From Virtual Assets to Digital Economy: An In-Depth Look at How NFTs and the Metaverse Really Work

A New Paradigm in the Virtual World: The Core Relationship Between the Metaverse and NFTs

Have you ever wondered why some people are willing to spend thousands of dollars on virtual real estate? This is not just simple gaming consumption but represents a whole new model of asset ownership. The metaverse, a concept originating from the 1992 novel “Snow Crash,” has now become the central platform where the physical and virtual worlds intertwine.

Essentially, the metaverse is a visually rich virtual ecosystem where people work, entertain, shop, and socialize. The key technologies supporting this ecosystem are blockchain and NFTs. Venture capitalist Matthew Ball has described the metaverse as “the fourth wave of computing after mainframes, personal computers, and mobile devices,” highlighting its significance.

So, what are NFTs? In simple terms, NFTs (Non-Fungible Tokens) are digital assets based on blockchain technology that possess uniqueness and non-replicability. In the metaverse, NFTs serve as “anti-counterfeit ID cards”, providing clear proof of ownership and scarcity for virtual assets.

Without NFTs, the metaverse would face three major issues: virtual items purchased cannot be resold (their value is locked on servers), virtual items designed by creators risk losing commercialization potential, and users’ virtual assets could be wiped out if the platform delists them.

The Fundamental Differences Between NFTs and Traditional Digital Assets

There are fundamental differences between traditional digital assets and NFTs. Traditional digital assets are often replicable, with unclear ownership, and transactions are limited to platforms; whereas NFTs are unique, with clear ownership recorded on the blockchain, and can be freely traded across multiple markets.

Specifically, a piece of music can be copied infinitely, but a specific NFT artwork will always be one of a kind. Copyrights of traditional game items belong to the game company, and players only have usage rights; but the copyright and trading rights of NFT assets are held by the owner. This difference allows NFTs to be applied in collecting, investing, gaming, and other scenarios, whereas traditional digital assets are mainly for consumption.

How Metaverse Projects Influence the Cryptocurrency Market

The metaverse and the cryptocurrency market are mutually reinforcing. During the previous bull cycle, projects like Decentraland and The Sandbox sparked a frenzy for buying virtual land. Data shows that MANA tokens surged by 4,100% in the 2021 bull market, far outperforming Bitcoin’s performance during the same period; The Sandbox’s virtual land prices soared from $1,000 to $45,000, surpassing the property appreciation in Taipei.

This wave of enthusiasm attracted substantial capital inflows, further boosting the entire crypto market. However, as the market peaked and declined, the floor prices of metaverse-related NFTs continued to hit new lows, with many small and medium projects becoming illiquid and difficult to trade.

From a long-term perspective, the potential of the metaverse remains. Continuous investments from tech giants like Meta, Microsoft, and Google, along with advances in virtual reality and artificial intelligence, lay a solid foundation for its development. The future depends on technological innovation, user engagement, and the sustainability of the ecosystem.

How Ordinary Investors Can Enter the Metaverse World

For beginners, directly buying and trading NFTs is the simplest and most feasible way to participate. The process involves five core steps:

Step 1: Choose an NFT Trading Platform

Opensea, as the most mainstream NFT marketplace, sets the industry standard in features and functionality. Most trading platforms operate similarly, so choosing one is sufficient to get started.

Step 2: Set Up a Digital Wallet

Players need to create their blockchain wallet (e.g., MetaMask) to connect to the platform, manage assets, and execute transactions. When first logging into Opensea, simply click “Connect Wallet,” accept the terms, and complete registration without any account opening fees.

Step 3: Acquire Cryptocurrency

Purchase Ethereum(ETH) or other cryptocurrencies through mainstream exchanges, then transfer them into your digital wallet. Sufficient funds are essential for trading.

Step 4: Buy Desired NFT Assets

Browse and select NFT projects of interest on the platform. If the asking price seems high, participate in auctions to seek better deals. Auction prices are usually below the floor price(Floor price), offering opportunities for “bargain hunting” despite time limits.

Step 5: Sell Owned NFTs

Find your NFTs in your profile, then choose to list them directly or participate in auctions. Set the price and duration, then list. After a buyer purchases, you will receive the corresponding proceeds. If you need to sell quickly, you can accept offers below the floor price.

Three Principles for Safely Participating in Metaverse Investments

• Never input private keys on unfamiliar platforms (private keys are equivalent to bank passwords; leakage results in total asset loss)
• Avoid using the same password for all metaverse accounts
• Be cautious of “guaranteed profit” NFT airdrop advertisements, as many are scams

Risks and Recommendations for Beginner Investors

Metaverse investments come with specific challenges. Due to the relatively small market size of NFTs, many projects face liquidity issues, making it difficult to find buyers or successfully liquidate assets. For newcomers, adopting a small-scale testing approach is advisable.

More importantly, beware of fraudulent projects claiming to be part of the metaverse. Many projects branded as metaverse lack real applications and are purely driven by market hype. When market enthusiasm wanes, asset prices often plummet sharply. Investors lacking in-depth research and speculative experience should steer clear of unknown or obscure metaverse projects.

Comparing metaverse/NFT investments with other types reveals: NFT investments have high capital barriers but are tradable at any time with high volatility; cryptocurrencies come in many varieties with varying risks; futures and CFDs offer leverage but limited profit potential; stocks are heavily regulated but offer relatively limited gains. Each investment type has its own risk-reward profile.

Common Questions About the Metaverse and NFTs

Are the metaverse and NFTs scams?

While some projects indeed carry fraud risks, mainstream and well-known metaverse projects have real use cases and are not merely marketing or scams. As a development direction recognized by mainstream capital, the metaverse represents a goal of technological innovation.

What is the risk level of investing in the metaverse?

All investments carry risks, including metaverse investments. Participating in seemingly cheap projects without proper understanding can be risky. However, since NFT trading does not involve leverage, following strict trading discipline and ensuring sufficient liquidity allows investors to enter and exit freely.