Is Hong Kong ready for The Metaverse?
Recently, Switzerland began to accept non-fungible tokens (NFTs) on its new digital exchange platform. Initially spurned as a bubble, NFTs are now expanding their frontiers across the crypto-community and the mainstream alike.
NFTs are the harbinger of a new digital era in the form of the Metaverse. In principle, The Metaverse is a virtual-reality space in which users can interact with other users in a programmed environment. Incorporating virtual and augmented reality to simulate real-life experience, the concept of Metaverses have been dubbed as the newest literation of the Internet, “Web 3.0” so to speak.
NFTs and Metaverses are interconnected. In a Metaverse, participants can showcase and trade digital forms of art and property using blockchain-backed NFTs.
For one, the Metaverse will help fulfill the desire of our younger generation to break the mold of socially constructed identities and restricted mobilities.
The Metaverse is now entering the peak of its hype cycle. Its value is estimated to be worth US$1 trillion, according to the digital currency investor Grayscale. One of the business opportunities of the Metaverse is the buying and selling digital real estate built on decentralized platforms. These virtual lands will allow digital identities or avatars to live, work and interact with each other.
Sentiment towards the Metaverse has been receptive. The city’s biggest names, such as New World Development’s Adrian Cheng and PwC, being early investors have lent credence to the Metaverse’s social and financial potential. Such was the ferocity of the Metaverse storm that has come upon us.
But what about the Metaverse’s accessibility to the public? What would be the upside for other Hong Kong entrepreneurs to also investigate this?
For one, the Metaverse will help fulfill the desire of our younger generation to break the mold of socially constructed identities and restricted mobilities. A quixotic wish can now be achieved in an alternate, albeit digital, universe with no government interference nor favoritism.
By stretching the corners of the Internet into a four-dimensional environment of virtual reality, enterprises can now create new business models that enhance inter-operability with the real world. Participants can also benefit from such immersive experience. The Metaverse now brings the playability of blockchain gaming, the connectiveness of social media, and true digital asset ownership through NFTs to its participants. Once the Metaverse fully unfolds, its participants can develop new identities (or even genders) like video game avatars, to create and trade digital assets such as music, art, fashion items and real estate. Which leads us to the next benefit of the Metaverse: it provides an alternative to our overdependence on limited physical space in Hong Kong.
As the Metaverse narrative begins to catch on with a younger demographic, it will enable access to and the creation of a new class of assets.
The resurgence of COVID has tamed the tentative optimism of a return to economic normality as we continue to experience partial lockdowns. Dozens of concerts and theatre performances, including famous Cantopop singer Hins Cheung’s concert, were cancelled, or postponed due to Omnicron. What if these events could switch to a digital avatar-based concert? In the US, Justin Bieber recently performed a virtual concert using his own avatar in a motion-capture suit. This is another advantage of utilizing a digital land in the Metaverse — it’s immune from the contagion that has continued to wreak havoc and redefine normalcy for everyone. The paradigm shift brought on by the Metaverse might help explain the hype around virtual property transactions in recent months.
Further, participating in the open Metaverse ecosystem grants more opportunities than mere digital ownership. As the Metaverse narrative begins to catch on with a younger demographic, it will enable access to and the creation of a new class of assets. For example, blockchain-based games — like traditional video games — give ownership of in-game achievements to players. Players can monetize in-game items, such as the wearables of their avatars or digital land plots, to trade with other players. Monetization encourages participation and fosters a sense of belonging, which further boosts innovation to create new items for sale. It’s a self-reinforcing cycle.
Even if a person does not have money to buy initially, he can work in the Metaverse. If a person finds a market for himself, that gives a new identity. This prospect will change the dynamics of living and working for the new generation that interacts with the Metaverse.
Nearly all Hong Kong-based entrepreneurs identify rents as the major challenge to doing business in Hong Kong. Perhaps the excitement inspired by the Metaverse can be seen as a segue to not only tokenize non-traditional assets like real estate and art, but to also invite local talents to innovate absent the constraints of land and space, and most relevant of all, COVID.
Unlike the real world, the Metaverse is built on the air of accessibility. The endorsement of high-profile athletes and celebrities has made the concept even more consequential. While still in the early stages of development, Metaverses present numerous potential social and financial opportunities with the use of NFTs and offer new ways for people to play, interact, gather, and transact.
But that is not to say the Metaverse is flawless. Just like any online-enabled communication applications, high technology barriers, erosion of human relationships and prevailing privacy issues are common roadblocks to true adaptation. If our history with technology is anything to go by, these problems are most likely transient. Our focus now should be on building substance, development, and the long-term vision for this burgeoning landscape.
The convergence between the virtual and real world might have seemed like science-fiction a little over a year ago. When it comes to NFTs and the Metaverse, we should play an active role to exploit its accessibility and the economic opportunities they present. We should now assess how our economy might interact with and benefit from it. Rather than trivializing its impact, there might be the solutions we need to hasten productive changes when stop-start is commonplace in the physical world. Velocity and continuous change are attributes of this COVID-induced economy, and to thrive in such environment we must all learn to adapt.
(An abridged version of this article first appeared in the South China Morning Post)