- Written by: AuthorsSchool
- Category: NFT Blog
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By Thad McIlroy
Book.io’s CEO Josh Stone is a publishing startup veteran, having launched BookShout in 2012 and running it for two years before selling the company to an investor. He went on to build an online learning platform on behalf of two authors. Then, in 2017, Stone began to delve deep into blockchain and cryptocurrencies, leading to this new venture, which he launched in 2022—originally under the name Book Token—with cofounder Ben Illian (who also worked alongside him at BookShout).
Book.io describes itself as “an NFT marketplace for buying, reading, and selling e-books and audiobooks” (though, thus far, it has only published e-books). The blockchain infrastructure enables a broad range of benefits for authors (and by extension publishers), book buyers, and, to a lesser extent, readers. Authors are able to build new revenue streams via limited edition NFTs, and by gaining a percentage of the revenue when their digital work is resold. The blockchain also affords unique ways to build reader communities.
Authors and publishers can take advantage of Book.io’s unique “decentralized encrypted assets,” which create a style of DRM that’s essentially unbreakable. The company is also launching “$BOOK tokens,” a unique cryptocurrency that is earned by readers based solely on the amount read—a way to incentivize readers to become more deeply involved with authors and their work.
Ingram Content Group chairman John Ingram was on the board at BookShout, and that connection eventually led to the company’s investment in this new startup, part of the more than $1.6 million that Book.io has raised. The Ingram investment is tied, in part, to another unique Book.io feature, dubbed Mint & Print—a print-on-demand service for digital books bought on Book.io and delivered via Ingram’s vast international infrastructure. In commenting on the investment, Ingram Content Group president and CEO Shawn Morin said Books.io “naturally aligns with the global reach of our business and our mission to provide the infrastructure and services necessary to help content reach its destination, from content creators to consumers.” Book.io has already published (or, rather, “minted” in the parlance of the world of NFTs) 12 titles, and all have sold out, some in as few as 11 seconds. First up was a replica of the Gutenberg Bible. It was, Stone explained, “an homage to Gutenberg: something monumental to start with—over 800,000 words—with 70 high-resolution images. Every cover was unique.” It was published in mid-July, at an initial price of 180 ADA (the native currency of the Cardano blockchain, currently trading for about 37¢ each); 1,600 copies have been sold. “On the first day we generated $110,000 in sales within 12 hours,” Stone said, adding that the company is already profitable.
The Gutenberg was followed by what Stone calls the “monster series,” including titles like Mary Shelley’s Frankenstein (49 ADA) and Robert Louis Stevenson’s The Strange Case of Dr. Jekyll and Mr. Hyde (39 ADA). After the monsters, Meditations by Marcus Aurelius, published October 8, was priced at 100 ADA in an edition of 400 copies. These are now available on Jpg.store—which bills itself as “the largest Cardano NFT marketplace”—at prices ranging from 400 ADA to more than 100,000 ADA. Copy #17 has been resold twice, most recently for 1,200 ADA, upward of $500.
To get a better understanding of how this works, let’s follow an author’s path on Book.io. Gina Azzi has written 27 romance novels in a specialized category, “sports romance.” Her upcoming publication on Book.io is titled Hot Shot’s Mistake: A Workplace Hockey Romance, the first in her Tennessee Thunderbolts Hockey Romance series. The Book.io version of Hot Shot’s Mistake will contain the exact same text as the Kindle edition, but it will feature 10 different AI-generated covers, each one, Azzi pointed out, “illustrating a different point in the book that holds special emotional significance.” The book will be minted on October 24, in an edition of 3,000. The pricing will be about 25 ADA.
Now let’s follow the book buyer’s path on Book.io. To purchase a digital book, a consumer needs to first convert some dollars into Cardano blockchain ADA. Cardano is an alternative to Bitcoin and Ethereum, and like those currencies its value has recently taken a nosedive, dropping by more than 80% in the past year, nearly 25% in the past month. It adds an exciting element to the book buying equation. To buy ADA, a person needs to register on a cryptocurrency exchange platform as well as with a “light” wallet vendor that connects to something called dApps. With that done, users can buy a book on Book.io.
Stone said he is committed to simplifying the process for book buyers until it reaches a point where, as he says, his mother can buy and read a book on the company’s digital platform. While he still has some way to go to get his mom onboard, the company’s technical command inspires confidence that the goal can be reached.
Azzi is excited as she prepares her first book launch. “I do think this is going to become much more mainstream,” she said. “It can sound scary. But Book.io does a great job of bridging where we’re currently at with where things are headed.”
A version of this article appeared in the 10/17/2022 issue of Publishers Weekly under the headline: Ingram Backs Book.io
Below is the information for authors to sign up on Book.IO
Author Sign Up
Get started with Book.io
Welcome to the future of publishing. First of all, congrats on your book! As an independent author, we understand you have dreams of getting your books out there and read, and we want to make publishing your work an easy process. We will walk you through the steps to get your books published on the blockchain and up for sale in our store.
Benefits of NFT eBooks
As the Author, you’re in control, here’s what you can expect:
• 70% of all revenue on the initial sale of your books
• You’ll set the Royalty % that you’ll receive on all secondary sales
• You won’t have to be exclusive with Book.io
• The title(s) you want to publish and the number of units
• The number of different covers and the corresponding rarity chart
• The price of your books (we’ll handle the crypto conversion for you)
• Get accurate sales reports pulled directly from an immutable blockchain
• Allow Readers to Print the NFTs they own through Mint & Print® (coming soon)
• Get started today! Just fill out the form below, and a Book.io representative will be in touch.
To sign up go to their website: Book.io - Authors
- Written by: AuthorsSchool
- Category: NFT Blog
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POSTED OCTOBER 29, 2021 VAIBHAV SHARMA
Undoubtedly, we are all connected right now via our phones, computers, and tablet pcs. But, according to experts, the metaverse will evolve more like products, services, and capabilities connect and blend together.
The Metaverse can indeed be thought of as the world’s digital counterpart. Human profiles are represented as avatars, which is indeed an extension of something like the real world. In the Metaverse, office spaces, property, and events are all mirrored.
In the domain of digital transformation, the concept of Metaverse has now become a subject of discussion. Literally, everyone is embracing the Metaverse, from tech giants like Facebook and Microsoft to Roblox and Epic games.
What is Metaverse? And why is it gaining so much popularity these days? Don’t worry; we’ll answer this!
In this blog, we will talk about the trending topic “Metaverse” along
Table of contents:
• Which companies are investing in Metaverse?
• What can you do with Metaverse?
• To Sum Up: What is the future of Metaverse?
• So, let’s get started!
What is Metaverse?
In short, it’s a collective virtual shared space.
A few of the beginnings of Metaverse can be seen in Neal Stephenson’s novel “Snow Crash” from 1992 and in Ernest Cline’s Movie “Ready Player One”.
The metaverse is a perfect fusion of physical, augmented, and virtual reality. The Metaverse is a public virtual world that may be accessed via the internet. It creates a “virtual world” experience by simulating human emotions and gestures.
The metaverse encompasses the entire social and economic structure that exists in both the actual and virtual worlds. Avatars, content, and goods may all travel around freely. It’s a living, breathing experience that never pauses or finishes like a game.
• The Metaverse is a virtual reality in which individuals can communicate and transact with each other and with digital 3D items.
• It relates to collaborative virtual worlds where currency can be used to buy and sell land, buildings, avatars, and even identities.
• Individuals can walk around with their friends, visit places, buy things, and attend events in such environments.
• Musicians, for example, can perform virtual gigs, and fashion companies can create virtual apparel for people’s avatars to wear in metaverse surroundings.
• It’s worth noting that Roblox, a popular children’s game, touts itself as a metaverse corporation.
For better understanding, here’s an example!
You could visit a simulated cafe and e-meet with your friends there, or you could travel to a virtual art gallery to see a digital art display.
Metaverses, on the other hand, aren’t just for gamers. Some metaverses allow you to meet up, collaborate, shop for goods and services, and participate in activities like live events, live concerts, among others.
Which Companies Are Investing in Metaverse?
Many technology companies, including Microsoft, Facebook, Roblox, and Epic Games, have been making this a reality.
But how many have they truly achieved thus far?
