Category: Research

Metaverse Explained: What is the Metaverse, and Why Does it Matter?

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One of the major buzzwords this past year has been “metaverse,” triggered in no small part by Facebook’s announcement this past October that it was rebranding to Meta and investing at least $10 billion on metaverse technologies.  While the term “metaverse” originated in the 1992 novel Snow Crash, in which people use the metaverse as an escape from a dystopian world (an idea also later explored in the novel and film Ready Player One), only recently has technology improved to the point where the metaverse could leave the realm of science fiction and become a reality.  This article will explore what the metaverse is now, and what it may become, as well as some of the companies involved in creating it and opportunities for financial institutions, in particular, to get involved and help shape the future of the metaverse.


What is the Metaverse?


The metaverse has been described in several different ways.  The Oxford dictionary defines the word as “a virtual-reality space in which users can interact with a computer-generated environment and other users.” Meta has referred to the metaverse as “a persistent, synchronous environment where we can be together.”  The video chat platform startup Gather has shared their definition of the metaverse as “the next iteration of the Internet that brings a sense of place and facilitates rich human connection.”

As the world is likely still several years away from seeing a fully-realized metaverse, it is unclear how exactly the metaverse will look in the end.  However, there are a number of facets of the metaverse that most people would agree are core components of the definition of the metaverse.

  1. The metaverse will be an ecosystem of shared virtual worlds.

While virtual worlds already exist today (for example, within online video games), most worlds are not linked, and consumers cannot move freely in between different worlds in the same way that one could move from one website to another.  Assets purchased in one game typically cannot be used or sold in a different game.  In the metaverse, it is expected that items such as digital clothing or accessories will be able to be shared across different worlds and experiences.  The boom of technologies such as non-fungible tokens (NFTs) may assist in allowing users to use items across different worlds.  Further, virtual worlds in the metaverse should be persistent, which is to say that the world will remain regardless of whether users are logged on or logged off, unlike Zoom meetings or video calls which end as soon as the participants leave the room.  Changes to these shared worlds could also persist into the future, creating a more realistic and lived-in experience for users.


2. The metaverse will fuse the real world with the digital world.

Creators will be able to recreate real-world spaces or objects in a virtual medium, where users can feel like they are present in the space, as opposed to merely seeing the space via a web browser. Virtual objects may also be embedded into the real world via AR technology.  The best current example of this technology is the hit game Pokémon Go.  Corporations such as Nike and Gucci are already investing in technology to bring their products and branding into the digital world in the form of skins and digital clothing. In the same way that consumers purchase branded goods and accessories as a form of self-expression in the real world, these digital collectibles will allow users to display their interests and personality in the virtual world.  As AR and VR technology improves, companies and creators will find new ways to merge the physical and the digital to create experiences that feel more real and more integrated with the daily life of the average consumer.


3. The metaverse will provide new ways for people to connect and interact with each other in a virtual space.

While the origins of the metaverse may be found in gaming (key examples include Fortnite and Roblox), many in the industry see the opportunity for the metaverse to redefine how and where people connect to each other.  The pandemic has shown the vital importance of finding ways for people to meet and engage with others via a virtual medium. In the future, the metaverse may provide channels for people to meet, talk, and enjoy activities and events together, even if they are far apart in the real world.  Though the pandemic will hopefully come to an end soon, it is clear that many companies already see a future in remote work that allows the company to save money, while at the same time offering employees a way to avoid the hassle of a regular commute.  Families separated across countries or continents will continue to see the metaverse as a way to stay connected in person, even as travel opens back up.  By eliminating the physical barriers and limitations of the real world, virtual spaces can democratize access to events, education, and even work opportunities.

