With the crypto and blockchain markets having matured significantly, attention is being placed on the rapidly evolving non-fungible token (NFT) and Metaverse. NFTs are becoming a major part of Web3, and the Metaverse is steadily increasing in popularity for both consumers and companies.
It’s said NFTs are the engines to drive the Metaverse, so the two are closely linked. The UAE is living up to its reputation as one of the earliest tech adopters in these fields as well. The number of people owning NFTs is more than double the worldwide average and the country is set to become a major player in the Metaverse.
But what’s happening now for NFTs and the Metaverse, and which direction are we headed in?
Exponential rise in NFTs
NFT transaction volumes, users and active collections all soared through 2021, earning the term NFT the coveted title as Collins Dictionary’s ‘word of the year’. And this momentum continues with the Chainalysis State of Web3 report finding that collectors sent over $37 billion to NFT marketplaces between January to May this year. This means they’re on track to outstrip 2021’s total of $40 billion.
There are generally peaks and troughs in NFT activity, with marketplaces undergoing periods of growth, downturns and recoveries, often due to global trends and levels of user demand.
Even taking into account these fluctuations, there’s a definite rise in the number of active NFT buyers and sellers in the marketplace, with an increase every quarter from Q2-2020 onwards, before a dip in Q2-2022. There’s been a steady growth, too, in the number of active NFT collections on OpenSea since March 2021, with over 4,000 reached in late April 2022.
NFTs and the Metaverse
With NFTs, people can own digital assets like images, audio, and video, and can sell, buy, and transfer items. Within the Metaverse, it’s even possible to own virtual real estate. Many brands, gamers and individuals are already treating the Metaverse as a lived reality, which is being reflected in the price for virtual real estate. Blockchain-based virtual real estate prices grew by 879 per cent from September 2019 to March 2022, while real estate prices grew by 39 per cent.
In the UAE, brands have been quick to embrace the Metaverse, backed by government initiatives such as the Dubai Metaverse Strategy, which aims to increase the contribution of the Metaverse sector to Dubai’s economy to $4 billion by 2030 and increase its contribution to Dubai’s GDP to 1 per cent. Etihad Airways is also releasing their first non-fungible token (NFT) collection, EY-ZERO1.
The collection of 2,003 limited-edition collectables includes Etihad’s Manchester City FC and offers a number of travel and lifestyle benefits. And Dubai’s stunning Museum of the Future is collaborating with Binance NFT to develop a range of virtual assets, with the first NFT drop expected in the coming weeks.
The Metaverse is an emerging space, so the long-term price of virtual real estate relies on current and potential utilities, like accessing exclusive communities and events. So far, this has been a major driver of NFT demand, and the current signs are that it’s crossing into virtual real estate sales.
The future of the Metaverse depends on how well everything is able to work together. It’s not yet known if brands will create their Metaverses in a way that can operate seamlessly with current Metaverse projects and blockchain technologies. There are some early signs that this could be the case, with, for example, Epic Games accepting crypto games into its store.
Although this isn’t particularly significant for today’s Metaverse, it’s a major step for gaming, which has similar aims — so it will perhaps smooth the path for other sectors to create similar blockchain-based Metaverse enterprises.
Interoperability will also speed up the adoption of technologies like virtual reality (VR). The more life-like and immersive the experience, the more likely NFT-based ownership will feel real and tangible to users. So, the faster VR technology grows, the better it is likely to be for metaverse offerings.
We’ve seen a rapid growth in revenue generated from VR-based gaming, and the Middle East and Africa (MEA) is set to capitalise on this, with the VR market in the region forecast to grow at a CAGR of 43.5 per cent between 2020 and 2028, when it is set to reach $23,041.99 million.
Several brands in the MEA are incorporating VR into their offerings — for example the VR Park at Dubai Mall, which propels visitors into the space and takes them on a journey to the future in a truly immersive experience.
The Metaverse is on its way, with VR technology, virtual real estate and blockchain all working together to bring us closer to meaningful digital ownership. NFTs sit central to all of these factors, and to become key players in defining ownership in the Metaverse, they need to add more value through utility, rather than just collectability. It’s an interesting time ahead for the Metaverse universe, with brands in the UAE leading the way towards adoption of these game-changing technologies.