate communities. Though marketing teams plan flashy campaigns in boardrooms, few campaigns indicate that blockchain technologies are required in a future metaverse. But the argument will become important when engineers lift the curtains on their creations.
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