Cryptocurrencies will be as useless in the metaverse as they are now

In case you hadn’t heard, the metaverse is coming. Maybe Facebook will build part of it. Maybe it’s already here, in the form of video games such as Fortnite, digital collectibles known as non-fungible tokens and even cryptocurrencies. Maybe there will be more than one metaverse; maybe there won’t ever really be any. It’s all a bit unclear.

What is clear, however, is that we are meant to think of this amorphous metaverse as a place of infinite wonder and possibility. It is envisaged by techno-utopians as an interconnected web of virtual worlds in which our “digital twins” can wander about buying virtual art, attending virtual gigs and having virtual relationships.

“The metaverse is the new land of opportunities,” crypto investor Vignesh Sundaresan (known by his crypto name MetaKovan and for spending $69m on an NFT by the artist Beeple earlier this year) told a panel last week. “It’s not about the commerce behind it, but having a place where people from different parts of the world can . . . have an opportunity for prosperity.” 

Apparently MetaKovan has no interest in making a land-grab for this new sphere, never mind that his pseudonym might come from a partial translation from Tamil to mean “king of the metaverse” or that he might run one of the world’s biggest NFT funds.

But there is, of course, a financial incentive here: crypto enthusiasts are hoping that NFTs, which are meant to represent the ownership of digital or physical assets stored on a blockchain, will become a key component of this future world, along with the cryptocurrency used to pay for them. NFTs representing plots of virtual “land” in the metaverse have already been sold for hundreds of thousands of dollars’ worth of cryptocurrency.

One company selling such virtual goodies is Somnium Space, invested in by Facebook founder Mark Zuckerberg’s old rivals, Cameron and Tyler Winklevoss — these days better known for being bitcoin billionaires. After the twins tweeted about it on Tuesday, Somnium Space’s native token, “Cube”, soared in value by 260 per cent. “The race for the metaverse is on!” one brother tweeted.

He gave the game away. As far as I’m concerned, the hypocritical fantasy that underpins crypto also lies at the heart of the metaverse. This isn’t about building a decentralised paradise where everyone can prosper and live in harmony; this is about making a small group of people rich.

“The metaverse is a marketing offensive,” says Janet Murray, a professor of digital media at the Georgia Institute of Technology and author of Hamlet on the Holodeck: The Future of Narrative in Cyberspace. “There’s a very vague fantasy at the base of this . . . This sense that technology will magically provide this alternate thing, and there will be some way to make a lot of money out of it, because technology has provided things that we didn’t think were possible before, and people made a lot of money out of those.”

Even if the metaverse does end up becoming the future of the internet, why would we want to use crypto tokens to pay for stuff there? Surely we would prefer to use money that we can also use in the real world. After all, we might be able to buy virtual clothes in the metaverse, but we still need real ones — and to eat real food and sleep in real beds. We need real money to pay for all that.

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Using cryptocurrency means being exposed to the volatility inherent in these speculative tokens. It also means having to pay an exchange fee — the standard rate charged for exchanging fiat currency to crypto, or vice versa, is around 2.5 per cent. There is no reason to use crypto in the metaverse — the vast majority of money nowadays only exists digitally anyway. Cryptocurrencies, in other words, will have as much use as money in the metaverse as they do in the real world.

I have always suspected that one of the reasons people keep buying into crypto — which I consider akin to a Ponzi scheme — is that they don’t really understand it. In some ways, therefore, the elusive metaverse is a perfect partner. Talking up ideas that people find confusing is a great way of obfuscating things that people find objectionable, as Zuckerberg seems to have discovered. It’s also apparently a great way of making a quick buck — or much more for a privileged few.

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