Rationalization of Crypto and Metaverse At Davos
This year’s World Economic Forum has almost come to an end. The five-day long forum – from 16th to 20th January had the theme of “cooperation in a fragmented world,” which hinted at the economic uncertainties caused by rising geopolitical tension, approaching recession, and climate change.
The 2023 World Economic Forum took place at a time when the world has changed thanks to Covid-19, toxic world politics, and economic volatility drastically. Along with that, the fall of FTX and the general degradation of the crypto coins as a whole have resulted in an eerie absence of crypto-promoters from Davos. The concept of the metaverse, too, it seems, has failed to impress people.
The End of Crypto Boom at Davos
The promoters of crypto coins and NFTs, in the past WEF events, would come in droves capturing the attention and awe of all the attendees. However, the World Economic Forum 2023 seems to be bereft of most crypto coin promoters. This is because the past year has been particularly bad for cryptocurrencies. In fact, bad is an understatement. First, the fall and fall of the value of bitcoin and other popular cryptocurrencies made investors poorer and poorer. And then came the infamous downfall of FTX. CNBC estimates that all these downward trends in the crypto market resulted in an overall loss of $ 1.4 trillion.
Teana Baker, the vice president of policy and regulations of the parent company of the stablecoin, USDC, sees a silver lining in this turn of events. According to her, now that the period of the hype is over, the companies that have been featured in Davos and elsewhere are putting stress on the practical use cases of cryptocurrencies and the technology behind them.
To combat the growing “menace” of cryptocurrencies, governments of many countries have started planning to come up with a virtual version of Central Bank currencies. However, discussions in the World Economic Forum 2023 made it clear that virtualizing Central Bank currencies can potentially have negative effects. Questions like how robust the money laundering prevention would be and who would create the international infrastructure needed for easy conversion of one virtualized fiat currency into another – need to be answered.
Realistic Discussion on the State of Metaverse
The World Economic Forum saw the presence of author Neal Stephenson – the man who first coined the term metaverse. In a discussion with Chris Cox, the chief product officer at Meta, Neal Stephenson tried to understand the real state of the metaverse, how far it is from mass adoption, and the technical feasibility. Cox admitted that the metaverse is still in a very nascent stage, and there are a number of technological hurdles that they need to overcome to ensure the mass adoption of this cutting technology.
One of the biggest issues in making the metaverse a success is the fact that despite the widespread adoption of fast internet, the metaverse requires faster internet speeds to ensure that the reactions of all the avatars in a certain virtual world must take place simultaneously. Even a second’s delay would ruin the interactivity of the metaverse.
Stephenson has pointed out the issue of centralization. Jumping from the metaverse of one platform into the metaverse of another platform would require the usage of open protocols for seamless synergy.
Investors have already been warned that Zuckerberg’s vision of the metaverse will need at least a decade to pay off. Meta’s Reality Labs already suffered a loss of $9.4 billion last year. The road to profitability for Meta is rather too steep.