Though the metaverse is still in its infancy, many companies have already begun creating and hosting virtual experiences that exemplify how people may interact with the metaverse in the future.  Examples include Marshmello’s 2019 concert inside Fortnite (attended virtually by 10.7 million people), or the SXSW Online XR experience in 2021 (which recreated downtown Austin, TX, the traditional host of the SXSW film festival). Companies like BMW and Audi have created virtual showrooms for consumers to shop for and virtually test drive cars, and platforms such as Decentraland and Gather allow users (retail and corporate alike) to create their own spaces for anything from art shows to weekly team game nights.


Left: Marshmello concert in Fortnite.  Right: SXSW Online XR

How Will the Metaverse be Created?

At its most fundamental level, the technology does not yet exist to support the metaverse as previously defined.  Like the internet, there will be multiple underlying technologies supporting the advent of the metaverse, including networks and infrastructure to deliver content to metaverse users, hardware to immerse users in the metaverse and render complex 3D environments, and programming standards and protocols to both allow various stakeholders to create new content and experiences in the metaverse and to allow different worlds and creations to interact with each other.  There is no finite answer of when all of these technologies will have developed enough to support the imagined metaverse – people speculate that it will gradually emerge over time.

As will be discussed below, companies are working to overcome current network limitations, improve hardware capabilities, and develop common standards and protocols in order to bring the metaverse to life on a large scale.


1Network Limitations:

To operate, the metaverse will require persistent connections that update in real-time with a high degree of accuracy and a fast data delivery time. The metaverse must also support a collection of applications and experiences across all devices and cater to a large pool of users concurrently.  This is an enormous computational challenge and one that fights against the underlying design or intent of the Internet. Bandwidth, latency, and reliability are the three main metrics used to measure network quality.

Bandwidth is commonly thought of as “speed,” although it actually refers to the amount of data transmitted over a given amount of time. The metaverse has far more rigorous standards than most internet apps and games.  Many players already face bandwidth and network congestion for online games; these requirements will be amplified by the metaverse, highlighting the need for technological improvements to increase bandwidth.

Latency refers to the time it takes for data to be transmitted from one point to another and back. For example, latency is the time it takes for a game player to receive information (such as whether a grenade has been thrown) and transmit that information to other players. In other words, latency can determine whether a player wins or loses, kills or dies in a game.  Many gaming companies have devised partial fixes that lower latency or mitigate the impact of high latency.  However, none of these current solutions scale particularly well.

Reliability measures the reliability of network service quality. This includes not only the overall uptime but also the consistency of other factors such as bandwidth and latency.

To deliver an immersive metaverse to the masses, all three of these network limitations will need to be solved.



Most industry insiders believe that hardware limitations will be the major stumbling block in realizing the metaverse.  In order to enjoy a fully immersive user experience, users will need to access the metaverse via AR/VR hardware.  However, current headsets are expensive, heavy, and lack the graphics quality and processing power to render realistic virtual worlds or objects.  This creates a massive barrier to entry for consumers interested in interacting with the metaverse.  Continuing to reduce the cost and size of AR/VR hardware will require continued improvements in the underlying hardware components, including processing chips, graphics chips, and light engines.  While AR/VR hardware development has taken massive leaps in recent years, including the launch of the widely popular Oculus Quest 2 and the increased adoption in the enterprise VR space of Microsoft’s HoloLens, analysts believe it may be five to ten years before the hardware can support the full metaverse at a price accessible to the mass consumer segment.


3Adoption of interoperable standards

Today’s internet operates under a set of common standards and protocols that allow anyone to create websites, share files, or otherwise interact with said internet. Standards and protocols will need to be considerably wider and robust in the metaverse. Furthermore, because interoperability and real-time synchronous experiences are so important, a common set of standards will need to be adopted.

In today’s world, big tech players may employ similar technology, but they are not designed to function together. Most companies are also adamant about not cross integrating their systems or sharing their data, which makes it more difficult, if not impossible, for users to jump to different companies or to integrate their digital lives across multiple companies.  Interoperability is one reason blockchain proponents believe that the future metaverse will be powered by blockchain technology and that decentralization will make it easier for developers of different platforms to connect and collaborate to offer a seamless experience to users.  However, examples of cross-platform gaming engines like Unity and Unreal Engine in the game development industry point to an alternative possibility, where independent third-party companies may arise to create metaverse engines to help developers create interoperable products.


