Subscriber Special Event
Come and join us on Zoom!
Dateline: Woking, 7th May 2024.
On 23rd May at 8.30pm London, 12.30pm San Francisco and 24th May 5.30am Sydney time, there will be a special 45 minute Zoom chat with Victoria Richardson and I talking about our new book “Money in the Metaverse”, that was launched at Money20/20 Asia in Bangkok last month.
We will be discussing some of the key conclusions from the book and answering your questions on the confluence of spatial computing, digital identity and tokenisation in a next-generation financial infrastructure.
You don’t have to do anything except mark the date in your diary and all paid subscribers will receive a Zoom link via this Substack on the morning of the event. I hope you will join us to take part in the discussion and help us to learn more too!
What’s Up?
The Bank for International Settlements (BIS) report on “The Economic Implications of the Metaverse” (BIS Paper 144, February 2024) looks at a Metaverse economy, built in VR/AR immersive environments, where avatars can engage in a broad range of activities. It notes that as their users spend more time (and attention) in metaverses there will undoubtedly be business opportunities from new services. Remember that the BIS is owned by the world’s central banks, so we take their output pretty seriously. And when their new report goes on to say that “an important foundation for such services is the ability to make instant payments, ideally across borders and currencies, and to create digital representations of assets (tokenisation)”, we could not agree more.
Now is the right time to be thinking about Metaverse strategies for business. The MIT Technology Review lists the Apple Vision Pro as one of its “breakthrough technologies” for 2024 because the mixed-reality headset has a display that is radically better than any that has come before. This device, together with Meta’s new VR headset (which Meta have just announced with also display Apple 3D video), will bring the spatial computing to the masses and drive the evolution of VR/AR metaverse across many different sectors. With Meta’s injection of AI into smart glasses, another metaverse-related project, the Metaverse is now more viable across the mass market.
There is a new ecosystem around the corner. Louis Rosenberg (CEO of Unanimous AI) carried out doctoral work at Stanford University that resulted in an immersive augmented-reality system built for the U.S. Air Force back in 1992. He recently predicted that by 2035 people will laugh at images from today that show people walking down the street staring down at a phone. He thinks that metaverses built on AR/VR technologies will replace mobile phones as the primary gateway to digital worlds, with the transition from mobile phones beginning in the middle of the 2020s and completing by 2035 or “possibly sooner”.
If that sounds hyperbolic in the light of current technology, bear in mind that “Gen Z” already spends far more time in the proto-metaverses than they do in the web world familiar to you. The next generation of consumers are showing the way: there are roughly 3.4 billion gamers, or 1 in every 2.36 people. 90% of Gen Z, 80% of Millennials and 63% of Gen X already interact with games and/or the metaverse. Where games begin, commerce follows and commerce will come because those standard solutions of the trading of assets between digital identities will form the security layer that was missing from the Internet because security is an integral part of what the metaverse actually is.
The BIS report suggests that if it becomes mass market, it could mean (i) a blurring of lines between the tradable and non-tradable sectors, (ii) greater cross-border economic integration and (iii) new demands on payment services. That latter point means pressure for innovation around instant payment systems, retail central bank digital currencies or tokenised bank deposits to support services in the metaverse. An old friend of ours (and very experienced Apple iOS developer), Andrew Ebling wrote about this on LinkedIn recently. He talked about the “pain of trying to pay” using a VR headset…
Take off the headset, authorise your payment or banking app (using FaceID, which means the headset must be fully removed, wait for a while until your overloaded computer groans and quits and then you have to start all over again while fretting over double charging.
Not the best experience, especially when you compare it to a near-future Apple “blink and pay” in virtual worlds. Especially when that blink-and-pay means the exchange of fungible and non-fungible tokens using decentralised finance protocols that never go anywhere near the existing banking infrastructure. Or, for that matter, banks. No wonder Andrew says that
As an app developer who jumped on the iPhone day-one, I absolutely can't wait to get started with the Vision Pro.
Victoria and I could not agree more the need to take metaverse commerce seriously and we think that web3 has a role to play here, which is why our book covers the exchange of fungible (i.e., money) and non-fungible (i.e., property) tokens in metaverse economies: In other words, money in the metaverse may take the form of fungible tokens that exhibit the characteristics of money in certain circumstances. The obvious candidate is what people refer to as “stablecoins". In the not–too-distant future central bank digital currencies (CBDCs) or private sector tokens with reserves in either central bank money or perhaps other assets such as gold (or oil, or electricity or who knows what else) will step in to fulfil this role for most jurisdictions.
Whether private or public payment mechanisms gain traction, there is no doubt that financial services strategists have to take the potential for Metaverse services very seriously. With demand from the entertainment, education, and defence industries and a forecast CAGR of more than 40% through 2030, the finance sector will look on as the opportunities for transactions proliferate and then be forced to respond because all of those transactions will require rails to move value around, to effect payments whether that value is fiat currency, game tokens or things that have not been invented yet. The transactions may be virtual, but the business implications are very real, and the Metaverse – in fact, a multitude of metaverses – is the next evolution of the internet. This will power new business models that, crucially, demand reimagined financial services.
The BIS report also specifically points to the relationship between digital scarcity and value as the basis for new business opportunities, which is why our book links the virtual, augmented and mixed reality space where transactions can take place, the digital assets that will be exchanged in those transactions, and the ownership of those assets. The book sets out a consistent and we think helpful model of the Metaverse to help all organisations to begin working on their scenario planning and strategies for this inevitable future.
Our book aims to bridge the gap between the creators of metaverses and financial services strategists looking to create value from virtual worlds, web3 and digital identity with the goal of facilitating more productive interactions between the stakeholders and more effective development of new products and services. We hope you like the book, we hope that you will join us on Zoom and more than anything else we hope that you will buy the book and enjoy it!
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