The early Metaverse experience may be found in gaming, as players create their own distinct worlds. Consider what Epic Games accomplished with Fortnite. They organized complete concerts for people to participate in and connect with.
The metaverse has no bounds. Allowing individuals to imagine endless spaces that aren’t constrained by geography.
Facebook and Microsoft, on either hand, are taking a slightly different strategy.
Horizon Workroom, a new method for office workers to communicate using virtual reality and headsets, was recently unveiled by Facebook. There are Avatars all wandering about in a virtual office area in real-time so that you can hold VR meetings with individuals.
On the other hand, Microsoft plans to completely revolutionize the way business and operations are conducted by creating a digital twin of the real world with which we may engage via mixed reality.
Roblox, a popular game, calls itself a metaverse corporation. Besides Epic games, Fortnite is also regarded as an integral part of the Metaverse.
Over time, The Metaverse has progressed beyond simply a gaming-related experience. Games like Unreal Engine and Fortnite have demonstrated how beneficial this network can be, and it is for this reason, a company like Facebook is ready to put so much money into it.
On the basis of above listed examples and how various tech giants utilize Metaverse, it’s clear that the demand for Metaverse service providers will rise dramatically. But, is Metaverse quite beneficial for individuals like us?
Let’s find out!
What Can You Do With Metaverse?
With the use of metaverse technology, users can easily wear virtual reality glasses that give the user the sensation of being there in front of a companion, even though they are physically separated and only linked over the internet.
There are no limitations at all. Each individual in the metaverse would have their own digital avatar, which would be our lookalike. We’ll be able to connect with the metaverse through augmented and digital reality, but we’ll also be able to interact with some aspects of it in our physical area.
You could have multiple personalities in the metaverse simultaneously, which you can develop for diverse reasons. You can collect rare things, play instruments, or join a popular sports team as a player. Each of your characters can be made for a certain reason.
To Sum up: What is the future of the Metaverse?
Imagine studying, working, interacting, attending concerts, earning money, and playing games in an online realm that is both an extension and a fusion of the real world.
Besides, meetings with clients, digital entertainment, work training, and even online study are all expected to be available online in the future, thanks to the Metaverse. This is why so many businesses are investing in the Metaverse: the network’s ability to change the world is undeniable.
Would you prefer to live in a Metaverse like this? Does it pique your interest? If you like this blog on Metaverse, do share it with others who may find this information useful.
Thanks for reading, and we will see you in the next blog on Metaverse!
For More Information Contact us at email@example.com
- Written by: AuthorsSchool
- Category: NFT Blog
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Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charter holder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.
Updated June 24, 2022
JEFREDA R. BROWN
Fact checked by SUZANNE KVILHAUG
What Is a Blockchain?
A blockchain is a distributed database or ledger that is shared among the nodes of a computer network. As a database, a blockchain stores information electronically in digital format. Blockchains are best known for their crucial role in cryptocurrency systems, such as Bitcoin, for maintaining a secure and decentralized record of transactions. The innovation with a blockchain is that it guarantees the fidelity and security of a record of data and generates trust without the need for a trusted third party.
One key difference between a typical database and a blockchain is how the data is structured. A blockchain collects information together in groups, known as blocks, that hold sets of information. Blocks have certain storage capacities and, when filled, are closed and linked to the previously filled block, forming a chain of data known as the blockchain. All new information that follows that freshly added block is compiled into a newly formed block that will then also be added to the chain once filled.
A database usually structures its data into tables, whereas a blockchain, as its name implies, structures its data into chunks (blocks) that are strung together. This data structure inherently makes an irreversible timeline of data when implemented in a decentralized nature. When a block is filled, it is set in stone and becomes a part of this timeline. Each block in the chain is given an exact timestamp when it is added to the chain.
• Blockchain is a type of shared database that differs from a typical database in the way that it stores information; blockchains store data in blocks that are then linked together via cryptography.
• As new data comes in, it is entered into a fresh block. Once the block is filled with data, it is chained onto the previous block, which makes the data chained together in chronological order.
• Different types of information can be stored on a blockchain, but the most common use so far has been as a ledger for transactions.
• In Bitcoin’s case, blockchain is used in a decentralized way so that no single person or group has control—rather, all users collectively retain control.
• Decentralized blockchains are immutable, which means that the data entered is irreversible. For Bitcoin, this means that transactions are permanently recorded and viewable to anyone.
How Does a Blockchain Work?
The goal of blockchain is to allow digital information to be recorded and distributed, but not edited. In this way, a blockchain is the foundation for immutable ledgers, or records of transactions that cannot be altered, deleted, or destroyed. This is why blockchains are also known as a distributed ledger technology (DLT).
First proposed as a research project in 1991, the blockchain concept predated its first widespread application in use: Bitcoin, in 2009. In the years since, the use of blockchains has exploded via the creation of various cryptocurrencies, decentralized finance (DeFi) applications, non-fungible tokens (NFTs), and smart contracts. Transaction Process
Attributes of Cryptocurrency
Imagine that a company owns a server farm with 10,000 computers used to maintain a database holding all of its client’s account information. This company owns a warehouse building that contains all of these computers under one roof and has full control of each of these computers and all of the information contained within them. This, however, provides a single point of failure. What happens if the electricity at that location goes out? What if its Internet connection is severed? What if it burns to the ground? What if a bad actor erases everything with a single keystroke? In any case, the data is lost or corrupted.
What a blockchain does is to allow the data held in that database to be spread out among several network nodes at various locations. This not only creates redundancy but also maintains the fidelity of the data stored therein—if somebody tries to alter a record at one instance of the database, the other nodes would not be altered and thus would prevent a bad actor from doing so. If one user tampers with Bitcoin’s record of transactions, all other nodes would cross-reference each other and easily pinpoint the node with the incorrect information. This system helps to establish an exact and transparent order of events. This way, no single node within the network can alter information held within it.
Because of this, the information and history (such as of transactions of a cryptocurrency) are irreversible. Such a record could be a list of transactions (such as with a cryptocurrency), but it also is possible for a blockchain to hold a variety of other information like legal contracts, state identifications, or a company’s product inventory.
To validate new entries or records to a block, a majority of the decentralized network’s computing power would need to agree to it. To prevent bad actors from validating bad transactions or double spends, blockchains are secured by a consensus mechanism such as proof of work (PoW) or proof of stake (PoS). These mechanisms allow for agreement even when no single node is in charge.
Because of the decentralized nature of Bitcoin’s blockchain, all transactions can be transparently viewed by either having a personal node or using blockchain explorers that allow anyone to see transactions occurring live. Each node has its own copy of the chain that gets updated as fresh blocks are confirmed and added. This means that if you wanted to, you could track Bitcoin wherever it goes.
For example, exchanges have been hacked in the past, where those who kept Bitcoin on the exchange lost everything. While the hacker may be entirely anonymous, the Bitcoins that they extracted are easily traceable. If the Bitcoins stolen in some of these hacks were to be moved or spent somewhere, it would be known. Of course, the records stored in the Bitcoin blockchain (as well as most others) are encrypted. This means that only the owner of a record can decrypt it to reveal their identity (using a public-private key pair). As a result, users of blockchains can remain anonymous while preserving transparency.
Is Blockchain Secure?
Blockchain technology achieves decentralized security and trust in several ways. To begin with, new blocks are always stored linearly and chronologically. That is, they are always added to the “end” of the blockchain. After a block has been added to the end of the blockchain, it is extremely difficult to go back and alter the contents of the block unless a majority of the network has reached a consensus to do so. That’s because each block contains its own hash, along with the hash of the block before it, as well as the previously mentioned timestamp. Hash codes are created by a mathematical function that turns digital information into a string of numbers and letters. If that information is edited in any way, then the hash code changes as well.
Let’s say that a hacker, who also runs a node on a blockchain network, wants to alter a blockchain and steal cryptocurrency from everyone else. If they were to alter their own single copy, it would no longer align with everyone else’s copy. When everyone else cross-references their copies against each other, they would see this one copy stand out, and that hacker’s version of the chain would be cast away as illegitimate.
Succeeding with such a hack would require that the hacker simultaneously control and alter 51% or more of the copies of the blockchain so that their new copy becomes the majority copy and, thus, the agreed-upon chain. Such an attack would also require an immense amount of money and resources, as they would need to redo all of the blocks because they would now have different timestamps and hash codes.
