How Non-Fungible Tokens Will Intersect with Virtual Reality

The strategic use of NFTs in Virtual Reality Environments and Worlds will unlock an exciting new range of use cases and possibilities. To fully comprehend the potential of these technologies, it is essential first to understand NFTs and Virtual reality in more detail.

NFT Definition

The following NFT definition has been covered earlier in the NFTs & Smart Contracts post.

"NFT stands for Non-Fungible Token. It is a type of digital token which is unique and scarce. An NFT is essentially a unique proof of ownership of something, usually a digital asset. NFTs are digital versions of physical collector’s items, and no two NFTs are the same."

Fungibility

Fungibility is the ability of an asset to be exchanged for another asset of the exact same type. For example, a $5 bill is fungible with all other $5 bills. They represent the same value. But the Oppenheimer Diamond, for instance, is non-fungible — meaning only one real, unique version exists.

Digital Scarcity

The internet and digital technologies, in general, created an abundance of data and information, like files or photographs, which could be replicated and shared endlessly. For example, suppose I took a picture of a celebrity on Santa Monica Boulevard from my phone. In that case, I could send that picture to thousands of people within seconds — creating thousands of versions of that picture right away.

Blockchain technology and specifically NFTs, enable digital scarcity. Some data from an NFT can still be replicated and shared, but the certificate of authenticity and legal rights of an asset will exist on a single, tamper-proof NFT. NFTs exist on blockchain networks such as Ethereum and provide a certificate of authenticity and legal rights to the digital asset.

Virtual Reality Definition

Virtual reality is an experience that is simulated and utterly different from the real world around us. VR requires a software-generated world to be experienced through hardware such as a VR headset (also called an HMD or head-mounted display), among other equipment.

VR Hardware & Software. Source: 

https://en.wikipedia.org/wiki/Virtual_reality

Once users are immersed in a VR world, they are inside the experience and don’t see the real, physical world around them. In this virtual reality world, a user can interact with 3D objects and spaces as well as other users. VR experiences try to simulate as many senses as possible to make the experience immersive.

The Difference between AR, VR & MR

The differences between AR, VR & MR have been covered earlier on HackerNoon:

1. https://hackernoon.com/augmented-reality-vs-mixed-reality-vs-virtual-reality-ik8730gv
   
2. https://hackernoon.com/the-difference-between-ar-vr-mr-xr-and-how-to-tell-them-apart-45d76e7fd50

Augmented reality adds a layer of digital objects to the real world. For example, think of the filters provided by Snapchat, Facebook, and Instagram. Some digital objects can be viewed and imposed on the real world, such as the top of a table or another person’s face, etc. Most AR apps work on mobile phones.

On the other hand, virtual reality replaces a person’s view of the real world and provides an immersive experience in a virtual world consisting of computer-generated imagery. A user accesses this world using a headset device. VR has many use cases across education, entertainment, and therapy.

President Obama tries on a VR headset in the Oval Office.

Mixed reality, also called hybrid reality, is a blend of AR and VR. Digital devices to experience MR are usually translucent such as the Microsoft HoloLens. Mixed reality creates real-world interactions between digital objects and users.

VR style technologies include AR & MR. The three together are sometimes referred to as Extended Reality or “XR.”

How NFTs and Virtual Reality Will Intersect

There are two primary functions that NFTs can fulfill in virtual reality worlds or experiences:

Digital assets in VR worlds can be owned through NFTs, and controlled using smart contracts. For example, the ownership of an asset in a VR world or game can be embedded in an NFT. While several virtual worlds already exist, many Virtual Reality Worlds and Experiences are still under development. Assets such as a building in the World of Warcraft could be held through an NFT. Relationships with the building’s stakeholders and payments to and from service providers can be managed through smart contracts.NFTs can unlock experiences or services in VR worlds, and smart contracts can be used to customize them. For example, a therapist can create a VR experience with a range of different voice-guided and visual components. Users can access this experience and customize the session’s length, tone, and intensity to suit their needs. The customization and payments can be managed through smart contracts. Meanwhile, the experience, with its various customizable components, created by the therapist is held by them in an NFT.

