The “Metaverse” is a developing concept whose origins date back to 1992 when it was first mentioned in Neal Stephenson’s sci-fi novel Snow Crash. The novel referred to an online world that people enter with their digital avatars.
Back in 2003, a metaverse-like game called Second Life was launched and experienced rapid growth, gaining up to a million active users. Compared with other massively multiplayer online role-playing games, Second Life more closely resembles real life. Within the game, users can own a house, get a job, and even invest and earn real-world money by using Linden Dollars, which are acquired in-game through an exchange called LindeX. However, as the platform uses centralized currencies, Second Life’s virtual world experienced an event resembling the 2008 financial crisis. Seemingly foretelling the upcoming global banking disaster, an in-game bank called Ginko Financial collapsed, leading to a loss of around 200,000,000 Linden Dollars (worth $750,000) in August 2007.
Fast forward to the present, and blockchain-based platforms like The Sandbox, Decentraland, Axie Infinity and many more have created their own versions of a metaverse. Leveraging the power of nonfungible tokens, the platforms have sold digital real estate plots for millions of dollars. Because of the growing interest, more mainstream companies and household brands have shown interest in entering the metaverse space.
Reports show that real estate sales on just four of the major metaverse platforms — The Sandbox, Decentraland, Cryptovoxels and Somnium — reached over half a billion dollars in 2021. While this is already a remarkable amount, the figure is expected to double in the next year. With sales booming, more companies and organizations dived in last year.
In the fourth quarter of 2021, Facebook announced it was rebranding to Meta and revealed that its focus would be building the Metaverse and enhancing online social experiences. While many took offense with the company, citing its previous privacy and data controversies, the move also brought more attention to the Metaverse. Google Trends shows a huge increase in searches for the keyword “metaverse” after the rebrand announcement. The rebranding also brought more investments into metaverse businesses, as venture capitalist firms started showing interest in blockchain-based projects like The Sandbox, Decentraland and Axie Infinity.
Chinese companies also started looking into metaverse businesses. In December, more than 1,360 Chinese companies, including conglomerates Huawei and Hisense, submitted over 8,000 metaverse-related trademark applications.
Many predict that gaming will play a huge part in companies diving into the metaverse space in 2022. In January, Microsoft announced its acquisition of game publisher Activision Blizzard for $68.7 billion. The firm hinted that gaming will play a huge role in the nascent space and said that the company will “provide building blocks for the metaverse.”
While there may be a greater influx of institutional players investing in metaverse projects in 2022, some are also predicting that decentralized metaverses may gain traction. Jane Thomason, chairperson of investment firm Kasei Holdings, believes that “The adoption of DeFi and NFTs in GameFi has only just begun and we will see incredible innovation in this space with community-owned economies and on-ramps to the Metaverse.”
Metaverse
