Top Uses of blockchain in Virtual Reality

Blockchain and XR are inextricably linked technologies. The unique properties of blockchain make it ideal for carrying out the transactions that make VR what it is today, and the distributed nature and one-of-a-kind qualities of blockchains present promising new opportunities for the creation, distribution, and enjoyment of games.

As an memory-aid, blockchain is a decentralised, distributed ledger that is kept in sync by a network of computers. Their most well-known application is in cryptocurrency systems, where they play a critical role in providing a decentralised and secure ledger of transactions. Data in any sector can be made immutable (effectively unchangeable in any way or form) with the help of blockchains. Since the blocks cannot be altered, the only place where trust is required is when initial data is input by a human or computer program. The key points with a blockchain are:

• A blockchain is a type of database, but unlike traditional databases, which store data in a linear fashion, blockchains store data in blocks linked together by encryption.
• A blockchain can be used to record many various kinds of data, but thus far it has been put to use mostly as a ledger for financial dealings.
• Since blockchain is decentralised, users keep control collectively rather than giving it to a central authority.
• Data entered into a decentralised blockchain cannot be changed after it has been recorded. For example, all Bitcoin transactions are publicly accessible and permanently stored.

These factors make blockchain currencies hugely important in XR, and while both technologies are relatively new and still evolving, there are currently a number of uses for blockchain transactions in the virtual world. While the list might change in the future, the present top uses for the technology in the context of XR include:

• As a virtual currency. Cryptocurrencies have been big news for a couple of years now, with the newspapers filling column inches with stories of the vast profits that could be made and sob-stories of how people have lost fortunes by misplacing a USB stick filled with Bitcoin. Typical cryptocurrencies include Ethereum, Litecoin, Ripple, and, of course, Bitcoin. In addition to providing a more stable and trustworthy virtual money system, cryptocurrencies can enable secure, transparent, and decentralised transactions for virtual reality business.

• Virtual property management. With virtual spaces such as Decentraland and Sandbox growing in popularity, and virtual land now for sale and readily available, Blockchain technology can be used to facilitate the ownership and selling of virtual property, which is becoming increasingly important as virtual worlds grow in size. This paves the way for users to construct and own real estate in these simulated worlds, where it may be used to generate income. While virtual land may sound to be a bit of a misnomer, it is an area of growth as VR users realise that virtual land and buildings are going to become increasingly profitable as more users join these virtual realms. Cryptocurrency is essential to the buying and selling of virtual properties.

• Operation of decentralised autonomous organisations. Essential to the proper management of virtual spaces, blockchain-operated decentralised autonomous organisations (or DAO’s) ensure that governance and operational decision making is kept within the closed group and cannot be infiltrated by unauthorised – and what they really mean by that is Government or some other recognised authority – outsiders who may seek to control the virtual area for profit or simply because they fear not being in control. While the internet as it stands is fairly free, there are still some legislative tools in place to prevent private users really having control. With blockchain technology being the scaffolding behind the structure of VR worlds, the notion is that it will be completely free, self-organising, and under the control of actual users. Quite where that will eventually lead us is anyone’s guess, but it is an exciting concept to start with.

• Secure purchases and marketplaces. Few would deny that the internet has become a dangerous place for purchases, as there are so many possibilities for fraud in card transactions. The use of blockchain in VR environments neatly sidesteps this whole issue by being an encrypted and therefore secure means of payment. Obviously, blockchain could be used on the normal internet too, but for the vast majority of casual users, it represents a leap in technology that many would not want to embrace. The idea of cryptocurrencies gives many casual internet users the shivers – mostly because they have read Bitcoin horror stories in the tabloid press. There is also the question of the infrastructure required; VR world has been designed around blockchain, but getting Amazon or your online supermarket to switch solely to using them would be a big ask. Because VR has developed alongside blockchain, it is likely to be fundamentally secure right from the start.

• It enables cross-platform interoperability. By decentralising VR worlds, were it not for the central structure of blockchain, then users may have found it difficult to access different virtual worlds and easily skip between them. But by having all worlds operate via blockchain technology, it becomes easy to access all of the different worlds and operate in them. This is essential for the decentralised nature of VR and will be the most powerful tool in the future development of VR worlds.

• Effective rights management. The issue of rights management in VR environments would be a huge problem without the support of blockchain. As it stands, standardising digital rights in the metaverse presents a number of challenges. To begin, it’s important to remember that every area of the Metaverse will follow the guidelines set by the people who build it and the providers of digital material. In a virtual reality setting, for instance, an avatar cannot move freely or interact with other users without the intervention of a programmer. It may be challenging to regulate the developer’s ownership of the stuff they’ve developed. People’s freedom in this setting may vary greatly depending on the direction the metaverse takes. Instead of being a single virtual location, the Metaverse is a network of disparate, independently developed content. Therefore, each “iteration” of the metaverse may take a different tack when it comes to addressing issues like human rights, autonomy, and consumer control. With the traceability of blockchain assured, digital rights become much easier to handle.

Additionally, brands and advertisers may control which users see their advertisements in VR by leveraging smart contracts built on the blockchain principle to do so. This, in turn, can boost the advertising’ relevancy and, ultimately, the advertisers’ Return on Investment (ROI). Blockchain technology can potentially be used to monitor and confirm the results of advertising campaigns. To measure the success of virtual reality ads, advertisers can record user interactions with the ads on a blockchain. The relationship between the brand and the customer can benefit from this openness, and it is likely to lead to far more relevant advertising, modelled on the needs and desires of each user.

The metaverse has learnt lessons from Web 2.0 and has new tools in blockchain to ensure that many of the problems of the past are not repeated. In blockchain-driven transactions we can hope to get a stronger, easier to handle internet that is truly in the hands of those who create it, rather than big corporations who are just looking at profit rather than fairness and transparency.