What is NFT or Metaverse? Explanation for beginners of the reasons for the attention and the relationship between the two.

NFT and Metaverse have been in the newspapers and in the media a lot lately. We have heard of both, but few of us have a grasp of what they actually are.

It is difficult to imagine what both NFT and the metaverse would be like if they were actually incorporated into one’s life.

However, that is not true. In some cases, the metaverse and NFT are already incorporated into our daily lives. We just don’t have the awareness that it is a metaverse.

For those who are not familiar with NFT and metaverse, which are becoming necessary technologies in the future, or for those who want to know more about them, We will explain them in an easy-to-understand manner.

What are NFT and Metaverse?

Although NFT and metaverse are often spoken of together as if they are similar terms, they are actually very different concepts.

Broadly speaking, a metaverse is a virtual space within its platform. It is open to anyone who is registered and has the right to participate. Of course, it is on the Internet. And within that space, there is also land and items used for icons. In order to clarify who owns the land and items, we are currently trying to incorporate NFT technology.

Also, money is needed to buy and sell land and items in the metaverse. If that money is managed on the blockchain using an original token used in the game, the owner of the money can be clearly identified when transferring it.

First, we will explain the NFT and Metaverse in detail.

What is NFT and what are its features?

NFT stands for NonFungible Token, meaning non-replaceable token. Non-substitutable means irreplaceable and unique, and NFTs can leverage blockchain technology to prove their uniqueness.

Until now, it has been easy to take a screenshot or “save a photo” of an illustration, photo, or video from the Internet and use it. However, it was difficult to prove the value of the photo, because it could be tampered with. Of course, the photos can still be used in the future, but as they are spread through social networking sites, it becomes difficult to know who the owner of the photo is.

However, what if the photos taken and illustrations created by the owner could be managed on the blockchain, and records of transactions could be linked by address? It would be a unique tool to prove that “I created the illustration” is owned by “you who purchased it.

In other words, with NFT technology, you can prove that your illustration or photograph is authentic.

NFT also allows you to earn royalty income from secondary distribution. OpenSea, the world’s largest NFT marketplace, allows you to set a maximum royalty of 10%.

For example, you sell your digital illustration for 1 ETH to Mr. B. Mr. B feels that your digital illustration is valuable, so you sell it for 3 ETH, and Mr. C buys it. Then Mr. B could make a profit of 2 ETH despite your work.

However, if you set a royalty, 0.3 ETH, 10% of the 3 ETH sold by Mr. B to Mr. C, will come into your wallet as your rightful income. After that, when Mr. C sells it to Mr. D, 10% will also come in as your rights income.

That is to say, your work will leave your hands and be resold repeatedly, but the rights you have created will be protected forever by royalties, which is another advantage of NFT technology.

What is Metaverse? Introduction to the features of Metaverse

Metaverse is a combination of the words “Meta” and “Universe,” meaning a world in a different dimension from reality, in other words, a virtual space.

We, the users, participate in the 3DCG virtual space constructed online as our alter egos called avatars, and while communicating with each other, we can engage in economic activities such as the production and sale of products and services provided by companies, and live a new life there as another “reality. It is possible to live a new life as another “reality”.

In particular, the coronavirus that has spread around the world since March 2020 has forced people to refrain from doing so and has restricted the scope of their activities. In fact, people could not even meet each other offline, but in a virtual space like the Metaverse, anyone with a computer and communication capabilities can access it.

Because it is a virtual space, there is no need to actually take a plane or train, and people from all over the world can communicate with each other without feeling limited by distance.

The difference from Zoom meetings is that even though the avatars are in a virtual space, a meeting room and PC are also available so that realistic meetings can be held.

Other uses include virtual live performances using the Metaverse. Here, too, what used to require offline travel to a live venue can now be easily attended from the comfort of one’s home.

What makes the metaverse different from online live viewing is that although it is a simulated experience, the same experience can be shared in a virtual space, and when crossed with VR (virtual reality) technology, a space is created in which it is as if the other person is right in front of you, talking to you.

