My cynicism with cryptocurrencies and NFTs stem from one core point: they do not have value in the real world. Altcoins live then perish as often as fruit flies, as rugs pull under investors’ feet and finances scurry to private bank accounts. The most popular coins and NFTs all link to events or products offline, whether it is buying items where they accept Bitcoin as legal tender, or communities and exclusive parties built around lazy apes. The more utility an item has, the more secure it is and likely that it will steadily increase in value over time.
Remarkably, metaverse coins exhibit the same qualities that grant them stability.
Over the last week (29 November to 3 December), global markets slumped slightly as they witnessed a variant of Covid-19 spread across multiple countries. Cryptocurrencies normally sit in their own well-insulated bubble, where market shocks deviate away from reality and rely on memes and speculation. Yet three coins related to the metaverse – The Sandbox (SAND), Alien Worlds (TLM), and Enjin Coin (ENJ) – all saw volatility that coincided with the global market. As a macro effect, the coins link to the real world more than others do.
On utility, all three have a purpose in the virtual ‘worlds’ and communities they are built on. Virtual land and items are all linked to the currency, so it has links to their purchase. With usability comes stability, as it is a commonly-accepted currency that anyone can use to purchase and use assets. Much better than an altcoin from the depths of the internet that can buy nothing.
With that said, the metaverse coin’s usefulness is bound within the virtual worlds they reside within. SAND can be used in Sandbox, with an exchange rate to fiat currency – but SAND cannot be used in games like, say, Fortnite. The lack of interoperability means there is an inherent ceiling in their worth.
And how different is it from buying virtual currencies in current-world video games? V Bucks is effectively a conversion from fiat currencies to a virtual equivalent, but regulated by the company that runs the world. The differences are minor, but they serve the same purpose, albeit with a decentralised approach.
On balance, metaverse coins show more potential than their counterparts, which is why they are worth following closely at least. But their value will be tied to the strength of the metaverses they serve, rather than their innate value. Why buy a currency in a world which people do not want to hang in?
Honestly, we cannot know how the market will shift as trust in a currency relies on the consumers who will use them for purchasing goods and services. Market forces will define the future, not a smattering of niche enthusiasts chatting on Discord. As competition in the metaverse heats up, so will the battle for the currencies that will serve them. The American dollar is one of the most stable currencies on Earth; a metaverse equivalent might bubble up over time.
The above should not be interpreted as financial advice from the author.