The biggest challenge facing regulators and players in the metaverse, non-fungible tokens (NFTs) and Web3 platforms is educating users, experts have said.
“Most often, we find that people judge this world of cryptos and metaverse based on external experiences, rather than from within. You will not understand it unless you are fully immersed in this ecosystem,” Marwan Al Zarouni, chief executive of the Dubai Blockchain Centre, said at DIFC FinTech Week in Dubai on Tuesday.
“Unless you have a digital wallet, transfer money between wallets, browse through NFT collections, add yourself to Discord channels and talk to communities, you will not understand the value-adds offered by these assets.”
Web3 is the emerging third generation of the World Wide Web — blockchain, decentralisation, openness and greater user utility among its core components — while Web2 is the current iteration.
Meanwhile, the metaverse is a digital space that allows users to communicate and move virtually in their three-dimensional avatars or digital representations. It is part of Web3 and projected to reach $5 trillion by 2030, according to a recent report by McKinsey & Company.
NFTs are digital avatars of artworks and collectibles. Ownership of these digital assets is recorded on a blockchain, which is a digital ledger. But, unlike currencies where every token is of equal value and can be swapped for any other, NFTs have unique qualities that stop them from being interchangeable or fungible.
“You owe it to yourself to educate yourself about this new world. You don’t have to invest a lot of money to educate yourself; there’s a huge community to support you,” Mr Al Zarouni said.
“Make the first connection with a trusted person who can guide you. Spend some time on these ecosystems and have first-hand experience before making a judgement.”
Metaverse consists of three main pillars, according to Nadeem Ladki, executive director of business development and strategic partnerships at cryptocurrency exchange Binance.
It includes the platform where you interact (such as Sandbox or Mana), tools and the hardware used for an immersive experience (like mixed reality, augmented reality, virtual reality or ocular headsets), and the assets and purchases people make in the metaverse (such as NFTs and crypto payments), Mr Ladki said at the event.
“Right now, everyone is connecting on Web3 wallets and DeFi wallets anonymously. On-chain reputation and identity will become crucial in how we interact with each other,” the Binance executive said.
“The next big uptake will be around digital identity, security and trust in who you deal with in the metaverse.”
Value-adds from the metaverse include experience, attention and gamification, Mr Al Zarouni said.
A lot of people who join the metaverse are seeking social interaction or experiences unavailable in the real world, while companies target the digital realm for captive consumer attention, he said.
The metaverse is where people interact in a digital space and are able to purchase and sell virtual assets in some shape or form, said Basil Al Askari, co-founder and chief executive of MidChains, an Abu Dhabi-based virtual asset trading exchange.
“It doesn’t necessarily need to be cryptos; it could be transactions with cryptos, cash or fiat currency,” Mr Al Alkari said.
Grasping blockchain and smart contracts is confusing for most people, according to Amrita Sethi, a banker-turned-NFT artist in the UAE.
“There is an obsession to understand how blockchain works. If you are an artist who wants to create digital art, you don’t need to understand blockchain,” she said.
“First approach a platform that will do all the work for you. Don’t be stuck in that initial phase of trying to understand the technology.”
A lot of artists are also intimidated at how they need to be active on platforms such as Discord and Twitter.
Fundamentally strip it down to what you would be doing in the physical world, she suggested.
“Follow your own path and develop your community in an authentic manner. Physical artwork is still important despite the emergence of NFTs,” Ms Sethi said.
“What people are beginning to lose sight of, because of the hype around NFTs, is that it has triggered a creators’ revolution and a paradigm shift in the way artists can have a voice and unlock creativity like never before.”