VCs are preparing fintechs to translate Web 1.0 into the metaverse by enforcing contracts, storing, sending and investing currency as well as extending credit, writes QED Investors’ Yusuf Ozdalga.
The term “Metaverse” was first coined by Neal Stephenson in his cyberpunk style sci-fi book Snow Crash. As virtual avatars congregate in the metaverse, a lot of the action is centred around a hundred-meter-wide boulevard simply named “the Street”. The coolest place to hang out on the Street is called the Black Sun – but interestingly the book makes no mention of a bank building, or even a mere bank branch on the Street.
As every big tech company from Meta to Microsoft are falling over themselves to stake out territory in the twenty-first century version of the metaverse, it is interesting that relatively few banks have made a move to become the First Bank of Metaverse (let’s call this bank the “BofM” for short).
Given how fast our society is evolving, it will not be a surprise to see such a financial institution come into existence in our lifetimes. But what would the BofM look like? What would be the key attributes for success?
Speaking broadly, we can say that there are some attributes of traditional financial institutions that the BofM would have to retain, and also some new and unique skills it would need to have by virtue of operating in the metaverse.
Let’s look at the traditional skills it would need first. These, in a sense, are the classic attributes of any financial institution, and arguably these have changed relatively little over the ages since the Sumerians first invented lending and Hammurabi became the first regulator on record in human history.
In no particular order of importance, a successful BofM would have to be able to move money, store money, lend money, and invest money.
To do all these things it would need to have the trust of the consumers that use it, so it would need a strong brand. It would also need regulatory legitimacy, in the long run, hence it would need to be on the right side of the law, so to speak.