JPMorgan, America’s largest bank, announced that it is the first lender to enter the metaverse, and opened a lounge in Decentraland – a virtual world built on blockchain technology.
The mainstream acceptance of non-fungible tokens has led to a remarkable rise in the metaverse. This is a place for immersive gaming, world-building, and entertainment. It is fueled by integrated commerce apps. Electronics giant Samsung opened a New York store in Decentraland. In November, Barbados created a metaverse embassy also in Decentraland.
In February 2022, JPMorgan unveiled the Onyx lounge, a suite of Ethereum-based services that the bank has authorized. At the same time, JPMorgan published a paper that explores how businesses can discover opportunities in the metaverse.
Christine Moy, JPMorgan’s head for crypto and the metaverse, stated in an email that “there is a lot of client interest to learn about the metaverse.” Our white paper was created to help clients cut through all the noise and highlight the current reality and the next steps in technology, identity, and workforce to maximise the potential of our lives in the metaverse.
JPMorgan starts its evaluation of “metanomics” by noting that the average cost of a parcel of virtual land has doubled in 2021’s second half. It jumped from $6,000 in June, to $12,000 in December, across four major Web 3 metaverse sites: Decentraland (The Sandbox), Somnium Space, and Cryptovoxels.
According to the JPMorgan report, “The virtual real estate market could see services similar to those in the physical world such as credit and mortgages, and rental agreements.” The report also stated that decentralized finance (DeFi) and collateral management could come into play. This could be done by decentralized autonomous organisations (DAO) rather than traditional finance central entities.
The report also stated that work in the metaverse is profitable. It cites a variety of entertainment providers as well as apps such as RTFKT, which was recently acquired by Nike. The bank also predicted that advertising spending will be a major part of the future.
JPMorgan’s paper tried to show the difference between the metaverse hype and reality. It stated that there are many areas that need improvement. These areas include the user experience, performance and commercial infrastructure.
“We believe the existing virtual gaming landscape (each virtual world with its own population, GDP, in-game currency and digital assets) has elements that parallel the existing global economy. This is where our long-standing core competencies in cross-border payments, foreign exchange, financial assets creation, trading and safekeeping, in addition to our at-scale consumer foothold, can play a major role in the metaverse.”