Due to the size of many cryptocurrency networks and how fast they are growing, the cost to pull off such a feat probably would be insurmountable. This would be not only extremely expensive but also likely fruitless. Doing such a thing would not go unnoticed, as network members would see such drastic alterations to the blockchain. The network members would then hard fork off to a new version of the chain that has not been affected. This would cause the attacked version of the token to plummet in value, making the attack ultimately pointless, as the bad actor has control of a worthless asset. The same would occur if the bad actor were to attack the new fork of Bitcoin. It is built this way so that taking part in the network is far more economically incentivized than attacking it.
Bitcoin vs. Blockchain
Blockchain technology was first outlined in 1991 by Stuart Haber and W. Scott Stornetta, two researchers who wanted to implement a system where document timestamps could not be tampered with. But it wasn’t until almost two decades later, with the launch of Bitcoin in January 2009, that blockchain had its first real-world application.1
The Bitcoin protocol is built on a blockchain. In a research paper introducing the digital currency, Bitcoin’s pseudonymous creator, Satoshi Nakamoto, referred to it as “a new electronic cash system that’s fully peer-to-peer, with no trusted third party.”2
The key thing to understand here is that Bitcoin merely uses blockchain as a means to transparently record a ledger of payments, but blockchain can, in theory, be used to immutably record any number of data points. As discussed above, this could be in the form of transactions, votes in an election, product inventories, state identifications, deeds to homes, and much more.
Currently, tens of thousands of projects are looking to implement blockchains in a variety of ways to help society other than just recording transactions—for example, as a way to vote securely in democratic elections. The nature of blockchain’s immutability means that fraudulent voting would become far more difficult to occur. For example, a voting system could work such that each citizen of a country would be issued a single cryptocurrency or token. Each candidate would then be given a specific wallet address, and the voters would send their token or crypto to the address of whichever candidate for whom they wish to vote. The transparent and traceable nature of blockchain would eliminate both the need for human vote counting and the ability of bad actors to tamper with physical ballots.
Blockchain vs. Banks
Blockchains have been heralded as being a disruptive force to the finance sector, and especially with the functions of payments and banking. However, banks and decentralized blockchains are vastly different. To see how a bank differs from blockchain, let’s compare the banking system to Bitcoin’s implementation of blockchain.
How Are Blockchains Used?
As we now know, blocks on Bitcoin’s blockchain store data about monetary transactions. Today, there are more than 10,000 other cryptocurrency systems running on blockchain. But it turns out that blockchain is actually a reliable way of storing data about other types of transactions as well.
Some companies that have already incorporated blockchain include Walmart, Pfizer, AIG, Siemens, Unilever, and a host of others. For example, IBM has created its Food Trust blockchain to trace the journey that food products take to get to their locations.3
Why do this? The food industry has seen countless outbreaks of E. coli, salmonella, and listeria, as well as hazardous materials being accidentally introduced to foods. In the past, it has taken weeks to find the source of these outbreaks or the cause of sickness from what people are eating. Using blockchain gives brands the ability to track a food product’s route from its origin, through each stop it makes, and finally, its delivery. If a food is found to be contaminated, then it can be traced all the way back through each stop to its origin. Not only that, but these companies can also now see everything else it may have come in contact with, allowing the identification of the problem to occur far sooner and potentially saving lives. This is one example of blockchain in practice, but there are many other forms of blockchain implementation.
Banking and Finance
Perhaps no industry stands to benefit from integrating blockchain into its business operations more than banking. Financial institutions only operate during business hours, usually five days a week. That means if you try to deposit a check on Friday at 6 p.m., you will likely have to wait until Monday morning to see that money hit your account. Even if you do make your deposit during business hours, the transaction can still take one to three days to verify due to the sheer volume of transactions that banks need to settle. Blockchain, on the other hand, never sleeps.
By integrating blockchain into banks, consumers can see their transactions processed in as little as 10 minutes—basically the time it takes to add a block to the blockchain, regardless of holidays or the time of day or week. With blockchain, banks also have the opportunity to exchange funds between institutions more quickly and securely. In the stock trading business, for example, the settlement and clearing process can take up to three days (or longer, if trading internationally), meaning that the money and shares are frozen for that period of time.
Given the size of the sums involved, even the few days that the money is in transit can carry significant costs and risks for banks.
Blockchain forms the bedrock for cryptocurrencies like Bitcoin. The U.S. dollar is controlled by the Federal Reserve. Under this central authority system, a user’s data and currency are technically at the whim of their bank or government. If a user’s bank is hacked, the client’s private information is at risk. If the client’s bank collapses or the client lives in a country with an unstable government, the value of their currency may be at risk. In 2008, several failing banks were bailed out—partially using taxpayer money. These are the worries out of which Bitcoin was first conceived and developed.
By spreading its operations across a network of computers, blockchain allows Bitcoin and other cryptocurrencies to operate without the need for a central authority. This not only reduces risk but also eliminates many of the processing and transaction fees. It can also give those in countries with unstable currencies or financial infrastructures a more stable currency with more applications and a wider network of individuals and institutions with whom they can do business, both domestically and internationally.
Using cryptocurrency wallets for savings accounts or as a means of payment is especially profound for those who have no state identification. Some countries may be war-torn or have governments that lack any real infrastructure to provide identification. Citizens of such countries may not have access to savings or brokerage accounts—and, therefore, no way to safely store wealth.
Healthcare providers can leverage blockchain to securely store their patients’ medical records. When a medical record is generated and signed, it can be written into the blockchain, which provides patients with the proof and confidence that the record cannot be changed. These personal health records could be encoded and stored on the blockchain with a private key, so that they are only accessible by certain individuals, thereby ensuring privacy.
If you have ever spent time in your local Recorder’s Office, you will know that the process of recording property rights is both burdensome and inefficient. Today, a physical deed must be delivered to a government employee at the local recording office, where it is manually entered into the county’s central database and public index. In the case of a property dispute, claims to the property must be reconciled with the public index.
This process is not just costly and time-consuming—it is also prone to human error, where each inaccuracy makes tracking property ownership less efficient. Blockchain has the potential to eliminate the need for scanning documents and tracking down physical files in a local recording office. If property ownership is stored and verified on the blockchain, owners can trust that their deed is accurate and permanently recorded.
In war-torn countries or areas that have little to no government or financial infrastructure, and certainly no Recorder’s Office, it can be nearly impossible to prove ownership of a property. If a group of people living in such an area is able to leverage blockchain, then transparent and clear time lines of property ownership could be established.
A smart contract is a computer code that can be built into the blockchain to facilitate, verify, or negotiate a contract agreement. Smart contracts operate under a set of conditions to which users agree. When those conditions are met, the terms of the agreement are automatically carried out.
Say, for example, that a potential tenant would like to lease an apartment using a smart contract. The landlord agrees to give the tenant the door code to the apartment as soon as the tenant pays the security deposit. Both the tenant and the landlord would send their respective portions of the deal to the smart contract, which would hold onto and automatically exchange the door code for the security deposit on the date when the lease begins. If the landlord doesn’t supply the door code by the lease date, then the smart contract refunds the security deposit. This would eliminate the fees and processes typically associated with the use of a notary, a third-party mediator, or attorneys.
As in the IBM Food Trust example, suppliers can use blockchain to record the origins of materials that they have purchased. This would allow companies to verify the authenticity of not only their products but also common labels such as “Organic,” “Local,” and “Fair Trade.”
As reported by Forbes, the food industry is increasingly adopting the use of blockchain to track the path and safety of food throughout the farm-to-user journey.4
As mentioned above, blockchain could be used to facilitate a modern voting system. Voting with blockchain carries the potential to eliminate election fraud and boost voter turnout, as was tested in the November 2018 midterm elections in West Virginia.5 Using blockchain in this way would make votes nearly impossible to tamper with. The blockchain protocol would also maintain transparency in the electoral process, reducing the personnel needed to conduct an election and providing officials with nearly instant results. This would eliminate the need for recounts or any real concern that fraud might threaten the election.
Pros and Cons of Blockchain
For all of its complexity, blockchain’s potential as a decentralized form of record-keeping is almost without limit. From greater user privacy and heightened security to lower processing fees and fewer errors, blockchain technology may very well see applications beyond those outlined above. But there are also some disadvantages.