The strategic use of NFTs in VR environments will give users the flexibility to unlock a wide array of use cases. Complex contractual structures and agreements can be created in these environments. The underlying blockchain mechanisms will make the contracts that govern these NFTs transparent, tamper-proof, and auditable in real-time. This will simplify and speed up any arbitration process in the future.

Use Cases

Gaming

Virtual worlds are computer-simulated environments where users can interact and collaborate to explore the world around them and engage in a range of activities. Virtual worlds already exist in Massively Multiplayer Online Games such as World of Warcraft.

Access to virtual land, virtual art, and virtual stores in these virtual reality worlds can be owned and controlled through NFTs. So can digital assets, such as the user’s avatar and their outfits or “skins,” among other items.

Business: Remote Collaboration & Data Visualization

Teams can collaborate and work on projects together in virtual environments where projects they are working with can be visualized and represented in 3D. Companies like Spatial already provide a phenomenal experience where remotely located users from across the world can enter virtual environments and work together as if they were in the same office.

Custom-built programs and algorithms which perform business tasks, such as crunching a set of data and providing insights, can be NFT owned and accessed through the smart contracts governing their functions.

Therapy & Wellness

Therapists can help clients overcome phobias by leading them through exercises and experiences in safe and controlled virtual environments. There have already been some experiments to work with people suffering from PTSD where they are encouraged to recreate aspects of challenging situations from the past and then confront them in VR worlds. These programs and experiences can be owned through NFTs and unlocked for clients and users in the future through smart contracts.

Wellness practitioners can create relaxing and soothing spa-style experiences for their clients rich in music, visuals, and affirmations. These experiences can be owned by the practitioners through NFTs and then be customized and unlocked through smart contracts so that each client can access a session that best suits their needs.

Education

Education is ready to be disrupted. Technologies like VR now allow education modules to be fully customized to the style and speed that suits the student best. Learning how to play the guitar, learning how to drive, or learning how to do surgery are all possible in virtual reality. The benefit of instruction in VR is that the training cost per user is significantly reduced. Equipment and conditions can be simulated online.

Education platforms like Skillshare and Udemy allow a lot of user-generated content and classes. Instructors creating courses and modules in VR would be able to provide their students with a more immersive experience. The education content they create could also be owned and accessed through NFTs.

Military & Police

Militaries and police forces across the world are often strapped for resources. Training can be costly because the mock situations they need to recreate and the equipment they work with is often expensive.

A midshipman conducts a simulated T-6B Texan II flight on a newly installed virtual reality trainer at the U.S. Naval Academy. ANNAPOLIS, Md. (Jan. 9, 2020). Source: 

Official U.S. Navy Page

, 

https://www.flickr.com/photos/usnavy/49394078193

Companies and entrepreneurs can create VR military simulations, war games, flight simulators, etc., to help train soldiers and law enforcement personnel at scale. These experiences or modules and assets within these experiences can be NFT owned and administered. For example, the use of particular weapons or the generation of a specific terrain type for training can all be accessed through different NFTs.

Conclusion

Smart contracts and NFTs exist thanks to blockchain technology. Users already have a range of NFT standards to choose from when creating NFTs. I believe that many more NFT standards will be created in the future as new blockchain platforms are established. Thanks to the interoperable nature of blockchains, users will be able to transact across different platforms from a single point. Meaning a user could access NFTs on separate platforms from their preferred platform. Blockchains will also secure on-platform assets and transactions while providing real-time auditability.

NFTs can instantly transform virtual reality experiences and media into verifiable assets that are easy to buy, sell, and access using blockchain tech. NFT’s have several enterprise use cases and have massive implications for Digital Rights Management. NFT’s used strategically in VR environments will make it safer for users to buy and sell digital assets. They will also make it easier for consumers to access customized VR experiences while rewarding the creators of these experiences.

—

Shaan Ray

Helping clients identify and invest in Emerging Technologies early on so that they can innovate and grow exponentially. Follow Lansaar Research for the latest in emerging technologies and new business models.

This article was also published here.

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