Goldman Sachs says the metaverse must run on blockchain, and heralds crypto tech as a huge disruptor | Currency News | Financial and Business News
Written by ABC AUDIO on December 16, 2021
The Sandbox
- Goldman Sachs has said blockchain technology must be at the heart of the metaverse.
- It also heralded the crypto tech as one of the most “disruptive” trends since the early internet.
- Goldman said blockchain allows users to securely own assets and transfer them across virtual worlds.
Goldman Sachs has said crypto technology will be at the heart of the metaverse, as it will allow people to securely own digital items across different virtual worlds.
The Wall Street bank’s analysts, led by Rod Hall, heralded blockchain tech as “one of the most disruptive technology trends” since the early days of the internet, in a note published Tuesday.
The metaverse is a loose term that refers to virtual worlds in which people, in the form of avatars, can game, work, play, socialize and trade.
In October, Facebook announced it was changing its name to Meta and would be focused on building virtual worlds, which it said are the future of the internet.
Crypto-focused gaming metaverses such as Axie Infinity and The Sandbox have been pulling in users of late. They allow players to create and trade items in the form of non-fungible tokens, or NFTs — types of secure crypto collectibles — and have in-game economies that use cryptocurrencies.
Goldman’s analysts said crypto technology must be at the center of the development of metaverses because it allows users to securely own assets or items, and move them across different platforms without the need for a central party’s permission.
For example, The Sandbox runs on the ethereum crypto network, which enables users to buy and sell in-game land and NFTs on exchanges outside the metaverse, such as OpenSea.
“We believe that the metaverse is likely to be an amalgamation of different 3D spaces and that users will move between these regularly,” Goldman said.
“If any virtual goods or services are unable to move from one space to another with the user, we believe their value is likely to be more limited.”
The analysts added: “With regard to the metaverse, blockchain is the only technology we see that can uniquely identify any virtual object independent of a central authority.
“This ability to identify objects and then track ownership will be critical to the functioning of the metaverse whenever it finally materializes.”
A blockchain is a digital ledger of transactions, which is overseen by all members of the network rather than by a central party. Blockchain technology powers bitcoin, where users called “miners” have to solve cryptographic problems to verify transactions, keeping the network secure.
Although Facebook/Meta has launched early versions of its metaverse, it’s unclear yet whether the company thinks decentralized blockchain technology will play much of a role.
Many crypto enthusiasts are worried that the company’s financial strength and power in social media means it could come to dominate the metaverse and tightly control creation and trading.
Meanwhile, critics are highly skeptical of the whole idea of the metaverse, noting that previous virtual worlds such as Second Life have been around for years and that virtual reality headsets have never really caught on.
Goldman’s note was bullish on the blockchain in general, although the bank said it was too early to work out clear investment strategies around it.
The analysts said blockchain “has much broader and far-reaching implications for decentralized identification and ownership of both digital and physical entities.”
They said the technology could increase privacy on the internet and get rid of the need for centralized control in a range of industries, such as supply-chain management.
— to markets.businessinsider.com
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