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Big tech companies are investing millions in the metaverse, which has caught the attention of tech enthusiasts and the public. According to the Influencer Marketing Hub, the metaverse is expected to have a global market value of $936.6 billion by 2030 and has more than 400 million active users every month.
A world where the physical and digital realms mix, giving endless opportunities for interaction, innovation, and expression. Web3 technology is crucial for empowering individuals. It allows them to establish their presence and own digital assets. Additionally, it enables them to prove ownership and interact across digital spaces and the metaverse.
What Is the Metaverse and Why Does it Matter?
The metaverse is a shared virtual space that blends physical and digital reality. It allows real-time interaction among users and digital objects. Many people often describe the metaverse as a convergence of various technologies, including virtual reality (VR), augmented reality (AR), blockchain, and other immersive technologies. Often associated with science fiction, it has been popularized by novels, movies, and video games, but is becoming more real as technology advances.
In the metaverse, users are not limited by the constraints of the physical world. Through digital avatars or digital representations of themselves, they can interact with each other and their surroundings, engage in various activities, and engage in socialization, entertainment, work, education, commerce, and more. An essential aspect of this interaction is the concept of identity in the metaverse, which you can explore in-depth in our article “What is Identity in the Metaverse”.
As the metaverse develops, users will be able to move between platforms, applications, and experiences effortlessly, allowing them to move seamlessly between them. For instance, a user could move from an online game platform to an educational platform with ease, without having to log in and out of different accounts.
What Is Web3 Identity?
Web 3.0, often referred to as the “Decentralized Web,” represents the next phase in the evolution of the internet. Static web pages and basic information sharing defined the Web 1.0 era, while interactivity and user-generated content characterized the Web 2.0 era. With Web 3.0, we can create a decentralized, interconnected, and intelligent online experience.
Digital identity in Web2 was centralized and often tied to social media profiles and accounts on various platforms. This gave these platforms substantial control over their users’ personal information, raising many privacy concerns and leading to the exploitation of user data for profit.
However, Web3 identity represents a departure from the centralized model of Web2, focusing on giving users greater control, privacy, and security over their digital identities. Web3 identity lets individuals create, manage, and choose who to share their personal data with, unlike Web2 models.
Key Pillars of Web3 Identity
The decentralized nature of Web3 identity stems from pillars such as:
- Decentralization: Decentralized blockchain networks form the foundation of Web3 identity platforms, ensuring no single entity ultimately controls users’ identities. This enhances security and places users in charge of their data.
- Self-Sovereign Identity (SSI): Self-sovereign identity empowers individuals with complete control over their digital identity. SSI enables users to securely store and share their identity information with others. This reduces the need for centralized identity providers and helps protect privacy. Users can grant and revoke permissions for accessing their identity attributes, putting them in charge of their online footprint.
- Decentralized Identifiers (DIDs): DIDs are unique, cryptographically verifiable identifiers used in web3 identity systems. DIDs allow for the identification and verification of individuals or entities on the blockchain using cryptographic techniques such as digital signatures.
- Verifiable Credentials (VC): Digital signed statements attest to an individual’s attributes, achievements, or qualifications. These credentials are tamper-proof, verifiable, and can be shared with others while protecting the user’s privacy.
- Interoperability: Web3 identity works seamlessly across different platforms, applications, and virtual environments. This interoperability is crucial in creating a unified and user-centric digital experience.
- Payment Systems: While Web2 payment systems rely on centralized intermediaries, web3 payment systems aim to eliminate or minimize intermediaries through blockchain technology and cryptocurrencies. This payment system offers global accessibility, enhanced privacy and security, faster transactions, and lower fees, particularly for cross-border transactions.
- Innovation: Web3 introduces concepts like decentralized finance (DeFi) and non-fungible tokens (NFTs), enabling new ways of transacting and creating value.
What Are Non-fungible Tokens (NFTs)?
NFTs are special digital assets that prove ownership of digital items, artworks, and collectibles. They use blockchain technology to ensure scarcity and origin. This asset can range from digital art, music, videos, virtual real estate, collectibles, in-game items, and even tokenized representations of physical assets.
NFTs introduce digital scarcity by creating limited and unique digital items. Each NFT represents a specific digital item or asset. You cannot divide non-fungible tokens into smaller parts while maintaining their value. In contrast, cryptocurrencies interchange and split into smaller units.
