Is the metaverse a good thing?
In this exclusive guest article, Brendan Beeken, the Founder and Chairman of cryptocurrency exchange Moni Talks, considers whether the metaverse is a good thing.
The advent of the ‘metaverse‘ had widened awareness of, and involvement in, cryptocurrency. The idea of virtual worlds with entirely online interaction appeals to sections of society in a way that simple decentralised financial services didn’t. Many are looking for social interactions and online gaming, not buying and selling assets for profit.
However, to join many of the emerging metaverses, you need to have a cryptocurrency – to buy ‘land’ and items, engage with others, attend virtual events, or play online games hosted in these digital worlds.
This is one reason we have seen crypto tokens like MANA and SAND spike in value. Alongside the ‘traditional’ crypto traders taking a speculative punt on these emerging tokens, there are metaverse ‘residents’ with no real interest in crypto trading who have to buy and use the virtual land’s own currency, creating additional demand for it.
But this creates a problem. People with little knowledge or experience of cryptocurrency trading are being brought into the space by metaverse involvement. They may not be aware of the risks associated with this volatile marketplace. They may not be aware of the scams and market manipulation that, sadly, exist and prey on the uninformed.
Need for Education
Is there a need for increased education about cryptocurrency? Simply put, yes.
I’m passionate about ensuring investors are well-informed. That’s why my crypto community, Moni Talks, has free cryptocurrency news and educational tools at its core.
The loudest voices in cryptocurrency promotion shout about the vast returns people have enjoyed. Combine this message with a lack of knowledge and some newbies brought into the crypto space through metaverse involvement could face problems.
They are unlikely to be able to adequately assess the risks and, as fans of the fun of virtual worlds, could be suckered into investing in novel, entertaining coins.
Take, for example, the squid game token last year. It appeared to be connected to the massively popular Netflix show of the same name. That was enough for money to pour in, including from novice investors enticed by the apparent link to the TV show.
In just three days, SQUID saw its value increase by 35,000%. Unfortunately for investors, the token couldn’t be sold on the open market, meaning they couldn’t realise their returns. Those behind the project, however, could. And they did. Developers cashed in their tokens for a reported $2 million, and the price of SQUID nosedived by 99% in just 24 hours.
Pump and Dump
Those involved in cryptocurrency for some time are aware of the tell-tale signs of a likely pump and dump scheme. Newbies, like those only involved in cryptocurrency because they want to engage in a multiverse, may not be.
Experienced traders know that research is absolutely crucial in cryptocurrency. Novices may not. Experienced traders know to look at the utility of the coin – ironically like the utility of metaverse tokens – and not be ensnared by amusing names, claims of celebrity connections, or funny cartoon characters.
A coin with a needed utility is likely to see demand increase, along with the value.
The divisive issue of regulation is also important here. While some decry more rules as an attempt to centralise decentralised finance, others believe regulation is a pragmatic way to protect people and the reputation of crypto.
This regulation doesn’t have to be from outside the industry. Exchanges could impose their own rules on which coins to list, setting standards to protect users.
Back to the Future
So, the growth of the metaverse will continue. With that, more newbies will become cryptocurrency buyers, owners, and traders.
To avoid them being taken advantage of, and to protect the reputation of crypto, the industry needs to ensure education is freely available, standards are high, and we look after our novice friends.