The NFT Frenzy: from Loot’s perspective on the Metaverse. Is this a tentative short term fad, or a new norm in metaverses? Deep dive on the Economics theory behind Metaverse.
Among all the discussions in the entire NFT community this week, nothing is hotter that can surpass the “Loot” project. A text file, something that contains an entire body of equipment, nothing more, nothing less.
There are neither artistic images nor beautiful 3D models, just a black background with some white words.
Someone must be thinking, “Is that it?”
Pretty much. And the floor price was 10 ETH. That’s over 30,000 USD, but we must stress that this is a Metaverse NFT and the ecosystem changes very quickly and when you read this article, the price of this NFT may have increased multitudes or even decreased multitudes.
Not long after, the Loot Project led to bottom up creation methods, and we saw a near endless amount of digital creations meant to pair with a few lines of terms used to describe a character’s equipment loadout. Loot was just like a seed, and once it was planted, it made more NFT creations spring to life.
Some people would call this a half-written program, others would even say no software engineer was hired for this in a figure of speech — somewhat similar to projects that just make a new token first. Right now the general direction of Loot is not written in stone, but one thing for sure is the fundamental spirit of a Metaverse — you can navigate different metaverses with your digital assets (NFT) and new rules made by other creators.
The spirit of the Metaverse: Your assets will travel with you around the Metaverses
Imagine this kind of world for moment:
One day you get off work, go home and put on your VR glasses and teleport to Universe A. In Universe A you go on an expedition exploring archaeology and history and you find some kind of sword that is old, tattered and rusty. You then take it to Metaverse B, where it becomes a reasonably strong sword that you use to slay monsters and dragons. You then take the sword to Universe C, a futuristic world where two robot nations are at war with each other. You equip the same sword and it turns into a kind of light-saber and you cut through robots like it’s nothing.
Different worlds, different creators, different gameplay, all from the same loot box.
The Gaming Metaverse concept breaks the closed ecosystem created independently by its original inventors. Through consensus for blockchain, all creators can stack up the value of digital assets infinitely and create unlimited reiterations of these NFTs.
In situations where value can be increased, the earlier something is created, the more potential there is for development and chances to attract creators to participate, this is also where the future value of an NFT is likely to increase.
Metaverse vs. The Real World: The Potential for Unlimited Demand and Ideal Augmented Reality
The past 15 years have been transformed by smartphones and mobile networks. The metaverse digital revolution will be brought to life through smart glasses (VR, AR, XR), blockchain, artificial intelligence, and high level cloud computing. From these technologies, their applications are limited by what their industry allows in terms of profitable operation costs. However, the combined effects of the metaverse created together should open a brand-new chapter of creativity in terms of the next human development.
Smart Glasses: These are the main entrance to the metaverse, although you can be a part of Metaverse without VR or AR, smart glasses are still a must-have device to embrace a fully immersive experience. Maybe later there will be more advanced technology like a brain-computer interface, but this will not be immediate.
Blockchain: This is the historical record of the Metaverse, and we might as well call it the time system of the metaverse. Each different chain is like a different parallel universe or a different world’s timeline. Switching to a different chain also means switching to another metaverse and shifting to new rules in that metaverse, as well as switching to that new blockchain’s version of history.
Cryptocurrency: The economic foundation of the metaverse, each token represents the economic strength of the world that the player joins. Benefits from the consensus model include high liquidity of the blockchain through a permissionless model which can also span several different virtual worlds.
NFT: The basis of the existence of the metaverse, any object can be an NFT, and these objects can be freely transferred across the metaverse, even being accepted by other worlds.
AI: The intelligent life of the metaverse. This goes without saying…
Cloud Computing: The metaverse needs something to connect channels and physical limitations of the metaverse.
From the above, we can identify that the biggest difference between the metaverse and the real world lies in the possibilities created by near-infinite expansion, near-frictionless flow of value, and extremely high trust foundation created by the transparency of blockchain technology. This may sound like nothing at first, but from an economic and consumer point of view, this represents an economic model with almost no limits.
Preface to Metaverse Economics: Why exactly are NFTs so expensive?
Let’s make a scenario…
You’re cleaning an old warehouse one day when you find an antique music box in that warehouse. You want to sell it, but you don’t know how much the music box is worth. So you first go to a flea market to get a quotation for a hypothetical auction. Jamie next door in the market is willing to pay ten dollars to buy this music box. You think that’s too low and want to see if there is a higher bid. Then you take the music box for auction on the internet. a foreign buyer named “Fox” is willing to pay you 1000 dollars for the music box, but he hopes that you can provide the proof of purchase and guarantee that it will be delivered to the address he specified in good condition, but you think it’s too much trouble.
So, finally, you sell that music box to a second-hand antiques collector in the community for 700 dollars.
In real life, the price of a unique item depends on the highest bidder among the users that it can reach, after overcoming the friction of the transaction. Therefore, when we want to get the highest bid, we must reach as many users as possible and reduce the friction associated with selling the item as much as possible.
However, if we take that same transaction to the world of NFTs, when you want to sell a digital art music box…
You put your NFT music box on OpenSea for auction. People who are attracted to the item (transparent, traceable, and trusted) place their bids. During the auction, someone outbids the rest of the bidders. You immediately receive the payment and transfer ownership of the NFT.
As for the collector, a special NFT collection exhibition opened up in the MomentX Metaverse just for him. And created a series of unforgettable MomentX experiences with that music box at the core, but that’s a story for another time…
In short, the perception of high value (big IP, famous artists, high value-added potential), high number of buyers (transparent information, fast dissemination), low transactional friction (high trust, instant transfers, instant payments) — all of these things create a general reason for value to be so high in a metaverse. Ideally speaking, these are all the reasons that create buyers who are willing to bid the highest in the world, and thus willing to pay the highest price.
Imagine one day if Pokemon launches the only ten Pikachu NFTs in the world. The price would be very formidable, wouldn’t it be?
But let’s think about an example of transactional friction for a moment, shall we?
Let’s say the Pokemon Taipei branch hosts an auction for only ten physical Pikachu plushies in the world .
Would price performance be the same compared to Pikachu NFTs? Would there be a pokemon hype train?
In other words, when friction is extremely low and the contact group is extremely large, even if 6 billion people think the work is worthless, as long as one person thinks it is worth 100 million dollars, then you have the opportunity to sell it for 100 million dollars. The chances for this to happen in the NFT world are several times higher than in the real world.
High Liquidity, high value-added ceiling, and low friction all create the basis for the possibility of the highest bid.
Metaverse economics: high trust, high mobility (both with value and information), and extremely low friction.
Of course we are still some distance and development away from this kind of world, but there is no better investment time than when you have crazy amounts of growth in the market.
The Metaverse Big Bang:
Finally, it’s time to talk about our establishment and how we enter this space — MomentX metaverse will start public testing in early October. We provide NFT-based empowerment services to bring NFTs to various entities and experiences in the VR metaverse and successively introduce various gamifying mechanisms after smart contracts are deployed to mainnet. If you are interested in joining our metaverse, you can immediately join our early access email whitelist through the official website to stay informed about the latest news with us.
In the near future, MomentX NFTs will soon be available for sale on OpenSea. The name of the series (tentatively) is: Genesis Creations, Genesis Keys, Genesis Locks, and Genesis Rooms.
If you have any questions about the metaverse or relative cooperation that you would like to inquire about, you are welcome to contact us at firstname.lastname@example.org.