Metaverse Ecosystem Players



Infrastructure – the metaverse infrastructure includes network providers, programming standards, and virtual worlds/platforms.

Network Providers

By expanding the reach of high-quality internet access, more people will be able to access and participate in the metaverse. One example is Starlink, SpaceX’s satellite Internet constellation, which hopes to provide high-bandwidth, low-latency internet, particularly to clients in areas underserved by traditional telecommunications firms.

Programming Standards and Protocols


NVIDIA is one of the major tech firms which has made significant investments into the metaverse.  NVIDIA Omniverse provides the programming infrastructure to create and connect virtual worlds into a shared universe.  This includes the interchange of assets between multiple users/world creators, the rendering and simulation of virtual worlds, and engines for simulating real-world physics and materials in a virtual space.


Virtual Worlds/Platforms

In the current state of the metaverse, virtual worlds have been created on both centralized platforms (i.e. platforms that are controlled by a single entity like a corporation) and decentralized platforms (i.e. platforms that are governed by the community of users or stakeholders).

Two key examples of centralized platforms are Roblox and Fortnite.  Roblox lets users create virtual worlds and games. Users can personalize their own avatars with virtual gear which can be applied across multiple worlds or experiences on the Roblox platform. Fortnite allows players to create and monetize their own content, including anything from digital clothing (skins) to dances (emotes). Fortnite Creative Mode also allows users to create their own games and experiences.


An example of a decentralized platform is Decentraland, which runs on the Ethereum blockchain network.  In Decentraland, users can buy and sell digital real estate, while exploring, interacting, and playing games. Real estate transactions are fueled by MANA, Decentraland’s native currency which is used for payments, and LAND –NFTs which represent ownership of virtual property. Smart contracts allow MANA owners to vote on policy modifications, land auctions, and new development subsidies on Decentraland.


Hardware – hardware companies develop and produce devices which will allow users to immerse themselves in the metaverse.


Tech giants and startups alike are working to create fully immersive user experiences.  Oculus has dramatically improved its virtual reality headgear in recent years by improving resolution quality and mobility.  Magic Leap provides AR glasses, with the vision of embedding the digital world into the physical world.  Immersion provides haptics technology that can make metaverse experiences feel more realistic.  Google’s Project Starline is a hardware-based booth designed to make video discussions feel as if both parties were in the same room. The hardware in the booth is used to create a projection that looks real to the other party.


Content – content in the metaverse includes digital assets and marketplaces, avatars, and virtual experiences like gaming, work, and social events.


Digital Assets and Marketplaces

The metaverse will require users to be able to own digital assets, such as NFTs which may reflect ownership of items such as digital files, skins, or even virtual land.  Many major brands like Nike, Coca-Cola, and Disney have recently launched their first official NFTs as they begin exploring how to engage users in the virtual economy.  Marketplaces like OpenSea offer opportunities for users to buy and sell these digital assets.



One of the exciting features of the metaverse will be the ability to represent oneself as an avatar within virtual worlds and to find new methods of self-expression by personalizing and customizing avatars.  Companies like Genies, which raised a $65 million funding round in 2021, allow users to create fully personalized avatars to represent and express themselves in the metaverse.  Other examples of virtual avatar creators include Ready Player Me and CryptoAvatars.



Experiences is a subset of content which refers to events or activities in which users can participate, and which may mimic or enhance events or activities users traditionally would have engaged with in the real world.  One example is Strivr, an enterprise VR training company, which partnered with MGM on a number of metaverse initiatives. MGM’s Human Resource Department announced a rollout of VR headsets as part of staff training. MGM is also exploring the implementation of this immersive technology by hosting virtual career fairs. Strivr’s clients include other big names such as Walmart and Verizon.


