How the Metaverse Could Change Ecommerce Forever
What is the Metaverse? This is a question that is difficult to answer because at this current point in time the Metaverse does not actually exist in the way that developers have envisioned for the future.
There are primitive platforms in use today including Decentraland and The Sandbox, but these are far from what the Metaverse is expected to be. It’s simpler to explain the metaverse in contexts of what is in use today, what technology will be incorporated into it and what companies hope the Metaverse will evolve into in time.
To understand what the Metaverse will mean to the future of ecommerce this article will delve into the technologies it will use and it’s evolving development. Read on to learn more.
Decentralizing the Web
To Understand the Metaverse and how it will change ecommerce we first need to explore the development of web 3 and look back at the previous two iterations of the internet.
Web 1.0: Phase one of the internet can be characterized by how users interacted with it. Users were typically passive consumers of content. Unless you were a web developer or owned your own website, you could only read information and data placed on web 1.0 but not engage with it. Engagement changed with the arrival of web 2.0.
Web 2.0: Social media and video sharing platforms such as YouTube, MySpace, Twitter and the now defunct Facebook ushered in the era of web 2.0. The internet was now dynamic and no longer static. The internet was all about interactivity at this point with social and collaborative elements being introduced.
This more participatory internet came at a cost though. To create content and engage, online users were supplying data and personal information to the companies that control these platforms.
Web 3: Web 3’s development revolves around the concept of taking back data and personal information that is being supplied to companies and putting it back in control of the users. Creating a decentralized web using blockchain technology through networks like Ethereum (ETH) and Bitcoin (BTC) makes this possible.
The primary innovation of these networks is that no single entity has ownership, but it can still be trusted because each owner and operator must adhere to consensus protocols which are the same set of hard-coded rules. The secondary innovation is that these networks allow money and value to be transferred between accounts.
Web 3 will enable users of the Metaverse to not only take control of their data and personal information, but also enable them to have full ownership of their digital items, Cryptocurrencies and tokens will be used to create new economies and business models in an area being increasingly known as tokenization. We will go over cryptocurrencies, non-fungible tokens and blockchain technology soon.
Like the Metaverse, web 3 is still being built so its definitive version and what it will encompass is not yet known. What can be surmised is that the Metaverse will be created using web 3 to enable users to have full control of their data and ownership of digital items.
Virtual Reality – Augmented Reality (VR/AR)
The development of virtual reality – augmented reality (VR/AR) is the vehicle that is and will be propelling the Metaverse forward. AR/VR closes the gap between the physical and virtual world for Metaverse users and ecommerce. Simple use cases for AR/VR include customers being able to visualize items they are interested in purchasing through 3D renderings without the merchandise physically being in their possession – virtual shopping. (These virtual shopping statistics further drive home this mantra.)
Through the Metaverse, companies imagine common events such as a group of friends in their home with one describing a pair of shoes they saw and are interested in buying. An artificial intelligence (AI) assistant narrows down the selection as the customer describes the pair of shoes until they find the correct one. Once the pair of shoes is found the customer can try them on without physically wearing them and personalize them to their exact desires.
After the customer buys the shoes, they will have a physical pair delivered to them and their Metaverse avatar gets a pair as well that the customer owns verified through the blockchain. The customer has full control of their digital asset shoes and can choose to keep, resell or transfer as they please. This could be done with virtually any item within the Metaverse from shoes, cars, plots of land, homes and even exclusive experiences such as meeting a celebrity on a private island for dinner. Within the digital realm the possibilities are limitless.
Did you know?
Samsung opened a virtual replica of its flagship store in the Metaverse game Decentraland.
This will enable fashion, motor vehicle, luxury and other companies to create fully licensed digital replicas of their products that customers buy and own. These items are completely owned by the user and theirs to do what they want with.
But what is behind making this possible?
Blockchain Technology, Cryptocurrencies & NFTs in the Metaverse
Blockchain technology: In the simplest terms the blockchain is a record for online transactions. These transactions could be for money, movement of goods or exchanges in information. The blockchain is decentralized storing data on the network instead of a single database like banks, Netflix, Google etc. The blockchain is a distributed ledger – information regarding every transaction is held in many places at the same time. To make a change on the blockchain everyone is notified and must agree on that change.
This fact makes the blockchain incredibly hard to hack because each one of these records would need to be changed at the exact same time. Through the metaverse and ecommerce the blockchain would be able to securely facilitate purchases of digital items and give full ownership of those items to customers.
Cryptocurrencies: Cryptocurrency is a digital-only token that uses the previously mentioned blockchain to confirm transfers of value and information. Cryptography, (the reason for the shortened name of crypto) is the method used to regulate creation, trade and security of a cryptocurrency. Cryptocurrencies are essentially:
- Digital – Cryptocurrency is completely native to the internet. You cannot physically hold or touch them.
- Peer-to-peer – Cryptocurrencies are exchanged between parties without one central entity or middleman needed to approve the transaction.
- Decentralized – Transactions are stored on a public, global ledger. Every transaction is held in many separate places or nodes at the same time. Removes custody from government and banking institutions.
Bitcoin (BTC) was the first cryptocurrency that was created by a person(s) under the pseudonym Satoshi Nakamoto. In white paper released in 2008, Satoshi referred to it as a peer-to-peer electronic cash system. The network that Bitcoin runs on, the BTC blockchain, launched in January 2009.
Non-fungible tokens: Non-fungible tokens are cryptographically unique tokens that are linked to digital, (and sometimes physical) content, providing proof of ownership. Use cases include artwork, music, digital collectibles and (merchandise, land and homes within the Metaverse) video game items.
Why is this important?
Cryptocurrency, the blockchain and NFTs create a secure way to prove ownership of digitally unique data and its value to be transferred peer-to-peer whether it be cryptocurrency itself, information or the digital replica shoes mentioned earlier – creating a virtual economy emulating real life.
Meta & Zuckerberg’s Vision
The creation of the Metaverse is already well set in motion. A company like Meta doesn’t change their name from Facebook for no reason. In an interview conducted by The Verge in July 2021, Zuckerberg described the Metaverse as an embodied internet. Through the advancements of AR/VR users would feel completely immersed and present within the Metaverse. Zuckerberg also said that the creation of the Metaverse will not be a project for Meta to undertake alone – many different companies and creators will contribute to its creation. Users will be able to freely move their avatar and data from one part of the Metaverse to another no matter who controls that section of it.
To prove Zuckerberg’s statement as fact, that Meta will not be the only company building and contributing to the creation of the Metaverse – Microsoft has dreams of being a major player in the creation of the Metaverse as well and just made a major acquisition in Activision and Blizzard. This massive addition to Microsoft could potentially boost their Metaverse ambitions.
The Next Wild Frontier
The creation of the Metaverse is still in its infancy. Multiple existing components are coming together to move it from an idea to a reality, but it’s safe to say that we are still five to 10 years out from seeing substantial progress in its creation.
According to an article published by Bloomberg Intelligence in December 2021, the Metaverse may be an $800 billion, next tech platform. The Metaverse will be a wild, digital frontier that could certainly change the future of ecommerce forever.