Metaverse, a glorified Ponzi Scheme?
I have been seeing a lot of people change their Twitter profile picture to a cool looking monkey who is wearing glasses and smoking a joint, something along those lines and I am extremely confused and lost because these people are mainstream celebrities (who seem to know nothing about it, a cashgrab).
Have you bought a Dabangg NFT yet? Being Human is a thing of the past now, be a meta-being now
There are enough articles on what is Web 3.0, what is an NFT, what is a Blockchain, what is a cryptocurrency, but to navigate this piece, I guess a map is crucial.
Everything has been centralized until now, especially financial institutions like banks. They have customers whom they offer services to and assure that their money is kept safe, and used as leverage for the banks to make money. Let’s say I deposit Rs.100 into Vice-City Co-op Bank, this money will not be just lying in a safe in the bank.
The bank will loan it out to other customers and generate revenue from the loan to carry out their service. This in a nutshell is how a bank works. It’s not very transparent, it's centralized, i.e. all the records are maintained by the bank entity and not accessible to any other individual.
This creates a lot of problems and a lot of loopholes as we have seen and experienced (cough cough, Vijay Mallya) where bad loans are sanctioned to people based on verbal agreements or “goodwill” and later not repaid at all.
In all this, the bank isn’t the one facing the largest brunt, but it's the common man, the customer who trusted the bank with their hard-earned money. So, when something doesn’t work, we as a species are solution-driven, and that is what Blockchain offers.
Blockchain, as the word suggests, is a chain of blocks, quite literally. Conjure up an image of blocks connected to each other by a string, and now make the number of blocks virtually infinite and that is what a blockchain is in its essence. It is a Decentralized, Distributed, Public Ledger or in simple terms a diary with all the records of all the possible transactions carried out by the people involved in it.
This was invented in 2009 by Satoshi Nakamoto, who since then has not been identified and remains a random person who published a very sound science paper on which entire financial systems are set to be based in the near future.
Blockchain solves problems for which the traditional approach had no answer. The record of transactions is now distributed to all people who are customers (nodes of the chain), these customers have a crystal clear view of the log of all transactions taking place and further can validate transactions.
A validated transaction is added as a block to the already existing chain of blocks keeping a track of the same. It puts power into the customers hands rather than the hands of a big corporation (something which Web 3.0 focuses on as well) and aims to create an environment where scams and frauds will be mitigated to some extent.
Next up, Cryptocurrency, the not so hot topic now, was recently overtaken by NFTs. Everyone must’ve heard about Bitcoin, Ethereum, DogeCoin (Thank you Elon!) and how people got filthy rich by investing in these coins, or these currencies which if you think about it boil down to being virtual money, as good as Monopoly money, but with real value somehow? What kind of sorcery is this?
Well, cryptocurrencies are just like any other asset class, they create value if people find them valuable in the first place. Gold was considered to be valuable and hence was a medium of exchange in medieval times due to its scarcity in nature.
Gold inherently didn’t have any value, it's the people who valued it, creating demand and hence why the prices shot up. Something similar happens with these coins as well.
You might be thinking, Dude! crypto is now a thing of the past, the new wave is here for the Metaverse, NFTs and Web 3.0 and I won’t be able to prove you wrong, but these are concepts based on cryptography and decentralization. Web 3.0 is an umbrella that applies these ideas to the whole internet.
It suggests that it is the third version of the Internet which was preceded by Web 2.0. Web 2.0 is the web we use commonly today which comprises of social networks and mobile internet access. What Web 3.0 brings to the table is smart contracts and automation to what is done on a daily.
Smart Contracts, Decentralized apps, Permissionless transactions will slowly become the norm in Web 3.0. Web 3.0 is going to be the vector of change that people are anticipating is going to be the next big thing.
Non-Fungible Token or its acronym, NFT is being fed down your throat even if you don’t want to hear about it, and even if you do want to hear about it, some people are making sure that it remains something obscure so.
NFTs are basically any form of media, be it an image of your dog Tuffy or a short gif of Ron Swanson throwing out a computer into the garbage, or a classic Virat Kohli cover drive snippet, you can now own it! Non-Fungible basically means that it cannot be tampered with or changed.
Once created it will remain unique forever, something like a collector’s item. Seems pretty cool right? If I could own the footage or a piece of art that means a lot to me, it’d be great.
My Opinions
The biggest catch here is, there are multiple copies of the same media. So there can be hundreds of Mona Lisas which kind of devalues the asset in the first place. Also, art is extremely subjective and people have different tastes, so a jpeg of a cool monkey might get crazy money, not because it's really artsy but just because someone valued it at the crazy amount, maybe because they had the money to spend. NFT ecosystem provides a great deal of upside to artists, giving them royalty money each time their work is sold and levels the playing ground when it comes to creators and consumers.
This is why I think that crypto after all might not be as decentralized and distributed as we are pegging it to be:
- It is literally controlled by the 1% of the people who get to make decisions or decide if a particular token is valuable or not and this 1% already has a lot staked in this game.
- How will it be different from the already existing framework in place where the upper echelons of the most wealthy control everything right from news, to the posts you see on your choice of social media to what products will be advertised to you.
- It’ll just lead to more exploitation this time without any form of governance or a controlling body in place to create any kind of minimal checks and balances.
Web 3.0, DAOs, Cryptocurrency, Metaverse are the newest things in town and just like all new things, people are apprehensive about them and so am I, but there is also an opportunity attached to the risk perceived which I can see. There is a lot of latent potential and a lot of new Web 3.0 projects are coming up which are really transformative and ingenious, but will it be sustainable, maintainable or even scalable in the longer run begs to be the question in my mind.
People have started buying virtual land in the Metaverse apparently and my locality has been already purchased by some Swedish guy who thinks Mumbai real estate is going to be in demand in the Metaverse and to his foresight, I must tip my hat.