• Improved accuracy by removing human involvement in verification
• Cost reductions by eliminating third-party verification
• Decentralization makes it harder to tamper with
• Transactions are secure, private, and efficient
• Transparent technology
• Provides a banking alternative and a way to secure personal information for citizens of countries with unstable or underdeveloped governments
• Significant technology cost associated with mining bitcoin
• Low transactions per second
• History of use in illicit activities, such as on the dark web
• Regulation varies by jurisdiction and remains uncertain
• Data storage limitations
Benefits of Blockchains
Accuracy of the Chain
Transactions on the blockchain network are approved by a network of thousands of computers. This removes almost all human involvement in the verification process, resulting in less human error and an accurate record of information. Even if a computer on the network were to make a computational mistake, the error would only be made to one copy of the blockchain. For that error to spread to the rest of the blockchain, it would need to be made by at least 51% of the network’s computers—a near impossibility for a large and growing network the size of Bitcoin’s.6
Typically, consumers pay a bank to verify a transaction, a notary to sign a document, or a minister to perform a marriage. Blockchain eliminates the need for third-party verification—and, with it, their associated costs. For example, business owners incur a small fee whenever they accept payments using credit cards, because banks and payment-processing companies have to process those transactions. Bitcoin, on the other hand, does not have a central authority and has limited transaction fees.
Blockchain does not store any of its information in a central location. Instead, the blockchain is copied and spread across a network of computers. Whenever a new block is added to the blockchain, every computer on the network updates its blockchain to reflect the change. By spreading that information across a network, rather than storing it in one central database, blockchain becomes more difficult to tamper with. If a copy of the blockchain fell into the hands of a hacker, only a single copy of the information, rather than the entire network, would be compromised.
Transactions placed through a central authority can take up to a few days to settle. If you attempt to deposit a check on Friday evening, for example, you may not actually see funds in your account until Monday morning. Whereas financial institutions operate during business hours, usually five days a week, blockchain is working 24 hours a day, seven days a week, and 365 days a year. Transactions can be completed in as little as 10 minutes and can be considered secure after just a few hours. This is particularly useful for cross-border trades, which usually take much longer because of time zone issues and the fact that all parties must confirm payment processing.
Many blockchain networks operate as public databases, meaning that anyone with an Internet connection can view a list of the network’s transaction history. Although users can access details about transactions, they cannot access identifying information about the users making those transactions. It is a common misperception that blockchain networks like bitcoin are anonymous, when in fact they are only confidential.
When a user makes a public transaction, their unique code—called a public key, as mentioned earlier—is recorded on the blockchain. Their personal information is not. If a person has made a Bitcoin purchase on an exchange that requires identification, then the person’s identity is still linked to their blockchain address—but a transaction, even when tied to a person’s name, does not reveal any personal information.
Once a transaction is recorded, its authenticity must be verified by the blockchain network. Thousands of computers on the blockchain rush to confirm that the details of the purchase are correct. After a computer has validated the transaction, it is added to the blockchain block. Each block on the blockchain contains its own unique hash, along with the unique hash of the block before it. When the information on a block is edited in any way, that block’s hash code changes—however, the hash code on the block after it would not. This discrepancy makes it extremely difficult for information on the blockchain to be changed without notice.
Most blockchains are entirely open-source software. This means that anyone and everyone can view its code. This gives auditors the ability to review cryptocurrencies like Bitcoin for security. This also means that there is no real authority on who controls Bitcoin’s code or how it is edited. Because of this, anyone can suggest changes or upgrades to the system. If a majority of the network users agree that the new version of the code with the upgrade is sound and worthwhile, then Bitcoin can be updated. Banking the Unbanked
Perhaps the most profound facet of blockchain and Bitcoin is the ability for anyone, regardless of ethnicity, gender, or cultural background, to use it. According to The World Bank, an estimated 1.7 billion adults do not have bank accounts or any means of storing their money or wealth.7 Nearly all of these individuals live in developing countries, where the economy is in its infancy and entirely dependent on cash.
These people often earn a little money that is paid in physical cash. They then need to store this physical cash in hidden locations in their homes or other places of living, leaving them subject to robbery or unnecessary violence. Keys to a bitcoin wallet can be stored on a piece of paper, a cheap cell phone, or even memorized if necessary. For most people, it is likely that these options are more easily hidden than a small pile of cash under a mattress.
Blockchains of the future are also looking for solutions to not only be a unit of account for wealth storage but also to store medical records, property rights, and a variety of other legal contracts.
Drawbacks of Blockchains
Although blockchain can save users money on transaction fees, the technology is far from free. For example, the PoW system which the bitcoin network uses to validate transactions, consumes vast amounts of computational power. In the real world, the power from the millions of computers on the bitcoin network is close to what Norway and Ukraine consume annually.8
Despite the costs of mining bitcoin, users continue to drive up their electricity bills to validate transactions on the blockchain. That’s because when miners add a block to the bitcoin blockchain, they are rewarded with enough bitcoin to make their time and energy worthwhile. When it comes to blockchains that do not use cryptocurrency, however, miners will need to be paid or otherwise incentivized to validate transactions.
Some solutions to these issues are beginning to arise. For example, bitcoin-mining farms have been set up to use solar power, excess natural gas from fracking sites, or power from wind farms.
Speed and Data Inefficiency
Bitcoin is a perfect case study for the possible inefficiencies of blockchain. Bitcoin’s PoW system takes about 10 minutes to add a new block to the blockchain.9 At that rate, it’s estimated that the blockchain network can only manage about seven transactions per second (TPS). Although other cryptocurrencies such as Ethereum perform better than bitcoin, they are still limited by blockchain. Legacy brand Visa, for context, can process 65,000 TPS.10
Solutions to this issue have been in development for years. There are currently blockchains that are boasting more than 30,000 TPS.11
The other issue is that each block can only hold so much data. The block size debate has been, and continues to be, one of the most pressing issues for the scalability of blockchains going forward.
While confidentiality on the blockchain network protects users from hacks and preserves privacy, it also allows for illegal trading and activity on the blockchain network. The most cited example of blockchain being used for illicit transactions is probably the Silk Road, an online dark web illegal-drug and money laundering marketplace operating from February 2011 until October 2013, when it was shut down by the FBI.12
The dark web allows users to buy and sell illegal goods without being tracked by using the Tor Browser and make illegal purchases in Bitcoin or other cryptocurrencies. Current U.S. regulations require financial service providers to obtain information about their customers when they open an account, verify the identity of each customer, and confirm that customers do not appear on any list of known or suspected terrorist organizations.13 This system can be seen as both a pro and a con. It gives anyone access to financial accounts but also allows criminals to more easily transact. Many have argued that the good uses of crypto, like banking the unbanked world, outweigh the bad uses of cryptocurrency, especially when most illegal activity is still accomplished through untraceable cash.
While Bitcoin had been used early on for such purposes, its transparent nature and maturity as a financial asset has actually seen illegal activity migrate to other cryptocurrencies such as Monero and Dash.14 Today, illegal activity accounts for only a very small fraction of all Bitcoin transactions.15
Many in the crypto space have expressed concerns about government regulation over cryptocurrencies. While it is getting increasingly difficult and near impossible to end something like Bitcoin as its decentralized network grows, governments could theoretically make it illegal to own cryptocurrencies or participate in their networks. This concern has grown smaller over time, as large companies like PayPal begin to allow the ownership and use of cryptocurrencies on its platform.
What Is a Blockchain in Simple Terms?
Simply put, a blockchain is a shared database or ledger. Pieces of data are stored in data structures known as blocks, and each node of the network has an exact replica of the entire database. Security is ensured since if somebody tries to edit or delete an entry in one copy of the ledger, the majority will not reflect this change and it will be rejected.
How Many Blockchains Are There?
The number of live blockchains is growing every day at an ever-increasing pace. As of 2022, there are more than 10,000 active cryptocurrencies based on blockchain, with several hundred more non-cryptocurrency blockchains.16 What’s the Difference Between a Private Blockchain and a Public Blockchain?
A public blockchain, also known as an open or permissionless blockchain, is one where anybody can join the network freely and establish a node. Because of their open nature, these blockchains must be secured with cryptography and a consensus system like proof of work (PoW).
