NFTs – identity in the metaverse

Even in familiar physical and online worlds, identity is becoming increasingly difficult to safeguard. The proliferation of applications to manage identity and prevent identity theft attest to the many ways in which one’s very sense of self can be subverted by digital ambiguity.

Now the creation of highly-developed metaverses – evolving from familiar multiplayer gaming to immersive virtual 3D worlds – brings a higher degree of complication to the challenge of securing identity. As metaverses fast come to feel increasingly like the real world – driven by the exponential growth of 5G and virtual reality technology – more of life, for gamers and non-gamers alike, will be spent inhabiting their complex worlds.

How then can we establish metaverse identity (as surely as genetic code confirms biological identity) that will rapidly evolve from primitive pixelated avatars into fully-fledged digital twins and alter-egos, with all of the trappings of inner life?

The answer may lie in non-fungible tokens (NFTs). These blockchain-based records of digital ownership have taken the world by storm due to the multi-million dollar sales of digital art, memes and playing cards with which they have become synonymous.

Yet this year’s record US$69.3m sale of a digital artwork only scratches the surface of what makes NFTs a big deal. Their true value lies in enabling unambiguous, decentralised ownership of non-physical assets such as music, online property, memes, gaming accessories – and one day identity itself.

If a digital concert ticket can be programmed with unique ownership rights and stored in blockchain, so too can a virtual identity. To be sure, no technology can perfectly protect identity (NFT encryption keys might be stolen, for example). But the robustness of blockchain security, and the platform fluidity enabled by blockchain decentralisation, promise to transform the metaverse experience, by enabling established identities that can move freely between immersive virtual worlds.

“The NFT will enable people to demonstrate and have an identity across platforms that they can clearly own and use on different ecosystems,” says Eric Anziani, COO of Crypto.com, which has an NFT platform alongside other products. “The fact that even the big digital platforms are starting to use that as an element to demonstrate your identity is very powerful.”

NFT identity unleashed in the open-loop metaverse

The implications of enabling a stable and secure digital identity in virtual worlds is enormous. It promises to give people the freedom to build genuine societies in the metaverse – with social, economic, even political interaction, based on recognised norms we enjoy in everyday life.

In fact, NFT-secured virtual selves may in many ways become more secure than identities in everyday life. Passwords can be stolen, biometrics hacked, passports forged. Identity secured in the blockchain is more difficult to fake and steal.

One of the most important implications of enabling identity in the metaverse is allowing people to migrate freely – as the same individual – between different virtual worlds that hold vastly different characteristics, cultures and rules of the game.

The transformative value of NFTs may reside in enabling humankind’s seamless ‘commute’ between physical and virtual domains – and from metaverse to metaverse – by establishing and securing each individual digital identity.

It’s what Anziani calls moving from a “closed-loop” virtual environment (such as a gaming or social platform) to an “open-loop” one.

“What NFT provides is abstracting the asset from the closed-loop environment, making it open-loop, and a lot more fluid and free,” he says. “That is very powerful. And we're just touching the surface today on the capabilities that can be built on top of that. Today it’s trading assets such as gaming items; one day it will give us free movement in the metaverse.”

There’s another potentially exciting dimension of identity in the metaverse. We tend to want to see identity as stable and uniform. Yet NFTs conversely open intriguing possibilities of subverting identity – for fun and discovery – in ways that nonetheless remain safe and secure.

Might we mint multiple identities? Trade aspects of our identity for fun? Rent an identity for a weekend? NFTs open the door to such possibilities.

From identity to community in a free metaverse

Today NFTs are already inspiring communities that converge around perhaps random-seeming projects, such as generating PFP avatars or even strange text files. These communities can grow into the tens of thousands, with members collecting items for social capital – and trading them for often astonishing sums.

One such scheme, called the Loot Project, transforms lists of gaming adventurer items (such as ‘short sword’ and ‘divine slippers’) into collectibles ranked by rarity – with one recently trading for US$800,000.

According to Anziani, such projects may represent the early stages of more robust and enduring community building in the metaverse – underwritten by NFT-enabled identities. “Being part of the community and building value is going to be more and more critical,” he says.

Such community building will be important, he adds, as dominant social networking platforms move into the metaverse space – aiming to impose their own closed-loop worlds (controlling data, behaviour and membership). Instead, he says, user-created metaverses enabled by NFTs may help return cyberspace to an earlier era of freedom.

“What NFT as a tool within the metaverse can open up is a kind of social network web 3.0. It’s really giving back the network to the individual, allowing more freedom, and less centralized oversight,” Anziani explains.

He adds that big tech players, building worlds at scale, may win early metaverse followings. With time, he predicts the following future: “People will migrate to open-loop metaverses that are more interoperable, and have the mindset of letting people use identity and assets freely, in different environments and for different purposes – all enabled by NFTs.”