Control Metavas to prevent corporate control, dissolution – BIS
Corresponding payment technologies need to be supported by regulations to prevent the meta-version from being fragmented and taken over by powerful private interests, according to a study by the Bank for International Settlements (BIS).
Immersive computer-generated environments, otherwise known as metaverses, peaked in early 2022, when Facebook changed its name to meta. “It is not a foregone conclusion that the metaverse will be widely accepted,” the BIS authors said. Some of its use cases were clearly “ridiculous”, but even then, the connection to the real world was strong:
” Volume [metaverse] Land sales are still tied to real-world real estate prices. […]. However, it is closely related to the value of Bitcoin. […] It suggests that hypothesis is the main objective.
As some uses develop, big investors are also interested in the sector. Gaming, e-commerce, education and healthcare are growth areas in the Metaverse. Even conservative estimates put the value of the Metaverse market in the trillions of dollars a decade.
The study divides Metavas into centralized and decentralized platforms. At its core, the platform is “owned by corporations that make all the decisions about how payments work on the platform. Regardless of the payment method, the platform system is centralized and under the control of the operator. This type of platform has a native token to maintain stability or limit user transactions. Roblox's Robux and Second Life's Linden Dollars are examples.
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Decentralized platforms like Decentraland and The Sandbox rely on cryptocurrency exchanges to connect to the larger economy. There are other payment methods that may grow in popularity, such as tokenized deposits and central bank digital currencies. CBCCs, in particular, serve well to facilitate cross-border applications. The study said:
“These systems can only provide a decentralized system.”
The authors cite other studies that show that users often care less about the technical aspects of managing MetaVas and more about the benefits of using them. He added that the decentralized metaverse is “tiny” compared to the centralized one.
What is the economic impact of services in the #Metaverse? Widespread adoption of technologies like #VR and #AR could mean blurring the lines between vehicles and non-vehicles, cross-border integration and new demands on payment services pic.twitter.com/TGiuXVlpN0
— Bank for International Settlements (@BIS_org) February 7, 2024
The metaverse has the potential to transform the global economy by geo-based pricing of services (“blurring the lines between tradable and non-tradable sectors of the economy”), encouraging global geographic integration and transforming labor markets. Central banks and regulators should take heed to take advantage of the potential benefits of the emerging metaverse, the authors said.
“To prevent virtual environments and currencies from becoming fragmented and controlled by powerful private companies, authorities can strengthen efforts to introduce efficient and compatible payments that can meet the needs of users.”
At 29 pages, the study was information-rich and marked by distinctly clear language and argument structure.
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