Specific examples of NFT

The NFT was probably first brought to the public’s attention with the NBA TOP SHOT. The NBA was in trouble because the Corona disaster had halted the NBA’s operations and there was no prospect of sales.

The solution was to create NFTs of player highlights and sell them as trading cards. NBA TOP SHOT” is sold as a package, and the packages containing rare NFT cards such as Rera and Legendary sell out quickly.

In particular, NFT cards featuring game-winning dunk shooting scenes by popular players such as LeBron James are priced at over 22 million yen.

From the owner’s perspective, a sense of superiority is created by the inclusion of a highlight scene of a favorite player as a unique entity in his or her own asset.

The NBA, as the distributor, also only sells digital data as NFT, so there are no production costs, paper costs, or transportation costs as with conventional trading cards, and it is possible to create an asset that will never deteriorate.

Elsewhere, CryptoPunks, where each piece of art is recorded on the ETH blockchain for the first time in 24 x 24 pixels (so-called dot paintings) and are also popular as a Twitter icon to own and trade at high prices.

Specific Examples of Metaverse

Metaverse may seem like a new concept, but it has already become familiar in the field of games. One of the most famous Japanese video games is “Atsumare: Animal Crossing,” in which you create an avatar that becomes your alter ego and live in a virtual space.

Another popular game is “MineCraft,” in which players can freely explore grasslands, oceans, and mountains, create their own original buildings, and acquire game items.

In particular, “MineCraft” is a collaboration between Enjin, a crypto asset issuance platform, and Microsoft, the provider of Minecraft, to introduce and develop digital assets on Minecraft.

Another game that has exploded in popularity around the world is “Fortnite,” a free online game that allows players to enjoy a battle royale with multiple other users. (Some charges apply)

You can also enjoy the game while talking with friends using the voice chat function. During the period of self-restraint from the Corona disaster, the popular artist “Genji Yonezu” also held a live concert on “Fortnite,” and the platform is also expected to be a great success.

The Relationship of the NFT to the Metaverse

You have probably realized that NFT and the metaverse are different technologies. So, how are these different concepts, NFT and the metaverse, connected? And what kind of world awaits us when they are connected?

Let us explain the details here.

What is the relationship between NFT and Metaverse?

Many of the metaverses attempt to use and leverage blockchain technology. This is because to trade in these virtual worlds, users need cryptocurrency or non-alternative tokens (NFTs). If people from all over the world participate, it is very difficult to transact in legal tender.

Many play-to-earn games in particular use cryptocurrency, a proprietary token used for both transactions and in-game assets and rewards.

Play-to-earn games embrace the idea of an open economy, offering monetary rewards to participating users who provide added value by playing and spending time in the game ecosystem. Previously, the perception of games was that they could be enjoyed for free and charged for gacha and other fees if necessary, but they did not remain an asset, just a way to have fun.

However, when NFT is integrated into the game, items and other items acquired in the game can be freely bought and sold. If you can’t get it by paying for it, but it is sold on the market, you can buy it there.

As new classes of games are introduced, user perceptions are changing. Now the games are not only fun, but also offer attractive opportunities to invest. When it comes to investment, the industry has recently seen large venture capital firms investing a lot of money in the gaming industry.

The Sandbox, a service offered by Coincheck, is a platform based on Ethereum blockchain technology, but users can create original in-game items, characters, and services by purchasing and renting LAND (land) in the metaverse The Sandbox is a platform based on Ethereum blockchain technology.

In addition, users can freely buy and sell their owned LAND, items, and characters on the platform as Non-Fungible Tokens (NFT), which are non-substitutable tokens by the Ethereum blockchain. The opportunity to trade in in-game currency and crypto assets to own personal NFT LAND tied to the blockchain on the Metaverse is likely to increase on other platforms.

Why NFT and the Metaverse are attracting so much attention

We think we have grasped the relationship between NFT and the Metaverse. Once again, what are the reasons why NFT and the metaverse are attracting attention now? There are good reasons why they are in the news.

