Is Your Company Ready for Web 3, the NFT Marketplace and NFT dApps?
If you’re unsure how smart contracts, the NFT marketplace, cryptocurrencies, decentralized apps (dApps), and blockchain relate to you, it’s time to work out where your company fits into the metaverse.
Experts say 2022 will be the year of the metaverse as Big Tech gear up to release hardware and software to allow us to play or work in a variety of virtual 3D worlds.
With big-box retailers such as Walmart appearing to be getting ready to enter the metaverse with its own cryptocurrency and collection of NFTs, the mass adoption of the metaverse can’t be far off. We only need to think back to how quickly the internet transformed our lives to realize the massive impact the metaverse could have on the way we do business.
NFTs are an important part of the metaverse and are basically protected digital assets which can be bought and sold using the blockchain. We will explain this in more detail later on.
Although this may seem daunting, the reality is that the merging of the physical and virtual worlds is not an unfamiliar concept and may not require as big a mental leap as you think.
In this article we try to make the metaverse more approachable by explaining how it works and what it could mean for your company:
- NFTs and the NFT marketplace
- Transformation of assets and value
- Smart contracts
- dApps and the dApps marketplace
- The issue of trust
- Preparing your company
Find out how we can help prepare your company for the metaverse and the NFT marketplace.
What is the Metaverse?
The metaverse is a shared virtual environment that people access via the Internet. Technologies like virtual reality (VR) and augmented reality (AR) are combined in the metaverse to create a sense of “virtual presence.”
Whether in virtual reality (VR), augmented reality (AR), or on a normal screen, the metaverse promises to allow a greater overlap of our digital and physical experiences in business, social life, work-life, shopping, and leisure.
What does a metaverse need to mirror the physical world and the way we currently do business?
- A method to store and exchange property (buy and sell things) – contracts and NFTS
- A currency – cryptocurrencies, such as bitcoin, to pay for things
- A method to exchange currency from meta (virtual or digital) to physical
- A method to transact in the metaverse which protects both sides of the transaction as it relates to performance – smart contracts.
What is an NFT?
An NFT is a non-fungible token (enabled by blockchain) – used to transfer digital property rights between a seller and a buyer. NFTs are the underpinnings of digital transformation in the NFT marketplace.
In economics, fungibility is something made up of interchangeable and indistinguishable individual parts. For example, gold is fungible, but a unique gold statue created by a famous artist would not be considered fungible (Wiki).
A token serves as a tangible representation of a fact, quality, or feeling. In many cases, the tokens themselves simply point to the location of the file, whether it be a GIF, individual artwork, or audio clip. This is akin to a car or home title which points to a physical asset in the physical world.
The property rights are part of the fabric of the blockchain versus a written copyright notice. Because the ownership and transfer of each NFT are recorded on the blockchain, the original creator of the asset can earn royalties from every sale and resale.
Some examples of what can be sold as NFTs include art, fashion, games, and memes.
How do NFTs Work? – Analogy with Property Rights in the Real World
NFTs form the basis for the transfer of digital property rights. To help us understand how they work, let’s think of them in the same way as property rights in the physical world, which form the cornerstone of capitalism.
When it comes to the selling of property, a number stored in the local government’s computer system corresponds to a number on the title deed of your house – a physical document. The title deed includes descriptive information about your property. It’s unique and is used to transfer property rights.
From a Physical to a Digital World
Thinking of a title deed as an NFT helps to make the leap from the physical to the digital world. Property rights are key to a modern functioning world or worlds, and they are based on a number in a database that points to another number that points to the property listed on the title.
Now, instead of a title number or identity stored somewhere in a local government office filing cabinet or government computer system, imagine this number or title stored globally in a distributed application called a blockchain, where all its unique characteristics are stored securely, and easily transacted upon with standard protocols. This starts to give you a glimpse into the enormity of this digital transformation.
Interestingly, we are so used to this ‘virtual’ world we’ve been living in that we don’t even think about it. A similar example is your driver’s license. What is your driver’s license number really?
The concept of storing our information in a globally distributed blockchain, once embraced, has almost unlimited potential. Add to that currency for transactions and you have a new foundation for our real world, as well as an infinite number of functioning virtual worlds – or differently put, the metaverse.
What is a Smart Contract?
A smart contract is a computational protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract.
What this means is that smart contracts regulate the rules around a transaction (a transfer of digital property rights) in the same way as a normal contract does. It also automatically enforces the rules and/or penalties of the agreement without the need for a middleman.
Smart contracts are created using blockchain technology and they are immutable, which means the code can’t be changed and therefore they are 100 percent secure.
What are Cryptocurrencies?
To pay for the transfer of digital property rights in the metaverse, we need a digital or online currency, which is where digital currencies such as bitcoin come in. Read more about the history of bitcoin and cryptocurrency.
What is a dApp?
A dApp or decentralized application is a software application that runs on a distributed network. It’s not hosted on a centralized server, but instead on a peer-to-peer decentralized network.
The dApps marketplace: An opportunity for blockchain innovators
The opportunity for many companies lies in decentralized apps – creating applications for the web or mobile that facilitate the use of smart contracts or deploying smart contracts for existing applications.
Essentially the front end of a decentralized application will have the same interface as other apps, but it is different in that the back end is built on blockchain technology – such as Ethereum – to allow for the use of nft marketplace smart contracts.
What is an NFT dApp?
NFT dApps are decentralized applications that incorporate the use of NFTs into their software.
What are Ethereum dApps?
These are decentralized applications powered and developed using the Ethereum platform. They use smart contracts for their logic and are deployed on the Ethereum network, using the platform’s blockchain technology for data storage.
Ethereum is the biggest player now when it comes to creating dApps, although there are others.
Ethereum technology essentially stores lines of code created by developers to run the operations of the smart contract at the backend of your application.
How to Use dApps?
For app developers – there is the option of creating an app with a decentralized backend or an app with a decentralized backend and frontend. (Storing data in the blockchain)
Ethereum dApps are at the center of what is known as Web 3.0 – technology based on the decentralizing of services and information with the aim of ‘freeing’ up users of the internet from the control of big corporations and governments. The focus in the future will increasingly be on Web3 marketplace development.
Here are some great examples of Ethereum apps you can use right now.
The Question of Trust
As in the real world, the metaverse also comes with risks as criminals try to exploit the inexperience of new players in this field. If you are new to this world, it is clear you will be wise to enlist the help of trusted partners – such as founders and developers who have navigated this world themselves and are aware of the associated risks and who have the know-how and experience to guide you through this uncharted territory.
How can you be Prepared for the Metaverse?
- Stay up to date
- The key at this stage is to stay on top of the latest developments and to watch the early adopters.
- Sign up for our newsletter to get regular updates on what’s happening, what it means to you, and how you can benefit.
- Onboard the right skills
It’s clear that the developers of the future need to have the experience and skills to create products that allow a merging of real and virtual worlds, so now is the time to look for developers or teams who already have blockchain technology and dApp experience under their belt.
The importance of finding a trusted development partner to help you spot opportunities and create risk-mitigated projects and protocols is clear.
At REEA Global we have been working on projects involving dApps and smart contracts for a few years already. We have the experience and know-how to take your project to the next level.
Contact us today to discuss how we can help you get ready for the metaverse.