Blockchain 101: The Metaverse Backbone

Grand Bazaar

Ecommerce changed the brick & mortar store paradigm. Best case, the traditional storefront is a convenience or extended distribution center, worst case it has simply disappeared. Ecommerce is a significant disruption on how goods and services are exchanged, and how brands are created. Web 3.0, or the “internet of the future,” promises to be the next disruption of how we interact both personally and professionally in the Metaverse. Privacy, security, and ownership concerns are key design considerations in how Web 3.0 is conceived. No one will be comfortable interacting, transacting, and sharing data in virtual worlds unless these concerns are addressed. 

As interactions and user communities form across multiple virtual worlds, the Metaverse’s potential of becoming the virtual Grand Bazaar will rely on the ability to track transactions and ownership of digital assets. Blockchain technologies form the backbone of the metaverse and are the one of the three key elements (blockchain, NFT’s and cryptocurrency) that differentiate Web 3.0 from today’s web2 internet implementation. With blockchain, the Metaverse will make the Mall of America, over 520 stores, look like the corner general store of the 1890’s. 

What is the Blockchain?

Blockchain supports the operations of a user- and community-based ecosystem in a virtual world of digital assets and data. Blockchain permanently captures transactions in a decentralized public data base called a ledger. The blockchain is decentralized in that each transaction is sent to all computers accessing the blockchain. With the ledger distributed, it is protected from tampering and external control. 

Blockchain was originally part of the cryptocurrency, Bitcoin, but has other uses including

  • Banking – Faster payment with direct settlement and better tracking
  • Education – Tamperproof credentials: transcripts, diplomas, certificates
  • Real Estate – Property Registries: replacing paper with digital assets for ownership and tracking
  • Supply Chain – Transparency from raw materials to customer’ doorstep 
  • Space Technology – Space Traffic management of orbital assets and planned maneuvers
  • Retail – Product Tracking guaranteeing product authenticity, reducing counterfeit exposure

Ethereum is a blockchain that is used as the backbone for virtual worlds: Cryptovoxesls, Decentraland and Somnium Space.

Basic Blockchain Operation

For transactions tracked with blockchain, the first step is to capture all the transaction information. Transactions are grouped into a block, like a page in an accounting ledger. Each block is time stamped. The time stamp confirms the right sequence for blocks entering the blockchain and that participants have the latest information. A hash (unique character string) which cryptographically calculated from the data in the block is developed for security purposes. The hash from one block goes into the next block and is part of the hash calculation for that block. This is how blockchain builds a trace into every block. Alarms are raised if there is an attempt to alter a previous block. If tampering is attempted there will be a mismatch of the hash of the altered block and the following block indicating an alteration in the chain. Since the blockchain is public, everyone has a copy, any tampering will be visible. When the hashes match, members of the chain know that their transaction has completed successfully and will be able to track its history. 


Decentralization is one the seven layers of the metaverse. Blockchain is one of the tools that are in this layer for planning and decision-making without central control. Although there will be technology giants (Microsoft, Meta, Apple) who will operate in the metaverse, there are other visionaries are developing their own virtual worlds. Maximizing the Metaverse’s potential these virtual worlds need to be interoperable. For virtual worlds’ interoperation will require blockchain to be track and prove ownership in multiple worlds. 

The Beginning

Metaverse and blockchain have a synergy that reinforces their development and acceptance. Together they will support the C change in how organizations and individuals work together. Tracking transaction history and ownership is important both in the virtual world and the use of cryptocurrency in both the metaverse and the real world. Security concerns will increase as the number of transactions within virtual worlds and across the Metaverse accelerate. There significant risks for fraud, phishing, and rug pulling especially if you are a novice. Managing these risks will be important for brands and original owners of digital assets to properly define the terms of ownership, use, governance and derivative works. Blockchain is metaverse’s backbone in controlling and managing what is bought and sold. The increased commerce will require blockchain to track the provenance of a digital asset, transactions and validate ownership. Everyone needs to be prepared to operate outside of their comfort zone of existing manual and automated processes. 

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