Opportunities in the Metaverse for Financial Institutions

Financial institutions have already begun exploring different areas of the metaverse.  These projects include creating digital replicas of their headquarters or branches where customers can experience what it would be like to conduct normal banking transactions in a virtual space instead of in-person, leveraging VR/AR technology to improve employee workflows, and hosting events and seminars for their customers in virtual spaces.

The key roles that financial institutions can play in the metaverse are analogous to the traditional roles of financial institutions in the real world.  Financial institutions should look to leverage their core strengths in exploring new initiatives and innovations in the metaverse.  These key roles can be broken down into three main categories.



The metaverse requires content in the same way that the internet requires websites.  Financial institutions will need to consider how they can create content and experiences for their customers.

While many transactions are already easily conducted via online or mobile banking applications, many more financial transactions still require personal contact between a banking agent and the customer.  Some customers may still prefer a more human interaction, even for regular transactions, and the metaverse may offer opportunities for financial institutions to create this kind of personalized experience in the virtual world.  For example, the metaverse could allow users to engaged with existing technology such as chatbots or roboadvisors in a more human way.

Financial institutions can also support content creation by their retail customers.  UGC is already a major part of the internet economy today, and building tools such as digital asset exchanges and portals to help users monetize their creations in the form of NFTs is an area that several financial institutions are already piloting.


As the virtual economy scales, fast, cheap, and secure digital payment rails become increasingly important.  As payments has long been a core area of strength for financial institutions, these same institutions may look to develop the payments infrastructure that will power transactions in the metaverse, which may leverage traditional payments, blockchain technology, or some combination of both.  Financial institutions also can help consumers access the digital payments space by acting as the bridge between fiat and digital currencies.

Another way financial institutions could support the metaverse is as a node validator for metaverse blockchain projects.  By participating as node validators, financial institutions can help build trust in the ecosystem.



Analogous to the way that financial institutions provide lending and financing to entrepreneurs and small business owners in the traditional economy, financial institutions can provide financing within in the virtual economy.  This could include loans to content creators, project financing, or even sponsorship of activities such as gaming, in exchange for revenue sharing.

Lastly, financial institutions can invest in and support the technology innovators who will research and develop the technology needed to make a fully realized and immersive metaverse a reality.


While a real metaverse may not arrive until several years from now, parts of the metaverse have already begun to emerge and provide people with new ways of interacting.  The virtual economy is growing rapidly and immersive technologies such as VR are beginning to redefine the way the people work and play.  The metaverse may eventually change how people live their lives and engage with one another.  Given the lockdowns and restrictions brought on by the pandemic, it becomes increasingly important to leverage technology to ensure that people can connect with others, with friends and family, with companies and service providers, in a human way, even if they cannot meet in the physical world.  It is vital for all potential stakeholders to work together to create a metaverse that is open to all, that brings people together, and that provides people with new opportunities to work, play, and experience things which may not be accessible to them in the real world.


Author: Krongkamol Deleon (Joy) and Premika Bhongsudhep (Prink)
Editor: Wanwares Boonkong (Pin)


From Internet Banking to Blockchain Finance, What’s Next for Financial Institutions?

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The concept of banking first emerged sometime around 2,000 BC in Mesopotamia, where merchants felt the need to give out loans to farmers and traders who roamed the different cities. From then on, as trade and the economy grew, modern financial institutions were built to consolidate the scattering of economic activities and provide trust.


For centuries, the financial system has been heavily centralized. Along with other government entities, financial institutions joined hands to govern almost all transactions, from money issuance to lending and investing. They have this power to centralize because they alone can keep track of all financial transactions. The invention of blockchain will change the fundamental mechanics of how this new era of the financial system operates with its decentralized record-keeping feature. Once this technology fully matures, traditional financial institutions as we know them will have a lesser role in the financial system.


Blockchain and Its Promise to the Financial System


Blockchain is a decentralized record-keeping system that documents all transactions that happened on it. In other words, it is a bank book that everyone can possess and whose content is self-updating with all new transactions and the change in ownership of any assets. It defies financial institutions’ fundamental role as the centralized record keepers who prevent the same money from being spent twice or the same asset being transferred repeatedly.

