The scalability of the Metaverse Industry and the Key Components
The year 2021 has been called the year of the meta-universe, the year when the concept of meta-universe exploded and the year when the meta-universe made the biggest shift from concept to application. Investors became bold in their venture capital investments and set their eyes on what seemed like a blue ocean with the launch of various public chains, the emergence of NFT, the combination of NFT and DeFi to form Gamefi and the creation of DAO for community autonomy, etc. With the trading figures of major trading platforms breaking new highs time and again, the meta-universe has seen its spring.
The concept has been formed, the next task for the metaverse is how to interact with reality and how to build a framework for the universe based on the real world. Only by moving from the virtual to the real can the metaverse truly become a reality mapping of the blockchain and the dream kingdom of WEB3.
I. What will the metaverse bring to us?
The development of the metaverse will bring a huge number of jobs to the world. Even though the core of the metaverse is the blockchain, matched with a consensus mechanism, the drive to enter the metaverse and perform a range of activities in it comes from the scenario and the devices. Device manufacturers will not let go of the opportunity to design, manufacture, test and run, and the support to the metaverse devices will eventually need to be done by the manufacturing industry.
One of the great possibilities of the metaverse is that it will expand access to markets for consumers in emerging and frontier economies. The internet has unlocked access to goods and services that were previously out of reach. In a metaverse world, workers in low-income countries may be able to find jobs in businesses around the world without having to leave their homes. Working online becomes normal, more people will be able to balance work and family better, the time, money and physical costs of commuting will be gone, and this will result in carbon emissions reduction which is in favour of the environment.
Education will be much more easier to conduct, and virtual reality worlds will be a low-cost and effective platform for it. All those educated in the metaverse will enjoy the same atmosphere as in the real world and save a lot of unnecessary hassle.
From a corporate perspective, there are also opportunities for massive expansion. Instead of opening a shop in every city, a major retailer might build a global shopping centre in a metaverse that serves millions of customers. Businesses will save on rent, utilities, office facilities and a host of other operational costs, and will be able to initiate office meetings anywhere and anytime in the metaverse, no longer delaying work because of lack of meeting rooms or being too far apart to communicate effectively.
In addition to retailers, the metaverse will accelerate the transformation from cash to cryptocurrency for games, sports and betting. Once the base currency becomes common, there will no longer be any restrictions on purchasing power, it will be uniformly priced and uniformly issued, and you can buy any lottery ticket anywhere, anytime, and when you win 5 million, you won’t need to worry about the prize being coveted by others.
The metaverse will consist of a large number of scenarios, with the real world as the mapping, and a large number of Internet industries such as media, games, film and IT will undergo a major migration, truly realizing the “interconnection” based on the Internet only. However, the main reason why the metaverse is so controversial is the contrast between the conceptual advancement and the relative backwardness of the technology, and the important contradiction between the establishment of an orderly system of rules and the disorderly market expansion mechanism. Therefore, before that, the metaverse needs a relatively sound basic environment. No industry can ignore safety and order, and building a relatively complete infrastructure for the metaverse is the focus of the moment.
II. In what areas should it be built?
1. Business infrastructure
The metaverse will bring about a huge economic expansion, so the elements that support the commercial economy of the metaverse will need to be properly constructed, such as the integration of the virtual world with the traditional world payment method, the integration of the virtual world with crypto payments and the NFT/digital asset market, ensuring the relative reasonableness of the payment conditions between the real world and the metaverse is the bridge between the two worlds.
2. Privacy protection and data security
The process of forming an orderly expansion of the metaverse leads to the formation of a huge amount of data, and information security in the era of digital economy is a top priority. From the traditional Internet to the metaverse, how to form the protection measures of data security through the logic of blockchain to form a security policy with the metaverse as the basic framework is the first problem to be solved.
Traditional Internet network information security is mainly based on the three principles of information security set by the National Institute of Standards and Technology (NIST) as the basic standard, including Confidenciality, Integrity and Availability, but in the blockchain environment, data security often also includes authenticity and traceability.
The technologies of cryptography, digital signature, data backup and data recovery in the Internet are still feasible in the meta-universe, but further technological development is needed in terms of authenticity, security control and integration and sharing according to the characteristics of blockchain. According to the logic of blockchain, a traceable distributed data system can effectively solve the problem of insufficient authenticity of data quality, through asymmetric encryption technology can effectively solve the problem of weak data security control. Through peer-to-peer technology and smart contracts, the problem of open data sharing can be effectively solved. Based on this infrastructure, developing a data security protection technology applicable to the metaverse system scenario is a major feature of the metaverse infrastructure project, such as Filecoin’s zk-SNARKs privacy computing technology and MEFS’s RAFI data recovery technology.
3. Improving regulatory policies
Regarding the regulation of the industry, in fact, countries have long formulated relevant policies and continue to improve them. The U.S. severely regulates ICOs and securitized tokens, and some states have also formulated more detailed regulatory mechanisms, such as New York State introducing Bitlicense, Wyoming explicitly allowing the operation of utility tokens, the UK government requiring crypto asset companies to comply with the Money Laundering Regulations (MLR) and register with the UK Financial Conduct Regulatory Authority, and Hong Kong introduced a licensing regime for transactions in the provision of security-based crypto assets in 2019 years, but has indicated that it does not regulate transactions in non-security-based crypto assets, although plans were made last year to introduce a corresponding licensing regime.
The government has an obligation to regulate businesses, and similarly, project providers have an obligation to regulate users. Forming complete business-to-user upstream and downstream regulatory measures while ensuring the rights of users is also an issue that businesses need to consider in their technology builds.
4. Tax Policy
In terms of taxation of crypto investments, the IRS treats cryptocurrencies as property for taxation purposes. Individual citizens who hold cryptocurrencies as capital assets for more than one year and have realized gains are subject to capital gains tax, while those who have held them for less than one year and have earned gains are subject to ordinary income tax.
Japan has also developed a taxation mechanism for cryptocurrency transactions, with individuals earning more than 20 million yen per year in salary or 200,000 yen in extra-salary income being required to declare their income from profits from cryptocurrency transactions, at rates ranging from 15% to 55%.
The improvement of the taxation policy is to ensure that the crypto economy can fit the taxation policies of different countries and bring a reasonable increase to the regional economy in compliance with the regulations on the one hand, and will ensure the healthy development of the crypto economy on the other.
The construction and expansion of the metaverse require a strong financial ecosystem, and it is vital that the virtual element has the same elements of the existing global economy, and that data security technology and privacy policies will protect the metaverse industry. The concept and technology go hand in hand, with the building of all types of infrastructure for the metaverse as the main foothold, is the core competency of the metaverse industry.