We will explain them here.

Since NFTs can now be utilized on the metaverse to conduct economic activities

The use of “NFTs” is also essential for a blockchain-based metaverse.

The “uniqueness” of NFTs on the metaverse platform can be proven. In particular, owning a heavily trafficked location in the game as a Land also allows the owner to retain scarcity and superiority. If a company can own a highly valuable Land in the metaverse, it can also advertise itself.

What differentiates NFTs from other virtual currencies on the market is that as data, they are irreplaceable.

By utilizing these NFTs in the metaverse, we can also expand the possibilities of the metaverse. This is because we can incrementally add more land and items to the metaverse.

By using NFT to prove land ownership and premier status, the range of services and products offered in the metaverse can be expanded. Examples of actual use of NFT in the metaverse include

  • Land
  • Buildings
  • Artworks (digital art)
  • Memberships (BoredApeYachtClub is famous for selling actual memberships)
  • In-game items

If the system includes limitations, such as only giving participation rights to those who own certain NFTs, it could expand the range of services and enjoyment by allowing the development of a system in which different services are available in the metaverse.

This will also dramatically expand the possibilities in establishing order in the metaverse.

For these reasons, the impact of NFT on the metaverse is very strong, and it is an essential technology for the further development of the metaverse.

Due to the bubble state of the virtual currency and NFT industry

At this time, no metaverse is as closely connected to crypto assets and NFTs as The Sandbox. However, with the price spike of popular NFTs such as CryptoPunks and BoredApeYachtClub in mid-2021, NFTs are currently increasing in asset value just by holding them.

As of May 2022, prices are falling, but we were forced to buy the ETH needed to purchase NFTs.

Many people do not know when land or items used in the metaverse will be converted to NFTs, but they want to own them early at a low price for first-mover advantage, and if they can buy them at a low price, they want to resell them to earn profits for speculation purposes. Such an overheated market is creating an NFT bubble.

Because of the Corona Disaster’s potential to become a new means of communication

The Sandbox is a little ahead of the curve, but Minecraft and Fortnite have yet to break out of the gaming realm.

The IT giants of the US are currently pioneering new means of communication and working for future platform concessions, with the former Facebook, which has even changed its name to Meta, leading the way with a stake in the future of the Metaverse.

Meta (formerly Facebook) has invested approximately $10 billion in its Metaverse-related division, Facebook Reality Labs, in a project that has become the company’s most ambitious to date. The company has also hinted at future uses for its Horizon Workrooms.

Other than that, it was Microsoft that announced the acquisition of Activision Blizzard, famous for games such as “Overwatch,” and announced support for the Metaverse with Teams, the company’s remote work and collaboration tool that has been increasingly used in the Corona disaster.

Google, which also boasts a more than 50% share of the smartphone market, has already acquired a metaverse-related company, although it has not mentioned the metaverse market as much as Meta and Microsoft.

Google has acquired North, a smart glass company necessary for the metaverse market, for approximately 19.5 billion yen, so it is steadily seeking a foothold in the metaverse market.

Giant IT companies such as GAFAM are vying for industry supremacy in the next generation of communication tools, the metaverse. It is hard to imagine which company will become the symbol of the industry. We should grasp that new communities are already in motion.

Summary of NFT and the Metaverse

Let’s summarize why NFT and Metaverse are attracting so much attention.

  • NFT and Metaverse use different technologies and already have platforms for each other.
  • The metaverse includes familiar platforms such as Minecraft and Fortnite.
  • In order for users to freely buy and sell land and items in the metaverse, the NFT technology must be unique. If we use blockchain management for this purpose and issue our own tokens, the metaverse economy will develop.
  • Currently, IT companies such as Meta (formerly Facebook Inc.), Microsoft, and Google are fighting for supremacy of the next generation platform, the Metaverse.

That is all.

If the technologies of NFT and the Metaverse can successfully intersect, the next generation platform will be wonderfully promising. We will keep an eye on the future development of the metaverse.