The past year has seen breathless progress in virtual worlds as things like non-fungible tokens (NFTs), a comprehensive business application for immersive gaming, world-building and entertainment, have been accepted into the mainstream in one program. In January, electronics giant Samsung opened a version of its New York store in Decentraland, and in November, Barbados established a Metaverse embassy in Decentraland.
JP Morgan Eyes Business Opportunities in the Metaverse
According to a report on February 16, JPMorgan, the largest US bank, stated that it is the first bank to enter the Metaverse and open a lounge in Decentraland, a virtual world powered by blockchain technology.
Alongside the unveiling of the Onyx Lounge (the name refers to the bank’s Ethereum-based licensing services), JPMorgan published a paper examining how companies can find opportunities in Metaverse.
“There are many customers who are interested in learning more about Metaverse,” Kristin Moy, JPMorgan’s head of crypto and metaverse, said in an email. “We put together our white paper to help clients cut through the noise and highlight what the current reality is, and what needs to be built next in technology, commercial infrastructure, privacy/identity and workforce, in order to maximize the full potential of our lives in the metaverse.”
JPMorgan begins its assessment of “metanomics” by pointing out that the average price of a piece of virtual land doubled in the second half of 2021, rising from $6,000 in June to $12,000 on four major web-3 metaverse sites: Decentraland, The Sandbox, Somnium Space and Cryptovoxels.
The JPMorgan report stated that over time, virtual real estate markets could begin to see services that resemble real-world offerings, including loans, mortgages and leases.” It added that product management for decentralized finance (DeFi) collateralization is likely to be added rather than traditional financial companies that can be run by a decentralized autonomous organization (DAO).
Working in the metaverse would also be beneficial, the report noted, citing a number of entertainment providers as well as apps such as RTFKT, a virtual shoe designer recently acquired by Nike. Another big spend could be on advertising, the bank said, citing a forecast of $18.41 billion in in-game ad spend by 2027.
JPMorgan’s paper attempts to illustrate the hype versus reality of virtual worlds and points out that many areas need improvement. This includes the overall user experience and performance of the avatar, as well as the business infrastructure.
The bank’s report stated that they believe the existing virtual gaming environment (each with its own population, GDP, in-game currency and digital assets) has parallel elements with the existing global economy. This is where their longstanding core competencies in cross-border payments, foreign exchange trading, financial asset investing, trading and custody, as well as their large consumer base in the virtual world, can play an important role.