A private or permissioned blockchain, on the other hand, requires each node to be approved before joining. Because nodes are considered to be trusted, the layers of security do not need to be as robust.
What Is a Blockchain Platform?
A blockchain platform allows users and developers to create novel uses on top of an existing blockchain infrastructure. One example is Ethereum, which has a native cryptocurrency known as ether (ETH).17 But the Ethereum blockchain also allows the creation of smart contracts and programmable tokens used in initial coin offerings (ICOs), and non-fungible tokens (NFTs). These are all built up around the Ethereum infrastructure and secured by nodes on the Ethereum network.
Who Invented Blockchain?
Blockchain technology was first outlined in 1991 by Stuart Haber and W. Scott Stornetta, two mathematicians who wanted to implement a system where document timestamps could not be tampered with.1 In the late 1990s, Cypherpunk Nick Szabo proposed using a blockchain to secure a digital payments system, known as bit gold (which was never implemented).18
The Bottom Line
With many practical applications for the technology already being implemented and explored, blockchain is finally making a name for itself in no small part because of bitcoin and cryptocurrency. As a buzzword on the tongue of every investor in the nation, blockchain stands to make business and government operations more accurate, efficient, secure, and cheap, with fewer middlemen.
As we prepare to head into the third decade of blockchain, it’s no longer a question of if legacy companies will catch on to the technology—it’s a question of when. Today, we see a proliferation of NFTs and the tokenization of assets. The next decades will prove to be an important period of growth for blockchain.
- Written by: AuthorsSchool
- Category: NFT Blog
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by JAKE FRANKENFIELD
Updated May 28, 2022
Reviewed by CIERRA MURRY
Fact checked by VIKKI VELASQUEZ
Investopedia / Tara Anand
What Is Cryptocurrency?
A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.
• A cryptocurrency is a form of digital asset based on a network that is distributed across a large number of computers. This decentralized structure allows them to exist outside the control of governments and central authorities.
• Experts believe that blockchain and related technology will disrupt many industries, including finance and law.
• The advantages of cryptocurrencies include cheaper and faster money transfers and decentralized systems that do not collapse at a single point of failure.
• The disadvantages of cryptocurrencies include their price volatility, high energy consumption for mining activities, and use in criminal activities.
Watch Now: What Is Cryptocurrency?
Cryptocurrencies are digital or virtual currencies underpinned by cryptographic systems. They enable secure online payments without the use of third-party intermediaries. "Crypto" refers to the various encryption algorithms and cryptographic techniques that safeguard these entries, such as elliptical curve encryption, public-private key pairs, and hashing functions.
Cryptocurrencies can be mined or purchased from cryptocurrency exchanges. Not all ecommerce sites allow purchases using cryptocurrencies. In fact, cryptocurrencies, even popular ones like Bitcoin, are hardly used for retail transactions. However, the skyrocketing value of cryptocurrencies has made them popular as trading instruments. To a limited extent, they are also used for cross-border transfers.
Central to the appeal and functionality of Bitcoin and other cryptocurrencies is blockchain technology. As its name indicates, blockchain is essentially a set of connected blocks or an online ledger. Each block contains a set of transactions that have been independently verified by each member of the network. Every new block generated must be verified by each node before being confirmed, making it almost impossible to forge transaction histories.1 The contents of the online ledger must be agreed upon by the entire network of an individual node, or computer maintaining a copy of the ledger.
Experts say that blockchain technology can serve multiple industries, such as supply chain, and processes such as online voting and crowdfunding. Financial institutions such as JPMorgan Chase & Co. (JPM) are testing the use of blockchain technology to lower transaction costs by streamlining payment processing.2 Types of Cryptocurrency
Bitcoin is the most popular and valuable cryptocurrency. An anonymous person called Satoshi Nakamoto invented it and introduced it to the world via a white paper in 2008. There are thousands of cryptocurrencies present in the market today.
Each cryptocurrency claims to have a different function and specification. For example, Ethereum's ether markets itself as gas for the underlying smart contract platform. Ripple's XRP is used by banks to facilitate transfers between different geographies.
Bitcoin, which was made available to the public in 2009, remains the most widely traded and covered cryptocurrency. As of May 2022, there were over 19 million bitcoins in circulation with a total market cap of around $576 billion. Only 21 million bitcoins will ever exist.3
In the wake of Bitcoin's success, many other cryptocurrencies, known as "altcoins," have been launched. Some of these are clones or forks of Bitcoin, while others are new currencies that were built from scratch. They include Solana, Litecoin, Ethereum, Cardano, and EOS. By November 2021, the aggregate value of all the cryptocurrencies in existence had reached over $2.1 trillion—Bitcoin represented approximately 41% of that total value.4 Are Cryptocurrencies Legal?
Fiat currencies derive their authority as mediums of transaction from the government or monetary authorities. For example, each dollar bill is backstopped by the Federal Reserve.
But cryptocurrencies are not backed by any public or private entities. Therefore, it has been difficult to make a case for their legal status in different financial jurisdictions throughout the world. It doesn't help matters that cryptocurrencies have largely functioned outside most existing financial infrastructure. The legal status of cryptocurrencies has implications for their use in daily transactions and trading. In June 2019, the Financial Action Task Force (FATF) recommended that wire transfers of cryptocurrencies should be subject to the requirements of its Travel Rule, which requires AML compliance.5
As of December 2021, El Salvador was the only country in the world to allow Bitcoin as legal tender for monetary transactions. In the rest of the world, cryptocurrency regulation varies by jurisdiction. Japan's Payment Services Act defines Bitcoin as legal property.6 Cryptocurrency exchanges operating in the country are subject to collect information about the customer and details relating to the wire transfer. China has banned cryptocurrency exchanges and mining within its borders. India was reported to be formulating a framework for cryptocurrencies in December.7
Cryptocurrencies are legal in the European Union. Derivatives and other products that use cryptocurrencies will need to qualify as "financial instruments." In June 2021, the European Commission released the Markets in Crypto-Assets (MiCA) regulation that sets safeguards for regulation and establishes rules for companies or vendors providing financial services using cryptocurrencies.8 Within the United States, the biggest and most sophisticated financial market in the world, crypto derivatives such as Bitcoin futures are available on the Chicago Mercantile Exchange. The Securities and Exchange Commission (SEC) has said that Bitcoin and Ethereum are not securities.
Although cryptocurrencies are considered a form of money, the Internal Revenue Service (IRS) treats them as a financial asset or property. And, as with most other investments, if you reap capital gains in selling or trading cryptocurrencies, the government wants a piece of the profits. On May 20, 2021, the U.S. Department of the Treasury announced a proposal that would require taxpayers to report any cryptocurrency transaction of and above $10,000 to the IRS.9 How exactly the IRS would tax proceeds—as capital gains or ordinary income—depends on how long the taxpayer held the cryptocurrency.10
Advantages and Disadvantages of Cryptocurrency
Cryptocurrencies were introduced with the intent to revolutionize financial infrastructure. As with every revolution, however, there are tradeoffs involved. At the current stage of development for cryptocurrencies, there are many differences between the theoretical ideal of a decentralized system with cryptocurrencies and its practical implementation.
Some advantages and disadvantages of cryptocurrencies are as follows.
• Cryptocurrencies represent a new, decentralized paradigm for money. In this system, centralized intermediaries, such as banks and monetary institutions, are not necessary to enforce trust and police transactions between two parties. Thus, a system with cryptocurrencies eliminates the possibility of a single point of failure, such as a large bank, setting off a cascade of crises around the world, such as the one that was triggered in 2008 by the failure of institutions in the United States.
• Cryptocurrencies promise to make it easier to transfer funds directly between two parties, without the need for a trusted third party like a bank or a credit card company. Such decentralized transfers are secured by the use of public keys and private keys and different forms of incentive systems, such as proof of work or proof of stake.11
• Because they do not use third-party intermediaries, cryptocurrency transfers between two transacting parties are faster as compared to standard money transfers. Flash loans in decentralized finance are a good example of such decentralized transfers. These loans, which are processed without backing collateral, can be executed within seconds and are used in trading.12
• Cryptocurrency investments can generate profits. Cryptocurrency markets have skyrocketed in value over the past decade, at one point reaching almost $2 trillion. As of May 2022, Bitcoin was valued at more than $550 billion in crypto markets.13
• The remittance economy is testing one of cryptocurrency's most prominent use cases. Currently, cryptocurrencies such as Bitcoin serve as intermediate currencies to streamline money transfers across borders. Thus, a fiat currency is converted to Bitcoin (or another cryptocurrency), transferred across borders and, subsequently, converted to the destination fiat currency. This method streamlines the money transfer process and makes it cheaper.
