Token economy
Crypto has made millions of dollars for a relatively small number of people, but the metaverse will make token economy concepts more mainstream. In particular, we will see the combination of Central Bank Digital Currencies (CBDCs) and the mechanisms of Decentralized Finance (DeFi) leading to 24/7 open markets.
Norway is one country already preparing for a tokenized infrastructure, and the Registry office has created an Ethereum blockchain-based platform to handle shareholder register transactions. A central finance institution in the country has also recently carried out a digital currency pilot using Ethereum blockchain-based tokens. In addition, with assistance from EY teams, Norway also established the world’s first tax and registry office in metaverse last year.
The metaverse could help bring about some financial benefits for all parties, too – for example, a CBDC could be programmable and prevent money laundering, which could help stabilize the flow of capital. Stablecoins will also disrupt the status quo in currencies by providing options depending on who you are dealing with, both within and beyond your ecosystem today.
New supply chain models
The token economy fits well into today’s supply chain models and will enable new developments such as greater visibility into the movement of goods, offering enhanced security, transparency and efficiencies for companies.
Visibility could also force changes in shipping practices from an Environmental, Social and Governance (ESG) perspective. One example might be automatic calculation and public knowledge of the carbon footprint created by the transport of goods. By entering data into an immutable blockchain solution, such as the EY-developed OpsChain ESG platform, businesses can report on CO2e positions and enhance emission transparency across the entire value chain.
ESG requirements are also expected to be enforced even more strictly by governments. Will you be allowed to ship an empty container in the future? The solution to this can be to use “zero-knowledge proofs” (ZKP) on a blockchain and fractionalize trading data. ZKPs allow you to decide which data is visible on a public blockchain, which makes it possible to ensure the privacy of confidential business data, while also facilitating collaboration between companies, including competitors. This will lead to new and innovative business models.
What’s next?
The metaverse and its underlying technologies will undoubtedly create some huge changes to business models. But perhaps the most important question is, how will the subcontracting levels change in response to metaverse business models?
In the classic version, a full supply chain involves dozens or hundreds of subcontractors outside the brand selling the product, all of whom need to be aligned to deliver value to the customer. This results in a diversified economy.
But in the metaverse, everything could be supplied by just one entity. Could we see the return of monopolistic business models? Or will it be moving into a decentralized structure?
Businesses should consider how all these different elements may affect future business in both the physical and virtual worlds.
Prepare for adoption
The most important message for every organization is: to be prepared to adopt the metaverse. In the long run, your business will not survive without it.
So, it’s important to take a Now, Next, Beyond approach. By doing what is possible now, you will be in a position to create the next – developing your organization’s approach and exploring opportunities, including partnering up with competitors to offer something new.
While doing this, you also need to imagine other possibilities beyond the horizon.
Lots will happen in the next two to three years, and in that time there will be many new tools and services to help you. But organizations should prepare for metaverse in many different ways – for example, audit committees, account teams and banking connections all have to be ready. And remember that all commercial activity in the metaverse will have tax and legal considerations that are still to be fully defined.
By embracing the potential of the metaverse now, organizations can keep pace with the coming changes to business models. And most importantly, have a stake in them too.
Authors:
Andrew Lowe, EY EMEIA Technology Go-to-Market Leader
Magnus Jones, EY Nordics Blockchain and Innovation Lead | Tax & Law Technology