Researchers at the Bank of England (BoE) have warned that widespread use of “Metaverse” virtual currencies could threaten international monetary order. One of the most talked-about aspects of the metaverse notion ever since its beginnings is how people will conduct commerce.
Several groups, meanwhile, think cryptocurrency will dominate the digital economy. Some academics, however, think this is bad for the economy around the world.
There is a risk of economic instability due to the use of cryptocurrencies in the metaverse.
Teresa Cascino and Owen Lock, two researchers at the BoE, think that crypto use will increase dramatically in the metaverse. The world’s economy’s ability to maintain its financial stability would be threatened as a result.
There is a high volume of everyday digital transactions, which could explain this. Decreases in the value of digital currencies may also have knock-on effects on traditional monetary systems.
The researchers found that consumer protection mechanisms were essential to the successful operation of a virtual financial system. This is done to stop online scams and other forms of online crime.
Cascino and Lock think that users would invest more time and money in the metaverse under regular conditions. Consumers would have more time for recreation, socializing, finding work, and purchasing goods and services.
On the other hand, some families choose to keep a portion of their savings in cryptocurrency. This will make making purchases in the metaverse much simpler.
For this reason, many businesses would have to accept cryptocurrency as a form of payment. Additionally, the company may offer crypto assets for sale as NFTs.
The researchers believe this would lead to a rise in cryptocurrency holdings by non-banking entities in the metaverse. Because of this, making a payment is simple.
Both Studies Urge Rules to Protect Against Dangers, According to Researchers
It’s also possible that certain businesses that specialize in crypto-lending will try to cash in on the trend, which might spark yet another crisis. Even banks might get in on the action by acting as digital asset custodians.
When this happens, businesses and individuals may both lose money if the value of digital currencies drops. Furthermore, it may cause large-scale cryptocurrency sales to repay loans or satisfy consumer demand.
As a result, both officials have advocated for more industry oversight. Threats associated with crypto use in the metaverse should be addressed by this legislation.
Big names in business like Meta, Microsoft, and Samsung are among the many that have placed bets on the future of the metaverse. The concept of the metaverse, however, is not without its critics.
One of these is the possibility of several tokens vs. a unified currency in the metaverse. Exactly who would have authority over and regulate actions within the virtual world is another open subject.
Cascino and Lock claim that the workings of the metaverse are a mystery. Yet, given the variety of possibilities, their worst nightmares might come true.