Today, we delve into the exciting realm of commerce in the metaverse. Brace yourself for some mind-boggling numbers. According to McKinsey & Company, a leading global management consulting firm, investors have already poured over $120 billion into metaverse funding. Fast forward to 2030, and the metaverse could be valued at a staggering five trillion dollars. What's more, nearly 80% of active metaverse users have made purchases within its digital realms. With the metaverse still in its infancy, the monetary potential is undeniably enormous.
Before we dive deeper, let's familiarize ourselves with a few key terms: digital wallets, digital assets, blockchain, and cryptocurrency. Blockchain, the technology that underpins these concepts, enables the existence of cryptocurrency, digital wallets, and digital assets. In the physical world, whenever we engage in a transaction, we receive a receipt as proof of purchase. Similarly, in the digital world, transactions can be recorded and verified.
Consider this scenario: you and a friend plan a vacation to Cartagena, and your friend books an Airbnb. If you use Venmo or PayPal to transfer your share of the reservation cost, a digital record or ledger of the transaction is created. Both parties can log into their respective accounts to see evidence of the transaction. PayPal, as a centralized authority, confirms and validates the transaction. However, the metaverse aims to be decentralized, offering freedom from a single controlling entity. To achieve this, developers created a decentralized ledger called a blockchain.
A blockchain serves as a decentralized database that securely stores electronic information, including records of online transactions. Unlike traditional financial systems, a blockchain doesn't rely on a single bank or institution to authorize and validate transactions. Instead, everyone participating in the blockchain trusts the technology itself. This transparent public ledger allows anyone to access and verify transactions at any time. Additionally, once recorded on the blockchain, transactions become immutable, meaning they cannot be altered or controlled by any single entity.
Now, let's explore cryptocurrency. As the name suggests, it is digital currency used for buying and selling goods and services within the metaverse. Unlike physical currencies, cryptocurrency doesn't depend on a central authority, such as a bank or government, to determine its value and legitimacy. Instead, cryptocurrency transactions are recorded on the decentralized and distributed ledger of the blockchain. To acquire cryptocurrency, you can use online exchanges and purchase it with a credit or debit card.
But how do you make purchases within the metaverse? You'll need a digital wallet, which can store your cryptocurrency, as well as your digital assets and traditional payment methods. You can use debit or credit cards for transactions, but having a digital wallet is essential to hold and manage your cryptocurrency. You may already be familiar with digital wallets like Apple Pay and Google Pay, which store your card information for online purchases and other activities. In the metaverse, your digital wallet also includes an address or public key, serving as a unique identifier on the blockchain. To receive cryptocurrency, others need to know your wallet address to send it to you. It's crucial to keep this key safe, as losing it means losing access to your wallet permanently.
Digital wallets in the metaverse come in various forms, including desktop, online, mobile, hardware, and paper wallets. Each type has its advantages and disadvantages, catering to different user preferences and security considerations.
