Interoperable Payment Systems Crucial for a Unified, Non-Monopolized Metaverse: BIS Study
Summary:
A study by the Bank for International Settlements (BIS) suggests that to prevent fragmentation and monopolization of the metaverse, regulatory-endorsed interoperable payment technologies are needed. The study indicates that metaverse usage is linked with real-world property prices and Bitcoin's value. It also categorizes the metaverse into centralized and decentralized platforms, with the former, run by corporations, currently dominating. The researchers also anticipate the metaverse will reshape global economy and labor markets, and encourage regulatory authorities to foster robust, adaptable payment systems.
To avoid a fragmented and monopolized metaverse, regulatory endorsed interoperable payment technologies are necessary, according to a report by the Bank for International Settlements (BIS). The appeal for the metaverse, essentially immersive, digital landscapes, surged at the beginning of 2022, following Facebook's transition to Meta. The researchers at BIS highlighted that it's not guaranteed the metaverse will gain widespread acceptance. Although some uses have been seen as “gimmicky”, there is a significant link to the real world. For instance, sales of virtual land in the metaverse have been linked to real-world property prices and Bitcoin's value, implying speculation is a major driver. Significant investments continue to be driven by potential applications within gaming, e-commerce, healthcare and education sectors in the metaverse. Even conservative projections suggest the metaverse market will reach trillions of dollars by the end of the decade.
The BIS study categorizes the metaverse into centralized and decentralized platforms. In the former, corporations own the platform and control all payment-related decisions. The operator controls the platform's payment system, irrespective of the payment method used, and provides a native token that could be adjusted to maintain stability or control user transactions. Examples include Roblox's Robux and Second Life’s Linden dollar. On the other hand, decentralized platforms like Decentraland and The Sandbox rely on cryptocurrency exchanges for broader economy integration. Other emerging payment methods include tokenized deposits and central bank digital currencies (CBDCs), which could efficiently facilitate cross-border applications. However, the authors indicate that these systems may only offer a semblance of decentralization. They noted that users mainly prioritize usability over concerns regarding the technical intricacies of metaverse governance, making the decentralized metaverse small compared to the centralized.
The metaverse's impact on the global economy could be transformative, potentially making service prices less reliant on geography, spurring international integration, and reshaping labor markets. Crux of the move for regulators and central banks is to ensure virtual environments and currency systems aren't divided or controlled by powerful corporations. Therefore, coordinated efforts should be initiated to foster robust, adaptable payment systems that address user requirements. The comprehensive 29-page study sets a clear narrative with its lucid language and reasoning.
Published At
2/7/2024 10:06:31 PM
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