Fully mature blockchain technology promises to provide greater efficiency, lower transaction costs, better transparency, a speedier rate of financial innovation, and a much lower carbon footprint (still heavily debated) compared to the traditional financial system.


The Inception of Blockchain Finance


In the early days of blockchain finance, Satoshi Nakamoto (pseudo name – actual identity remains unknown) invented Bitcoin (whose underlying technology later became known as blockchain), a digital currency to aid in the decentralized transfer of money. The transfer data stored in Bitcoin’s blockchain is static – meaning that the blockchain can only record that Entity A transfers B amount of money to Entity C.

Ethereum then came along and introduced smart contract technology, which allows blockchain to be programmable. Ethereum blockchain can instruct that only when Event D happens, Entity A can transfer B amount of money to Entity C. Any transactions can become fully automated upon a defined set of rules.

Both technologies were the foundation of the concept of what is now known as Blockchain Finance.


The Blockchain Finance Dilemma


While groundbreaking, current blockchain finance is not without limitations. The challenge lies in the Blockchain Dilemma – that blockchains may only choose up to two qualities to achieve: Security, Scalability, and Decentralization. The limitation is the mechanism to how each party in blockchain finance agrees that a transaction is legitimate and therefore should get updated in everybody’s copy of the bank book (referred to as the “Consensus Mechanism”).



Source: Original framework by Certik, adapted by Beacon VC


Since both Bitcoin and Ethereum prioritizes Security and Decentralization, scalability is a challenge for both blockchains. In order for a new transaction to be recorded in everyone’s copy of the bank book, someone who holds a copy of the bank book must confirm that the transaction is legitimate through the computation of a complex mathematical equation. That person is referred to as a miner, and the first miner who gets the equation right wins a monetary reward. This process of solving a mathematical equation to confirm a transaction is called the proof-of-work consensus mechanism (PoW).


Other blockchains prioritize Decentralization and Scalability, giving birth to the proof-of-stake consensus mechanism (PoS). Blockchains that adopt PoS include Polkadot and Vechain. Under the PoS concept, a miner can be eligible to confirm a transaction by putting down a ‘ stake’ in the form of coins belonging to that blockchain (think of it as a refundable deposit). The more coins put down by a specific miner, the more eligibility that miner has to validate a transaction. This consensus mechanism works because the miners who are not validating any specific transactions are obliged to check the work of the validating miners. Faulty confirmation of a transaction is penalized by confiscation of stake.


Finally, other blockchains prioritize Security and Scalability. While many blockchains use the PoS to validate transactions, we have seen a rise in the proof-of-authority consensus mechanism (PoA). In this case, new transactions are confirmed by a few authorized players in that blockchain. These players are incentivized to keep transaction data legitimate and enjoy the monetary benefit for that blockchain growth. Examples of blockchains that prioritize security and scalability include blockchain consortiums formed by financial institutions (JPM coin), and the Bitkub chain. In reality, there are many other ways that a blockchain can achieve scalability and security, as we also see cases using a hybrid model between PoS and PoA – the delegated proof-of-stake mechanism (dPOS), which we will leave for another discussion.


The Two School of Thought of Blockchain Finance (CeDeFi/ DeFi)


There are big debates in the blockchain finance space whether blockchain finance should be centralized (CeDeFi or CeFi) or decentralized (DeFi).



CeDeFi is an evolution of the current financial system where an intermediary helps manage the transaction and regulate the users’ activities in that ecosystem. Under this scenario, if a user wants to make a transaction, the user needs to create an account with the company, deposit cash or any assets into the company’s custodian, and use that company to execute the transaction. In this case, the customer would need to reveal their personal information to participate in the ecosystem. Great examples of CeDeFi platforms include Binance and Coinbase.