• Though they claim to be an anonymous form of transaction, cryptocurrencies are actually pseudonymous. They leave a digital trail that agencies such as the Federal Bureau of Investigation (FBI) can decipher. This opens up possibilities of governments or federal authorities tracking the financial transactions of ordinary citizens.14
• Cryptocurrencies have become a popular tool with criminals for nefarious activities such as money laundering and illicit purchases. The case of Dread Pirate Roberts, who ran a marketplace to sell drugs on the dark web, is already well known. Cryptocurrencies have also become a favorite of hackers who use them for ransomware activities.15
• In theory, cryptocurrencies are meant to be decentralized, their wealth distributed between many parties on a blockchain. In reality, ownership is highly concentrated. For example, an MIT study found that just 11,000 investors held roughly 45% of Bitcoin's surging value.16
• One of the conceits of cryptocurrencies is that anyone can mine them using a computer with an Internet connection. However, mining popular cryptocurrencies requires considerable energy, sometimes as much energy as entire countries consume. The expensive energy costs coupled with the unpredictability of mining have concentrated mining among large firms whose revenues running into the billions of dollars. According to an MIT study, 10% of miners account for 90% of its mining capacity.16
• Though cryptocurrency blockchains are highly secure, other crypto repositories, such as exchanges and wallets, can be hacked. Many cryptocurrency exchanges and wallets have been hacked over the years, sometimes resulting in millions of dollars worth of "coins" stolen.17
• Cryptocurrencies traded in public markets suffer from price volatility. Bitcoin has experienced rapid surges and crashes in its value, climbing to as high as $17,738 in December 2017 before dropping to $7,575 in the following months.3 Some economists thus consider cryptocurrencies to be a short-lived fad or speculative bubble.
$576 billion Total market cap of Bitcoin, as of May 2022.
How Do You Get Cryptocurrency?
Any investor can purchase cryptocurrency from popular crypto exchanges such as Coinbase, apps such as Cash App, or through brokers. Another popular way to invest in cryptocurrencies is through financial derivatives, such as CME's Bitcoin futures, or through other instruments, such as Bitcoin trusts and Bitcoin ETFs.
What Is the Point of Cryptocurrency?
Cryptocurrencies are a new paradigm for money. Their promise is to streamline existing financial architecture to make it faster and cheaper. Their technology and architecture decentralize existing monetary systems and make it possible for transacting parties to exchange value and money independently of intermediary institutions such as banks.
Can You Generate Cryptocurrency?
Cryptocurrencies are generated by mining. For example, Bitcoin is generated using Bitcoin mining. The process involves downloading software that contains a partial or full history of transactions that have occurred in its network. Though anyone with a computer and an Internet connection can mine cryptocurrency, the energy- and resource-intensive nature of mining means that large firms dominate the industry. What Are the Most Popular Cryptocurrencies?
Bitcoin is by far the most popular cryptocurrency followed by other cryptocurrencies such as Ethereum, Binance Coin, Solana, and Cardano.
Are Cryptocurrencies Securities?
The SEC has said that Bitcoin and Ethereum, the top two cryptocurrencies by market cap, are not securities. It has not commented on the status of other cryptocurrencies.
Investing in cryptocurrencies and other initial coin offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Because each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein.
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
1. Bitcoin. "Bitcoin: A Peer-to-Peer Electronic Cash System," Pages 3-4.
2. JPMorgan Chase. "Could Blockchain Have as Great an Impact as the Internet?"
3. Coinbase. "Bitcoin Price."
4. CoinMarketCap. "Global Cryptocurrency Charts."
5. Baker Mckenzie. "Most Countries Have Failed To Implement Travel Rule."
6. Freeman Law. "Japan and Cryptocurrency."
7. NDTV. "More Changes Likely on Crypto Bill."
8. European Commission. "Commission Sets Out Digital Finance Package."
9. U.S. Department of the Treasury. "The American Families Plan Tax Compliance Agenda," Pages 20-21.
10. Internal Revenue Service. "Frequently Asked Questions on Virtual Currency Transactions."
11. Bitcoin. "Bitcoin: A Peer-to-Peer Electronic Cash System," Pages 1-3.
12. Decrypt. "What Are Flash Loans?"
13. Coinmarketcap. "Bitcoin Price."
14. The New York Times. "Pipeline Investigation Upends Idea That Bitcoin is Untraceable."
15. National Public Radio. "How Bitcoin Has Fueled Ransomware Attacks.
16. NBER. "Blockchain Analysis of the Bitcoin Market."
17. Bitcoin.com. "Hackers Have Looted More Bitcoin Than Satoshi's Entire Stash."
- Written by: AuthorsSchool
- Category: NFT Blog
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A deep dive into the ‘future of the internet’
By Monica J. White - November 23, 2021
Long before Facebook rebranded to Meta and CEO Mark Zuckerberg talked about “the metaverse” at great length, the concept of the metaverse was already thriving and rapidly expanding. There’s no escaping the truth — the metaverse is here, and it’s probably here to stay.
The question is, what is the metaverse? Is it as big a deal as some companies make it out to be, or is it just a passing trend that will be forgotten in a few months? Do you need to know all about the metaverse, and should you get involved before it blows up further? In this article, we take a deep dive into the concept of the metaverse and talk about its past, present, and most importantly, its future.
The metaverse is a virtual reality
The metaverse is indeed a virtual reality, but it’s not quite the same thing as what you’ve seen in science fiction blockbusters.
Imagine a franchise like The Matrix, where the world is a digital simulation that everyone is connected to, and is so well-made that nearly no one knows that it’s not real. The metaverse is not quite like that, but it definitely has the potential to evolve into something fantastically immersive.
The idea behind the metaverse has been around for much longer than Meta’s vision of it — in fact, it’s far older than even Facebook itself. Zuckerberg referred to it as “an embodied internet that you’re inside of instead of just looking at.”
The real meaning of the metaverse is just as broad as Zuckerberg’s vague description of it.
At its most basic, the metaverse is a virtual reality that allows people from all over the world to interact, both with each other and with the metaverse itself. Users are often allowed to obtain items that remain theirs between sessions, or even land within the metaverse. However, there are many ways to interpret that concept, and it has evolved greatly over the years.
On the internet, we’re always interacting with something — be it a website, a game, or a chat program that connects us to our friends. The metaverse takes this one step further and puts the user in the middle of the action. This opens the door to stronger, more realistic experiences that simply browsing the web or watching a video fail to evoke very often, if ever.
What’s the difference between VR and the metaverse?
Virtual reality (VR) and augmented reality (AR) are both concepts that are closely tied to the metaverse, but they are not one and the same. Instead of viewing them as different iterations of what is essentially the same thing, it’s good to view them as separate entities that supplement each other.
VR and AR equipment allows the user to immerse themselves in a virtual world. In the case of VR, we are shown completely different surroundings. Be it a game or a movie, VR lets you interact with the changing world around you. AR, on the other hand, adds elements to your real surroundings and lets you interact with them in various ways.
The difference lies in the purpose. You can play a VR or AR game at any given time without interacting with others, but the foundation of the metaverse, as envisioned by Meta and other companies, is human contact.
In short, the metaverse is the playground for both of the above — a way for people to share a virtual universe together, be it for work, school, exercise, or simply for fun.
The use of VR and AR tools will go a long way in expanding the metaverse and making it feel like a real experience as opposed to a video game with extra steps. However, the concept of the metaverse goes far beyond just VR and AR — it’s meant to bring people closer together in previously unheard of ways. This, in turn, also opens a lot of room for expansion.
Who is building the metaverse?
Zuckerberg’s recent Meta keynote turned millions of new pairs of eyes toward the metaverse, but there are several giants in this race to the future. Each of these companies has its own vision of the metaverse, which only serves to further expand the already vast meaning of the word.
