Bitcoin, a digital currency that has shaped financial and digital landscapes since its inception, is witnessing a renaissance as a new asset type, 'Ordinals', propelling it into the limelight of the burgeoning metaverse.
According to Yat Siu, co-founder and executive chairman of Animoca Brands Corporation Ltd, the introduction of Ordinals to Bitcoin is contributing to the decentralised currency's continued evolution.
Ordinals, described as assets "inscribed" on the smallest denomination of Bitcoin, are effectively, the network's equivalent of Non-Fungible Tokens (NFTs).
The concept emerged in the Ethereum network five years ago when CryptoKitties led the charge in digital ownership and is now making waves in the Bitcoin community.
"Ordinals allow Bitcoin, which is the most valuable crypto community by market cap, to store not just digital value, but also digital culture," stated Siu.
Cultural markers
Digital culture and ownership are integral to both the real-world and digital economies.
While Bitcoin is a store of value, Ordinals function as stores of culture, disrupting the traditional notion of asset ownership.
With digital lives becoming as valuable and important as physical ones, true digital ownership facilitated by NFTs and now Ordinals permits digital items to carry personal meaning, thus becoming cultural markers.
As a result, the consideration of culture and digital ownership in the metaverse is crucial.
"Ownership gives us economic freedom over something, allowing us to transact and use it as we please. This freedom helps create network effects related to that ownership," explained Siu.
These network effects extend beyond the item's practical utility.
#Bitcoin having its own #crypto #culture moment with #OrdinalsNFT just like #Ethereum did with #NFTs 5 years ago underscores the importance of how culture will drive mass adoption into the #openmetaverse #web3 @OnChainMonkey @animocabrands #NFT #blockchain see my article at… pic.twitter.com/RYLNeRpYNS— Yat Siu (@ysiu) July 13, 2023
Similar to fashion choices in physical world
The cultural value attached to an item can contribute to personal identity and community belonging, thus enhancing the item's worth, a reality reflected in high-value physical items such as the Birkin bag or high-end fashion, as well as in the digital realm.
According to a report by Credence Research, the virtual goods market is expected to exceed US$200 billion by 2028.
This is supported by users worldwide who already spend billions on virtual goods for Web2 video games and virtual worlds.
Digital items in these spaces do not offer specific utility but serve as cultural and identity markers, similar to fashion choices in the physical world.
Siu emphasizes that culture is a key driver of real-world economies and will have a similar impact on the metaverse.
"Culture, in real-world terms, represents one of the major total value locked (TVL) of any economy. The same phenomenon of culture as TVL is already occurring in virtual worlds," said Siu.
Promising future
Despite economic hurdles, NFT sales totalled $4.7 billion in the first quarter of 2023. Moreover, digital stores of culture or NFTs generated in excess of $24 billion in 2022, with 90% or more of that value shared with creators and participants.
This growth suggests a promising future for digital culture and ownership in the metaverse.
The McKinsey research points out that the metaverse has the potential to generate US$5 trillion in value by 2030.
As Web3 continues to become more established, accessible, and popular, the impact of culture will manifest itself in increasingly powerful ways in the metaverse, further driving demand, consumption, and utility in the age of digital ownership.
"As we truly enter the age of digital ownership, we expect to see continuous innovation and growth in the open metaverse driven by culture and ownership," concluded Siu.