If you’re not a gamer, up until a couple of months ago, you may have never heard the term “Metaverse.” Actually, it’s a term that’s been around for a while (coined by Sci-Fi author, Neal Stephenson in 1992), but it’s recently been on heavy rotation following Facebook’s bombshell shift in branding. The tech giant defended its unprecedented marketing move as “essential” to reflect the “next evolution in social connection.” Facebook rebranded itself as “Meta” with an infinity symbol to represent the endless possibilities for e-Commerce, education, communication, fundraising, building communities, and so on.
Within the Metaverse, people can slip in and out of a massive network of connected 3D environments. Users have the option of being themselves – or some representation thereof, like an anonymous avatar. People can interact with digital objects in a manner that feels very familiar because that interaction has been programmed to simulate our physical reality.
Look at games like Fortnite and SimCity; the latter debuted in 1989, more than a decade before social media arrived in our lives. As commonly seen in innovative startups, the co-founders clashed with their vision of the future and the game was over. SimCity, later resurrected as Sims, played out building new cities and communities in a virtual world. World of Warcraft was the darling video game of the early 2000s but faded out. Fortnite is somewhat of the antithesis of SimCity in that the characters are tasked with the mission of destroying cities – and each other – unless they team up to fight the monsters (Husks) that are invading their hideouts. Launched in 2017, the e-Sports game peaked the following year with nearly 350 million users and earnings of $5.5 billion. Since then, Sandbox, Axie Infinity, Decentraland, and dozens of other dedicated Metaverse games have been launched in the Android Playstore and Apple Store.
Alright, presumably you’re not reading our blog to learn about gaming. Where things become important and relevant to us here at Shield is that playing games in the Metaverse parallels trading on the financial markets. And, with that, comes the burden of compliance, which is currently a non-factor in the digital world. Today, the Metaverse is the wild, wild, West of centuries ago.
The Metaverse is essentially a virtual marketplace that enables creators to develop, buy, sell, and trade digital entities. Things get blurry when tokens are traded for goods that manifest themselves in the real world, like rare sneakers previously owned by a famous NBA star player. Nike is reportedly ready to make a play to formally enable such trades. However, they’re not the only Fortune 100 vying for coveted real estate within the Metaverse: dozens of companies and individual investors have already paid millions to own a slice of it. Even small companies are cashing in on the blurred line between an NFT purchase made in the virtual world for an item that can be worn in the real world. Some brands believe that it’s the future of retail.
But there’s also enormous potential for the dark side. Arguably not as dark as the dark web which exists solely as a forum to perpetrate unspeakable crimes, the Metaverse currently offers something in between. Until regulatory authorities formally recognize the Metaverse as a market, trades, purchases, and sales are up for grabs without any legal obligation to meet compliance standards. It’s a brave new world for bad actors to profit – and have a little fun traversing the next dimension while they’re at it.
Hiding is easy; you can create your virtual representative in one virtual world, send it into the next virtual world in a different form, and so on, almost infinitely. The essence of blockchain pretty much makes it possible to collect whatever monies you’re owed through a financial transaction within the Metaverse, regardless of whether it’s legal or ethical. Those aspects of doing business are as immaterial in the virtual world as dollar bills.
Trading in the Metaverse marketplace offers staggering potential. Some analysts forecast that it will quickly hit $1 trillion in value. Others forecast a boom in jobs at chip manufacturing plants like Intel and Nvidia, in gaming companies where software developers are in critically short supply, and in retail marketing where those who figure out how to profit from selling in both worlds will be in hot demand. Digital humans can strike it rich as influencers championing brands within the Metaverse. Even Deloitte, one of the most conservative and traditional companies on the planet, has gotten into the game with the launch of their virtual studio and innovation space, “Unlimited Reality.”
The Metaverse may be the next frontier for retail, real estate, social connection, and e-Commerce, but it’s also a marketplace mecca for bad actors to generate ill-gotten gains. It’s a place already ripe with sexual harassment, gender and racial abuse, violence, and market abuse. And the tricky part is that it’s exceptionally tough to traverse both worlds as a compliance officer monitoring the behaviors of an obscured, once- or twice-removed avatar who’s depositing their gains in a protected virtual vault. A brave new world that it is, like all new things, we eventually figure out how to use them. It just takes time. Until then, the fraudsters should enjoy their financial freedom in the Metaverse because it’s a safe place to hide – at least for now, anyway.