Facebook’s journey toward the metaverse is actually not that surprising. In March 2014, Facebook acquired Oculus for $2.3 billion. The company continued releasing Oculus Quest products, making some of the best VR headsets currently out there.
Considering that Meta now plans to heavily rely on both VR and AR in order to bring realism to the metaverse, buying Oculus seven years ago doesn’t feel like a random decision at all. It’s worth noting that Oculus Quest will soon be no more. Starting in 2022, the entire product line will be rebranded to Meta Quest, thus finally completing the acquisition and erasing the previous branding.
In addition to Meta Quest, Andrew Bosworth, chief technology officer of Meta, announced that some Oculus products will be called Meta Horizon. According to Bosworth, this will be the branding that encompasses the entirety of the VR metaverse platform.
With Facebook’s huge announcement out in the open, Microsoft was not far behind to jump on the metaverse train. The tech giant is looking to build a metaverse of sorts inside Microsoft Teams starting as early as 2022.
Microsoft’s plan is to utilize Mesh in order to let every Teams user participate in video meetings, replacing webcam images with animated avatars. Artificial intelligence will be used to listen to the user’s voice and animate their avatar accordingly, complete with matching lip movements. Switching to 3D meetings will also produce additional hand movements.
While Microsoft’s announcement may seem small when compared to Meta’s, it’s definitely a step into the metaverse that clearly illustrates the company’s interest. These changes to Teams indicates that, much like Meta, Microsoft might want to integrate the metaverse into the future of remote work.
Nvidia also has a horse in the metaverse race, and it’s called the Nvidia Omniverse. The company calls it “a platform for connecting 3D worlds into a shared virtual universe”. Nvidia’s Omniverse is cloud-native, meaning that it’s a shared, persistent platform that remains the same between sessions. It runs on RTX-based systems and can be streamed remotely to any device.
The graphics card giant seems to have, so far, gone down a slightly different route with its metaverse. Meta and Microsoft place a lot of emphasis on the social aspect of the metaverse, but Nvidia’s focus is collaboration and exploring new technologies. The Omniverse is used by designers, robotics engineers, and other experts to simulate the real world in virtual reality. One example is Ericsson — its engineers use Omniverse to simulate 5G waves in urban environments.
Looking into the future, we’ve got another big-ticket player on the horizon. Apple is rumored to be working on both a full VR headset and AR glasses, and all signs point toward the brand reaching for the metaverse. Both of these devices would likely have to plug into a metaverse in order to function, so Apple may not be that far behind Meta when it comes to building the metaverse.
Is the metaverse just a video game in disguise?
Short answer: Not really.
Long answer: Maybe a little bit, depending on your point of view.
Online games such as Fortnite, World of Warcraft, or Minecraft are all metaverses — each in their own way. They create a lasting world for their players to join and leave as they please. A player’s progress is saved on an external server and shared with other users, meaning that everything you do in these games can be revisited at a later time.
Technically, every game could be considered a metaverse, and the metaverses that various tech giants are working on can all include some aspects of gaming. However, the idea of the metaverse is much broader than just that of a video game. The metaverse is meant to replace, or improve, real-life functionality in a virtual space. Things that users do in their day-to-day life, such as attending classes or going to work, can all be done in the metaverse instead.
There are some similarities between video game metaverses and the idea of a broader metaverse. You can interact with others, perform various tasks together, and to some extent, shape the world around you. However, all of this is firmly set within the limitations of the game.
A good example of this is that you can build yourself a giant castle in Minecraft, but in World of Warcraft, you don’t have that same freedom. Players are allowed to own a garrison, which is a plot of land of sorts, but they have little to no influence on what it looks like and where it’s placed. More importantly, the plot is the same for all players and they can only visit each other when invited.
Although the titles mentioned above are what’s popular right now, it’s worth noting that the concept of the metaverse exists in many video games, and it has been around for a long time. Second Life, a game from 2003 that’s still around to this day, is essentially a metaverse that doesn’t have an end goal the way many other games do: It just lets you roam the world and interact with other players. Oh, and you can also fly.
In an ideal metaverse, you forge your own destiny, and many of the common video game limitations are removed. However, the first step is the same for nearly every metaverse, game-related or not: You have to create your character.
Becoming an avatar
In the metaverse, users are given an avatar — a representation of themselves that they can tweak to look however they like. The way the avatar looks depends on the platform. It can be something very basic, but it can also be high quality, with a lot of room for customization. Users can strive to remain true to life, but they can also turn themselves into someone entirely different.
The avatar, once created, is the user’s ticket to the metaverse — a virtual universe where the sky is the limit, provided one has the imagination to suspend reality for a little while. The avatar can move, speak, explore the area, and more. The limitations of the avatar lie entirely with the platform.
Some instances of the metaverse resemble a video game and let the user walk around using a keyboard and mouse. More advanced versions involve the use of virtual reality headsets and controls that truly immerse the user in the world by replicating their real-life movements in the metaverse.
Different companies have different takes on the avatar-creating process. Microsoft Mesh is being integrated into Teams in 2022, bringing something new to the metaverse table. The program will allow the user to create a fully customized avatar of themselves. Through the use of mixed reality technology, the avatar will represent the user in a realistic way. In the future, this will involve a full range of facial expressions, body language, and backgrounds.
Meta has big plans when it comes to avatar creation in its upcoming metaverse, Horizon Worlds. The avatars will be supported by VR and will replicate the user’s actions in real time. While this all sounds peachy, these avatars do not currently have legs — possibly to make the movement and travel easier to manage. However, Meta is also working on photorealistic Codec Avatars: Impressive-looking, ultrarealistic avatars that will be rendered in rea time along with the surrounding environment.
Regardless of the platform, the ideal metaverse will let the user pick what they want to look like while retaining the realism of facial expressions and movements when supported by VR.
What does the metaverse look like?
Before answering this question, we need to distinguish “the metaverse” from “a metaverse.” There is no one singular metaverse that connects all the other universes into one cohesive whole, although they all involve the use of the internet to connect their users to one another. As such, every metaverse can look entirely different from the rest.
The way a metaverse looks depends entirely on its creator. Some metaverses are sandbox-like, giving a lot of room for creation and not limiting the user a whole lot in terms of what they end up building. Think Minecraft, but bigger: Everyone shares the same world instead of sharing a server with friends.
In such a metaverse, real-world rules still mostly apply. You’re likely to see the sky, buildings, and nature, and most significantly, other people. The art style depends on the metaverse and can be cartoony, realistic, or anything in between.
However, as Zuckerberg emphasized during his Meta keynote, the metaverse doesn’t suffer from the same limitations as the real world does. There is no reason why you couldn’t go to space with your entire family in the metaverse, provided its creators allowed for this to happen.
The bottom line is that a metaverse can look like a classroom, a street, a fantasy forest, or the bottom of the ocean. However, the most popular instances of it offer something that’s a mix of all of those things, all thanks to the freedom they provide their users.
Is a metaverse possible?
Let’s take a moment to quickly recap where we stand. We’ve got a virtual reality where the only limitations lie in the hands of its creator. We’ve got an avatar that represents us. Of course, we have an internet connection that lets us join this shared world.
Where do we go from here? It depends.
In an ideal world, the metaverse should connect each and every user to one another. Joining a public server should provide the ability to interact with everyone else who is connected at the time. The reality is often different.
As certain metaverses grow more popular, it becomes impossible for the servers that host them to handle such huge traffic loads. This means that some developers create different layers that separate the users, effectively making the world a little smaller.
There may come a time in the future when this can be avoided, but right now, the metaverse is often fragmented — not to mention the fact that people use different platforms, effectively choosing their preferred universe.
As mentioned above, every company has a different take on the metaverse. Facebook is working on Horizon Worlds, Nvidia has its Omniverse, and much smaller fish in this very big pond are also joining in. The cryptocurrency world has metaverses of its own.
The fact that these metaverses are disconnected from each other, operate on different platforms, and have no shared uses or goal, means that the idea of one large metaverse is currently impossible.
If the metaverse is meant to be one giant, shared virtual world, all the companies involved in releasing their own metaverses would have to join forces. For that to happen, not only would these brands have to cooperate, but server technology would have to rapidly advance.
