Financial transaction

How will fintechs adapt to the metaverse?

marsmeena29 / Getty Images/iStockphoto

Metaverse is an emerging technology that is very promising but also has many unknowns. While some predict the Metaverse will become the “new normal” in the future, others believe it’s just some fancy secondary technology that will be used primarily by players.

See: Metaverse virtual real estate is booming: what’s the appeal?
Find: Best Metaverse coins to buy for 2022

Regardless of what the metaverse will eventually become, it’s worth learning what it is and how fintech companies will adapt to it in the future. After all, an estimated 88% of Americans are now using fintech in one form or another, so learning how these companies will adapt to the metaverse is something worth looking into.

What is the metaverse anyway?

The Metaverse can be hard to explain unless you’ve experienced it firsthand, but it’s essentially a digital universe. The metaverse is rapidly emerging in the gaming community, as hyper-realistic 3D worlds allow gamers to interact with other gamers around the world through social media and the internet. Already, the metaverse is expanding into a sort of parallel world to ours, as entire worlds are being created that are limited only by the minds of developers and users. For example, land in the metaverse is a real commodity, as users build their own worlds that may or may not reflect real-world experiences.

More: Looking for a job? The metaverse is recruiting

Can you make real financial transactions in the metaverse?

Yes, you can use real money to buy real products in the metaverse. In games, players have long had the ability to purchase tools that could help them level up, such as specialized weapons or additional skills. Now you can buy everything from land to buildings to unique avatars in the metaverse.

Goods and other purchases in the metaverse are true investments, many of which have already increased significantly in value, with some even reaching the seven-figure range. For example, in Decentraland, a major metaverse project, plots of land recently sold for $17,000, with some as high as $575,190. This amount could be even higher as you read this. An “alien punk” created by CryptoPunks sold for $7.58 million, and it is currently offered for resale at $142.4 million. In short, yes, there are a lot of important real-world financial transactions taking place in the metaverse.

Although you can use traditional currency to buy certain things in the metaverse, most NFTs, avatars, and other items for sale are built on the blockchain, where cryptocurrency is king in terms of transactions. This is one of the reasons many cryptocurrency investors are so optimistic, as they see a whole new economy developing in the crypto-based metaverse.

What role will fintechs play in the metaverse?

Fintechs are designed to facilitate financial transactions for users, but they also exist to make profit. As the metaverse grows and becomes more like the “real” world, fintechs will undoubtedly be involved.

At its core, a financial transaction in the metaverse is identical to a transaction in the physical world. Anything fintech can do to make it easier to process transactions in the metaverse will be popular, and early adopters may be the ones to benefit the most. If the metaverse truly lives up to the expectations some have of it, fintechs will have to do the heavy lifting when it comes to, for example, providing payment processing services, auto loans, and home loans. Traditional banks will no doubt be keen to get their hands on these transactions as well, but fintechs may have a head start when it comes to mobile technology, ease of use, and the ability to process crypto transactions. Just like in the real world, financial services will likely become a highly competitive industry within the metaverse, and fintech will not only play a role, but also help shape the entire economic environment within these parallel worlds. .

Learn: Metaverse Stocks: 5 Best Buys

What does this mean for you as an investor?

Trying to pick winners in the metaverse is kind of a wild ride at this point. Nobody really knows what will become of the metaverse and what exact services will be needed, let alone which fintechs will ultimately prove to be the dominant players in the space. But there is no doubt that there will be a lot of money being made in the metaverse by fintechs at some point.

Talk to your financial advisor about this exciting opportunity in emerging markets to see which fintechs are most likely to become early adopters of the technology, positioning themselves to benefit the most.

More from GOBankingRates

About the Author

After earning a BA in English with a major in business from UCLA, John Csiszar worked in the financial services industry as a Registered Representative for 18 years. Along the way, Csiszar earned the Certified Financial Planner and Registered Investment Advisor designations, in addition to being licensed as a life insurance agent, while simultaneously working for a major distribution house. of Wall Street and for his own investment consulting firm. During his tenure as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans to hundreds of clients.