Conversely, with the growing need to protect own data and distrust in institutions comes the demand for DeFi. Users are required to manage their own funds and financial activities. They must have a personal wallet where they store their assets and use that wallet to carry out transactions by connecting it with decentralized service providers. Since these decentralized service providers execute trades based on smart contracts, the transactions automatically occur when conditions are met. There is zero need for human intervention. This gives flexibility for DeFi users to select service providers whose set of rules they like the most.


Which School of Thought Will Prevail?


Although there is no guarantee which school of thought will prevail, or that there will be any clear winner, we anticipate that CeDeFi will gain mass acceptance and adoption for real commercial purposes first, despite the current boom in DeFi which has been driven by speculative forces.

It is all about the evolution of public trust. CeDeFi is, by design, a bridge for general customers to start exploring the blockchain finance ecosystem and shifting their trust away from financial institutions/centralized governing entities to service providers (think of Binance, Bitkub, Zipmex, Satang Pro, etc.). These companies excel in replicating the same user experience a customer would have if they were to interact with general fintech that people know and have grown accustomed to. Once more people start adopting CeDeFi, and the infrastructure and interface for DeFi are in place, the public will soon learn to shift trust from said service providers to algorithms (code and rules of how transactions are made), leading to the potential mass adoption of DeFi. It is impossible to say when mass DeFi adoption will happen, but we can definitely see both CeDeFi and DeFi co-existing in the foreseeable future.


Such co-existence can take place in a number of manners:

  • Gateway: Since value creation in the economy is still largely driven and transacted in the physical world, CeDeFi can exist as a gateway for users to convert traditional assets (such as fiat money) into decentralized blockchain finance. We are already starting to see this symbiotic relationship between CeDeFi and DeFi, in which users convert their money into digital assets using CeDeFi and then transfer it to their personal DeFi wallet. (think of Fiat -> Binance -> Metamask wallet)
  • Market Segmentation: It is possible that CeDeFi and DeFi can co-exist by serving different markets in the economy. Segmentation can be based on the need for governance. For instance, CeDeFi can serve segments where visibility and governance are critical, such as corporate clients, while DeFi can serve the retail market. Segmentation can also be based on the type of trust users require. Conventional users can use CeDeFi because their trust system is based on having a single entity to point to when things go wrong, while DeFi users can be more comfortable with the algorithm.
  • Business Extension: CeDeFi organizations can use DeFi as a place to experiment with financial innovations and later acquire the know-how to build or integrate similar services to their platform. This is the same model that we already see in the financial industry, in which big financial institutions leverage the capability of startups to enhance the robustness of their offerings.


While this migration unfolds, regulators and financial intermediaries incumbents will likely try to slow the migration rate to a minimum. This is because they will first need to find a satisfactory framework to thrive in an entirely DeFi environment. After all, there are certain benefits to centralization, such as the ability for the government and banks to control fund flow, regulate the market, and effectively pull monetary levers to protect the economy or national interests.


What’s Next for Financial Institutions?


There is no telling when mass CeDeFi or DeFi adoption will happen, but it is paramount that financial institutions start finding their role in this emerging ecosystem. To start from an inside-out perspective, financial institutions were built upon trust and efficiency through consolidation. The critical area of exploration is where financial institutions can continue to deliver benefits both in the CeDeFi or DeFi context. From an outside-in approach, financial institutions can navigate through different blockchain layers and access points in the ecosystem to identify a natural fit for their current products, capabilities, or future strategy and monetization models.


While we are racing towards what may be the most significant overhaul of the financial system in modern history, we must strive to remember that different populations adopt technology at different rates and that meaningful innovation must not further marginalize anyone.



Author: Woraphot Kingkawkantong (Ping)
Editor: Krongkamol Deleon (Joy)
Special shout-out: Wanwares Boonkong (Pin), Phanthila Saengthong (Mook), Panuchanad Phunkitjakran (Pook), Napat Nantavechsanti (Jum+), Phongsuphat Kanchanakom (Monn)