Thanks to blockchain’s interoperability features, NFTs can be transferred and traded across various platforms, applications, and marketplaces. This allows NFTs to retain their value and authenticity even when moved between different ecosystems. Each NFT contains metadata that describes its attributes, ownership history, and other relevant information.
How Web3 Enables True NFT Ownership in the Metaverse
Web3 provides several key features that empower users with true ownership over their NFT assets in the metaverse:
- Web3’s self-sovereign identity (SSI) empowers users with full control over their identity and assets in the metaverse. This includes their avatars, virtual properties, achievements, and personal information. Users can navigate metaverse spaces with a consistent identity while having the ability to manage and protect their data privacy.
- Decentralized technologies like blockchain are redefining ownership in Web3. This decentralized nature allows for ownership of digital assets to be verified using verifiable credentials (VC) and transferred from person to person without intermediaries. In the context of the metaverse and NFT ownership, verifiable credentials serve as the bridge that connects an individual’s real-world identity to their virtual assets.
- Web 3 identity introduces true digital ownership, allowing individuals to link their digital identity to their NFT holdings through verifiable credentials. Consequently, this linkage allows users to prove their claims of ownership across different platforms and metaverse spaces.
- The blockchain provides a transparent record of NFT ownership and transaction history. This proves authenticity and prevents counterfeiting or unauthorized duplication of digital assets.
- Web3’s interoperability features ensure that different virtual worlds, platforms, and applications within the metaverse can communicate seamlessly. This allows users to move their NFTs, assets, and data across other metaverse spaces and platforms, enhancing user experience.
- Web 3’s focus on user control and personalization extends to the metaverse. Users can define their experiences, interactions, and preferences in virtual environments. This leads to a more immersive and engaging metaverse experience tailored to individual preferences.
- Web 3’s decentralized finance (DeFi) and cryptocurrency ecosystems can extend to the metaverse, enabling new economic models within virtual worlds. Users can buy, sell, and trade virtual assets, services, and experiences using cryptocurrencies, creating vibrant economies within the metaverse.
Challenges in Web3 Identity Adoption
While Web3 identity has immense potential, there are key challenges to overcome for widespread adoption:
- Education and Awareness: The transition to Web3 identity requires users to understand the concepts of self-sovereign identity, verifiable credentials, and blockchain technology. Overcoming the learning curve and promoting awareness are crucial for the widespread adoption of this transformative model. A Yahoo Finance survey showed that only 24% of people knew about Web3, and 8% were very familiar with it.
- Standardization of Verifiable Credentials: To unlock the full potential of Web3 identity, we must standardize the formats and protocols for creating, sharing, and verifying verifiable credentials. This standardization ensures compatibility across different metaverse platforms and ecosystems.
- Regulatory considerations and legal frameworks: The regulatory landscape will evolve as the adoption of Web3 identity continues to expand. A collaborative effort among stakeholders, including governments, industry players, and the community, will play a pivotal role in shaping policies. This will foster a safe and vibrant metaverse.
The impact of Web3 identity on the metaverse and NFT ownership cannot be overstated. By enabling true digital ownership of NFTs through verifiable credentials, Web3 identity transforms how we engage with virtual assets, fostering trust, interoperability, and decentralization.
The combination of self-sovereign identity and verifiable credentials ushers in a new era of digital interactions where individuals hold the reins of their digital identities and assets. As the metaverse evolves, Web3 identity will play a critical role in shaping its course. This will offer users greater control over their digital presence and interactions.
Decentralization, being the central discussion of the next phase of the web, aligns with what Identity.com represents. One of our pursuits is a user-centric internet where users have control over their data. Another reason why Identity.com doesn’t take a back seat to contributing to this future via identity management systems and protocols. In fact, we are a part of the World Wide Web Consortium (W3C), the standards body for the World Wide Web.
Through our work, Identity.com is helping many businesses by giving their customers a hassle-free identity verification process. Our open-source ecosystem provides access to on-chain and secure identity verification solutions that improve the user experience and reduce onboarding friction through reusable and interoperable Gateway Passes. Therefore, if you’re interested in learning more about how we can help you with identity verification and general KYC processes, please don’t hesitate to get in touch.