In order to host all of these different iterations of the metaverse on one platform, unimaginable server loads would have to be handled not just by the host, but also the end user.
Until this is possible, the metaverse may always be somewhat fragmented, forcing the users to choose their universe of choice before they connect to the shared world.
What is the purpose of the metaverse?
The metaverse, as a concept, is not very easy to define, if only because of how limitless it seems to be. This means that its general purpose can be defined on a case-by-case basis — not just the company or group of people that create it, but also each individual user.
The general purpose of the metaverse is to connect with others through a virtual, shared universe. Be it for work, self-improvement, or simply entertainment, the metaverse exists to breach the borders of reality and distance, connecting people from all over the globe.
Allowing users, portrayed by their avatars, to interact with the world at large without giving them any clear goals allows for a lot of freedom of choice. This is also what Meta has built its big reveal on — the fact that in the metaverse, you can essentially do just about anything you want.
Let’s take a look at some of the more common things you can do in the metaverse.
A common theme in metaverses involves allowing users to buy plots of land. Such a property, upon purchase, becomes assigned to one particular user and is unavailable to other players as long as it’s owned by that specific avatar. Plots can be bought or rented, just like in the real world.
Owning property often allows the user to utilize it in whichever way they might want. Some choose to build a gallery to house the items they own, while others create shops or shared public spaces.
The concept of letting the users roam free and build whatever they want in their own space is not new, and it definitely plays into the success of games such as Minecraft or Roblox. User creativity saves a lot of time for the developers of the metaverse, who would otherwise have to spend it on designing the buildings themselves.
Of course, this is the internet, and too much freedom can lead to various forms of abuse. Most metaverses continue to supervise the content created by their users, and depending on the host, it may be taken down. Even a seemingly infinite universe has its limitations.
Once you own something in the metaverse, it can be sold or traded to one of the other users. This adds an element of wealth and prestige to an otherwise detached world. Some lots are worth more than others, some items are rare while others are common — all of this adds up to the creation of an economy that applies to a particular metaverse.
Typically, plots of land in the metaverse vary in size and location. As this is a virtual rendition of real life, it’s not a surprise that the real estate market is alive and well even in the metaverse. Contested plots, located closer to busy areas or simply made more desirable through some other luxury, can reach much higher prices than a tiny square of grass on the outskirts of town.
Some metaverses attract not just regular users, but also companies. As the universe is shared by many, this opens up the opportunity to advertise. Simply buying land and displaying the logo of the company can be an effective way to pique or refresh interest.
Companies are able to benefit from the metaverse in more ways than one. Organizing events, creating crossovers between franchises, and engaging with the user base is made easier in a seemingly limitless universe.
Live and interact
The above examples of what you can do in the metaverse are all technicalities when you compare them to the ideal metaverse — a place almost capable of replacing reality. We’re not quite there yet (and we won’t be for years), but the efforts of companies like Meta or VRChat are bringing us closer to this than we’ve ever been before.
In a perfect metaverse, you are capable of interacting with every person around you. This goes beyond the text-based chat we’ve all seen in games such as Second Life or Habbo. Incorporating voice communication, VR headsets, and AR glasses allows for interaction on a whole new level.
Whether it’s meeting your friends and going skydiving or forming a study group in a virtual library, the main concept of the metaverse will always revolve around human interaction — just not in person.
Work and study
From Meta to Microsoft, many companies place a lot of emphasis on the ability to work, cooperate, and study together in the metaverse.
Microsoft is planning to use Mesh to bring realism to otherwise dull video meetings. Meta hopes to create virtual workspaces, giving remote workers a chance to spend time together in virtual reality during their workday.
The metaverse can also be used for work in different ways, including simulating real-world tasks in virtual reality first. This can be utilized by engineers, programmers, designers, and many other professionals through metaverses such as Nvidia’s Omniverse.
The connection between the metaverse, cryptocurrencies, and NFTs
When speaking of the metaverse, it’s impossible not to mention cryptocurrencies. After all, some of the biggest instances of it are based on the blockchain — the decentralized framework that cryptocurrencies operate within.
One such example is Decentraland, a sandbox-like metaverse that lets its users buy plots of land, explore other plots, and interact with each other. The entire economy is based around MANA — a cryptocurrency used specifically in Decentraland.
What sets these metaverses apart from commercially owned universes is the fact that they rely on a decentralized network where your assets are your own and are not controlled by the owner(s) of the metaverse.
Cryptocurrencies, and therefore also the universes that are set around them, are usually decentralized. This means that the currency, virtual land, or the whole metaverse is not owned by a single entity and cannot be taken down, sold, or otherwise destroyed on a whim. Decentralization involves contracts distributed to a network of users and a majority vote. Unless the majority of the network votes to take the metaverse down, it should, in theory, remain accessible to everyone.
This is not the case in gaming metaverses, such as World of Warcraft, where your account continues to belong to the company in charge of the game. This means that all of your assets, such as your equipment or your characters, are ultimately not yours to control. This is where non-fungible tokens (NFTs) come in.
NFTs can be anything from (frankly, rather ugly) 8-pixel avatars to breathtaking works of art. At their core, NFTs are a decentralized way to assign ownership to virtual goods. Anyone can download a photo and claim it as their own, but NFTs involve cryptocurrency and contracts that pin down ownership to one particular user.
In the metaverse, this opens up a whole new level of economy that turns this fantastical concept into a way for people to make (or lose) real-world money. Users can buy virtual plots of land, avatars, or even a hat for their metaverse avatar — all through the use of cryptocurrency.
Non-fungible tokens are independent of the metaverse, but they do play a part in the economy of certain universes, such as Decentraland or The Sandbox — an upcoming metaverse that is not yet live.
The Sandbox sells plots of land in the form of NFTs, assigning full ownership to the person who buys them. The users can then visit that plot and interact with its contents. Just one glance at The Sandbox’s map shows that this form of NFTs caught the interest of not just cryptocurrency fanatics, but also dozens of companies that see it as a new advertising space to explore.
Some big-name brands and franchises already own land in The Sandbox ahead of its launch. You’ll see gigantic plots of land belonging to Atari, RollerCoaster Tycoon, The Walking Dead, Shaun the Sheep, and even South China Morning Post.
This is a mix of brands that no one would ever accuse of having much of an interest in either NFTs or the metaverse, but the concept shows promise, and some companies are looking to capitalize on that.
It’s difficult not to draw similarities between the real-world economy and the way the cryptocurrency market ties into some of the most popular metaverses. The end result can be wonderful or jarring, depending on which side of the fence you’re on.
The future of the metaverse
No one can deny that the concept of the metaverse has started to spread to previously uncharted lands. We’ve gone a long way from its humble beginnings in games such as Second Life, Habbo Hotel, or even the long-gone, long-forgotten Club Penguin.
According to Zuckerberg, Meta hopes to hit the ground running with Horizon Worlds, although even Zuckerberg admits that we’re not quite there yet. It will take years for the metaverse to permeate our reality to the point of being as widely known and accessible as what Meta is hoping to achieve.
The vision of the metaverse as a shared universe where people separated by continents can play, learn, share, and even work together is futuristic and idyllic in equal measure. Bustling streets filled with stores, parks, and people can all be recreated in the metaverse, but the technology needed to support it is still not something that every person can easily access.
Another step toward mainstream recognition lies in the realism of the metaverse experience. The introduction of VR and AR into the metaverse will certainly go a long way in making the experience feel far more realistic than it does with a keyboard and mouse.
We’ve already seen interesting crossovers that tested the limits of the metaverse. Travis Scott performed a virtual concert in Fortnite that was attended by over 12 million people. Justin Bieber has just announced that he plans to do the same. Even though The Sandbox isn’t live yet, Snoop Dogg, an avid supporter of NFTs, already owns land in it and lets people buy VIP passes to visit his mansion in the future.
Zuckerberg believes that the future of the internet lies in the metaverse — he even went as far as to call it the successor to mobile internet. Whether that is true still remains to be seen.
One thing is for sure — it’s difficult to deny that the metaverse is no longer a wild concept pulled straight out of a sci-fi film. Facebook/Meta has just added fuel to a fire that has already been burning, and in a few years, we may be seeing the metaverse utilized in ways we previously haven’t even thought possible.