Tyrone Siu / Reuters
- The metaverse is a great opportunity for the crypto space, according to a Bank of America strategist.
- BofA's Haim Israel predicted that cryptocurrencies will eventually be widely used for transactions on virtual worlds.
- He said crypto-based platforms will need to be developed, creating "a great opportunity for this entire ecosystem."
The metaverse is a great opportunity for blockchain technology, and it will finally see cryptocurrencies begin to be used widely for transactions, according to a Bank of America strategist.
Haim Israel told Insider on Tuesday that the metaverse is likely to fuel a development boom in the crypto world, as people rush to create virtual world platforms.
"I definitely think this is a great opportunity," said BofA's head of global thematic investment strategy. "You need the right platforms ... it will definitely be a great opportunity for this entire ecosystem."
Israel predicted that the metaverse is where "we are going to start using cryptocurrencies as currencies." But he said that existing digital currencies are likely to prove too volatile for this, so some types of stablecoins will likely come to dominate.
The metaverse is an umbrella term that refers to a variety of online 3D virtual environments in which people can play, build things, socialize, work, and even trade and earn crypto assets.
Interest in the metaverse has skyrocketed after Facebook said in October that it would change its name to Meta, to signal its commitment to building its own platform. Large companies and cryptocurrency developers alike are competing to build digital worlds.
One popular platform, Decentraland, uses decentralized encryption technology to allow users to buy virtual land, build their own structures, and vote on the governance of the economy.
A parcel of real estate in Decentraland was recently sold for $ 2.4 million, as fans turn to digital properties and land as speculative investment. Kingdom of the Republic paid $ 4.3 million for a property in the metaverse of The Sandbox on Tuesday.
BofA's Israel said it looks like the metaverse will be where people finally start to use cryptocurrencies widely for transactions.
The idea is that cryptocurrencies go hand in hand with the blockchain technology that underpins some of the new virtual worlds. That allows metaverses to remain decentralized, rather than under the control of tech companies or payment providers.
However, Israel said that many digital currencies are too volatile to be widely used for transactions. That means metaverse developers are likely to turn to stable coins, which are pegged to stable counterparts such as the US dollar.
The BofA strategist predicted that traditional payments companies will become much more interested in cryptocurrencies, if they are widely used in the metaverse. "I see a lot of collaboration between the two," he said.
While excitement around the metaverse has grown, many people are more skeptical. They point out that virtual worlds have been around for decades, Second Life, for example, and that virtual reality headsets have never taken off.
Others question whether cryptocurrencies will really gain wide adoption, and aren't sure that tech giants like Facebook won't end up dominating whatever the metaverse turns out to be.
"I'm not convinced that the metaverse is user-owned or decentralized if it's developed by Meta, Microsoft, Apple, etc. (which is where $ 10 billion is spent to develop it!)," Ben Gilbert, Equity Executive at risk in PSL, tweeted earlier this month.
Raj Gokal, co-founder of cryptocurrency network solana, shared his own doubts in a cheep In the past week.
"I'm concerned that the metaverse is overrated (across the industry)," Gokal said. "I have not seen so much hype in the mainstream media about a new product or category of products, maybe never."
