Read the first part of this series here: Web3: The Web’s Next Frontier
The future of digital experiences and economies has changed since concepts such as the metaverse, Artificial Intelligence (AI), and cryptocurrency became mainstream.The metaverse offers an immersive virtual world that exists alongside the physical world, offering opportunities for social interaction, entertainment, and commerce.Additionally, AI offers the ability to copy human intelligence and automate complex tasks, making it an essential part of today’s digital world.Meanwhile, Cryptocurrency has challenged traditional financial systems, introducing decentralized and secure methods of transactions.
Of this 3-part series, part 1 introduced the concepts of Web3 and the metaverse along with investing opportunities in these spaces.This part covers the metaverse, AI, cryptocurrency, and blockchain technologies and how these technologies can work together in addition to the areas investors can focus on.
Convergence of technologies Just as AI and metaverses are part of Web3, Web3 also utilizes virtual reality (VR) or augmented reality (AR) technology.
As both operate on a decentralized model powered by blockchains, they can be interoperable.This means the exchange of digital assets and the use of decentralized applications (dApps) can occur across multiple platforms.
These decentralized applications (dApps) are anticipated to be a core part of Web3 solutions for implementing functionalities that use machine learning.
Their application is quite observable in NFTs, where future NFTs are expected to transition from static images to dynamic artifacts exhibiting intelligent behavior.
But what happens if we combine all three of these technologies? At the 2023 London Blockchain Conference , Robert Rice, the CEO of Transmira – the first XR metaverse platform, suggested the idea of convergence of the metaverse with Artificial Intelligence (AI) and blockchain.
According to him, these three technologies can deliver promising results when combined – accelerating development and improving security.
Unlike Web3, standalone metaverses are not open source.These are built by various companies and organizations, such as Facebook’s Metaverse, Decentraland, and The Sandbox.
However, for the metaverse to become a reality that everyone has access to, a lot needs to improve, especially in terms of infrastructure.According to Citibank, only 25% of the global population will have access to 5G by 2025.For everyone to access the metaverse, the current state of infrastructure isn’t sufficient.
The type of currency used in the current metaverses is mainly cryptocurrency, specifically Ethereum.However, future metaverses can incorporate other payment forms such as central bank digital currencies (CBDCs) and even traditional forms of payment.
Real-life applications If combined, blockchain can help AI improve data integrity to build a transparent data economy.AI has the power to read large amounts of data within seconds and it can introduce a new level of intelligence for blockchain-based technologies.
The application of both technologies is vast.
AI models executed on blockchain networks can improve transactions, recall orders, place stock orders based on past data, and improve customer experience.
Using AI, the healthcare industry can access large amounts of patient data.When this data is placed on the blockchain, it can stay secure from any breaches.
In the pharmaceutical industry, blockchain and AI can accelerate drug trials and improve patient tracking and trial data collection.
In supply chain management, blockchain can assist with monitoring imported and exported goods.The technology can detect and prevent the transportation of illegal drugs and fake medical devices.
Blockchain also has a lot of potential in the metaverse.It can improve everything data-related, including data gathering, data storage, and data interoperability across various platforms.With an immutable decentralized record of all transactions, blockchain can make all crypto transactions transparent in the metaverse.
Companies getting a head start IBM ( IBM ) has built a strong blockchain infrastructure – one of its contributions to the larger Web3 environment.
IBM’s blockchain allows companies to build their own blockchain ecosystem for supply chain management.
The company has also partnered with others such as Walmart ( WMT ), Bank of Montreal (BMO), CaixaBank, and the United Bank of Switzerland (UBS) to lower costs and improve efficiency through blockchain.IBM’s Q2 earnings report showed a revenue decline of 0.4% year over year, with a 0.4% rise on constant currency terms.The adjusted EPS also declined by 6%.
The cloud provides a key technology to deliver secure Web3 services, and while IBM is a major player in the traditional cloud market, it’s still behind competitors Amazon, Microsoft, and Google in this area.However, its hybrid cloud and AI business are still expanding .
Red Hat, the open hybrid cloud technology IBM acquired in 2019, saw a revenue increase of 11% year over year in the second quarter.As its hybrid cloud services continue to grow to analyze large amounts of data, IBM can focus on launching more AI tools to help companies reach efficiency faster.
The stock is currently trading at $138.94 and its one-year target price is $144.
Roblox ( RBLX ) – the online gaming platform is testing generative AI in its metaverse platforms .Roblox CTO Daniel Sturman believes that generative AI tools can help all users create unique content regardless of their familiarity with the Roblox Studio and other 3D content creation tools.
Several tailwinds could potentially pique investors’ interest in this stock.Firstly, the company’s Q1 revenue was reported at $655 million, an increase of 22% year over year.In Q1, through bookings only, Roblox generated $774 million – a 23% increase year over year.
Roblox is also utilizing Meta’s VR product, the Meta Quest, in its platform.This collaboration with a tech giant can turn the odds in its favor.
While the lucrative numbers aren’t enough for the valuation benchmark, looking at other factors such as AI initiatives, collaboration with Meta, and increased engagement on the platform can improve its userbase and potentially bring a massive audience to the platform in the coming years.
AI cryptocurrencies – currency that powers AI blockchains – has made an entryway into the mainstream sector as well.Dozens of companies are utilizing AI crypto projects on their platforms.Consider The Graph ( GRT ), an Ethereum-based cryptocurrency that can index data from Ethereum, IPFS, and PoA networks.The coin was once at an all-time high of $2.88.
Today its price is at $0.12.While the coin may have a lot of potential, as with any crypto stock, investing is risky.
Another crypto platform utilizing AI and machine learning is Fetch.ai ( FET ).The startup recently announced $40 million in funding to provide monetization and utilize other AI tools on the platform.FET is currently trading at 0.22 – a sharp decline from its all-time high price of $1.19.
Crypto winter isn’t over and most coins are struggling to stay above water.Until metaverses and cryptocurrencies are regulated, such challenges will continue.
However, in terms of decentralization, companies that continue to implement AI and blockchain technologies may see a reward at the end of the tunnel.Investors can start testing the waters in Web3 but avoid making major investments.
Stay tuned for part 3 of this series that will focus on end-user experiences with Web3 and as always, pointers on where to invest.
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