A metaverse is either a digital copy of the physical reality or a fantastical world in a digital form with its own attributes and backgrounds. In relation to NFTs, it has, so far, leaned towards the latter option. Many fashion and pop culture brands are creating their metaverses with celebrities’ avatars, they're also inviting the fans to create their own avatars, and dress them with the brand’s digital wearables. In this case, the wearables are presented in the form of NFTs.
Similarly, metaverses have been used by many game developers to create a unique game environment with its own background. In these games, the players require certain in-game items to progress further in the game. They can take many forms depending on the game’s metaverse, but all of them will still be registered as NFTs on a certain blockchain.
But the key thing about these NFTs, regardless of the metaverse, is that they have a certain value outside the game and can be transferred on the blockchain to any user who is willing to buy them. Thus, by minting an NFT in a metaverse, its owner can then sell it to someone else for a considerable sum of money.
In early 2021 fashion items and collectibles started to get peoples’ notice in the form of NFTs. Also, Mark Cuban, Mike Shinoda, Grimes, and some other celebrated individuals started creating their own NFTs or just making comments in their favour. That quickly came to the focus of the mass media, and the NFT hype started to grow. More artists and celebrities started to experiment with NFTs and metaverses, and the big brands had to follow the trend so as not to miss out on it.
But so far, this has to a large extent been a speculative idea that does not have much benefit in real life. And the brands have been exploiting it purely because it has been proving to be profitable. As to the future of metaverses and what they could give to the general public is yet uncertain as metaverses have only existed for a year or so. Now, I will give a few examples of how NFTs and metaverses could be used in more practical ways.
NFTs could be integrated with augmented and virtual reality and used in many areas of digital technologies. NFTs could be used to serve as digital certificates in the areas where sensitive data is used and where privacy is important. One of the applications could be in medicine where transplant organs and costly medications are reserved for certain patients so that the records cannot be compromised.
This could be possible because every NFT is non-fungible and uncopyable. Every NFT is issued by a smart contract, and everyone is given its unique ID, an ordinal number. The uniqueness of every NFT is not necessarily about its ID but about a combination of the smart contract address that minted it and its ID. Every NFT is minted by an ERC-721 type smart contract, and every NFT will have this contract’s address in its transaction history as the first one. There can be multiple NFTs with similar IDs from different smart contracts but never from the same one.
And surely metaverses can become the next big thing in the entertainment industry where AR/VR, NFTs, and metaverses could seamlessly fuse together. NFTs could serve as digital passes for online and physical presence in different events. Similarly, they can be used as a certificate of ownership for subscriptions and the purchase of general goods, which are part of the metaverses.
However, there are some flaws with NFTs when it comes to the authenticity of physical objects. You can collect metadata about a physical object and link it to the NFT, and then the metadata itself will be the proof of its authenticity. But this method has its limitations: it can hardly be applied to physical collectibles with cultural value or transplant organs themselves. And it does not prevent that object from being swapped for a counterfeit.
So, NFTs can be good for keeping electronic records correct and proving the authenticity of digital articles. But they can be no more effective in proving the authenticity of prized physical collectibles and other precious physical objects, than the digital solutions and manual checks that industries and experts have been relying upon for many years.
If metaverses are to ever go big, they will have to follow established laws. But we presently have no such law that metaverses would be subject to. With the current rate of metaverse development and growth, it might take a very long time for such laws to appear. However, the lack of a legal structure that services metaverses might become a stumbling block on their way to mainstream adoption. Large entertainment businesses will not be able to use them if they are not part of the legal sphere, which will also scare away the general public.
It is presently hard to estimate how much time it might take for the metaverse laws to shape up, but it will be necessary to provide guarantees of safe use to make metaverses appealing to mainstream audiences. When state-level standards for metaverses are drawn up, there will be clear frameworks on how metaverses can function in our existing infrastructures, including their safety and legal guarantees.
But the rate of creation of regulation for metaverses might also depend on the impact of the metaverses on our everyday lives. If metaverses prove their worth on a larger scale, the regulation will inevitably have to happen as it always does when new technologies come on the scene.
Five years ago, cryptocurrencies were under a global ban, and in the last two years, numerous bill proposals were introduced in many countries and were adopted into laws. So it can easily happen for metaverses and NFTs because new technologies always dictate what needs to be regulated and regulation never stops progress.