When the avatar makes the money
The internet has completely revolutionized how we do business. But these digital business models are a thing of the past. With the advent of blockchain technology, web3 offers even more opportunities for businesses to thrive in the virtual world. In this blog post, we will explore eight different business models that you can start today in the web3 world. Each of these businesses has a lot of potential, so don't miss out!
Until a few years ago, online commercialization went fairly traditional ways: companies and entrepreneurs used the internet to advertise their services online or to sell their products in webshops. In the meantime, Web3 has added a new dimension to the internet, bringing forth a massive expansion of business opportunities for companies.
“International groups have been first to utilize the new business models of Web3,” digitalization expert Martin Giesswein tells us. However, it is not just Nike, Sony, Microsoft, or FIFA who stand to gain unforeseen opportunities to make money through Web3. “On principle, Web3 is open to all businesses, but it will benefit some more than others. But no company can afford not to think long and hard about the topic,” Konrad Holleis, Head of Custom Programs at the WU Executive Academy, says, stressing the subject’s importance.
This is why the Executive Academy has developed a new online course on the topic in cooperation with Martin Giesswein. “Web3 and the Metaverse” is targeted at executives and entrepreneurs and will launch in April 2023. Together with guest lecturers, attorney-at-law Tullia Veronesi of Schoenherr Attorneys at Law, and Heinz Popovic, CEO of WINWEST, Martin Giesswein will offer participants a compact overview of the entrepreneurial opportunities and legal framework conditions of Web3.
In the past years, a decentralized version of today’s internet was created with Web3, opening the doors to gigantic virtual worlds (metaverses) that allow a more intense experience than a screen does. The term Web3 is a catch-all term for smart, digital parallel worlds and the technologies behind them. Blockchain technology is playing a key role in all of this. Metaverses can be considered sub-categories of Web3. These virtual realities create a whole new world that users can explore through their avatars, purchasing services, consumer goods, and experiences on the way.
Thanks to such technological possibilities, Web3 offers a myriad of business opportunities to companies that go beyond the “traditional” digital business models, as they move to and sell their products in the virtual and crypto-worlds. Read on for the eight best business models in Web3:
Modern hunter-gatherers will rejoice in the digital hunting grounds of Web3, especially when it comes to purchasing or trading unique digital goods (non-fungible tokens, NFTs).
It means that you own, e.g., a valuable sports car or an expensive work of art in real life and, simultaneously, its digital copy as an NFT. The NFT will serve as proof of ownership on the one hand and as an exhibition piece in the metaverse on the other hand. This way, you will have a unique digital specimen which you could also sell to generate profits.
Trading and gambling with these digital goods has become another popular pastime. The Web3 trade model is special because it doesn’t require an intermediary anymore: the legal “title” is automatically transferred to the blockchain and the transaction becomes visible to all participants. Konrad Holleis points to the company cryptoWine as an interesting example: “Trade & drink is a platform where quality wines from Austria are tokenized so that they can be traded online. They are sold or auctioned off and then continue to be stored in the Austrian province of Burgenland. When they reach maturity, you can have them delivered,” Holleis explains.
Until that is the case, the wine can be turned into hard cash: the wine NFTs that were bought or purchased in an auction can be traded for a profit or gifted to another person by their new owners.
Marketing is everything – especially in Web3. The manufacturers of brand products aim to digitalize their range to turn a profit also in the metaverses. “If you buy a certain Nike sports shoe in real life, you will also receive a digital version for your avatar in the Web3 game ‘Roblux’ (real-to-virtual). And it also works the other way around (virtual-to-real): McDonald’s has recently secured patents that will make it possible in the near future to order a burger in the metaverse and have an actual burger delivered to your home. That particular bandwagon was jumped on by the Vienna Tourist Board, which ventured a collaboration with the Freud Museum to interact with potential international tourists: the ‘Get me out, Freud’ campaign has a Sigmund Freud avatar travel the metaverse, where he convinces players to take a break from the virtual world,” Martin Giesswein recounts. Potential tourists talking to the modern-age Freud at the main square of the Decentraland metaverse are eligible to win a trip to Vienna.
As you probably know, you need an avatar, something akin to a digital twin, to move through the virtual metaverse and computer-game world. These avatars, however, don’t have to bear any physical resemblance to you. You can pay to receive a completely new look (a so-called skin) or simply a new hairstyle or garment.
The Snap app even lets you buy digital jewelry designed by the Austrian start-up Jevels.
Even property and houses can be bought in Web3 – on the premises of the online worlds in the metaverses. Last year, the sale of virtual property generated revenues in the amount of 500 million euros. In 2022, this number could even top the 1-billion-euro threshold. The virtual plots are offered as NFTs and can of course be traded. To increase their value, the offer is strictly limited. Decentraland, for example, has parceled out no more than 90,000 plots.
In order to add a transaction to the blockchain, the help of so-called miners is enlisted. These are people or companies that complete these writing tasks in exchange for a “gas fee” (paid in cryptocurrency). The amount of these gas fees differs depending on the blockchain and frequency of transaction. In the past, diligent miners could make a fortune through crypto-mining, i.e., mining for or producing crypto-tokens. By validating the transactions, the miner adds new blocks to the blockchain.
Of the various blockchains that exist, many have ceased to use the consensus algorithm that operates on the proof-of-work method of miners described in business model number 6. Instead, they use proof of stake, which is based on a consensus of the token owners of the blockchain in question, to guarantee that the transactions have been validated correctly. “If you use your tokens for this, you will be rewarded for putting your capital to work. This kind of staking resembles a modern-day interest-rate business,” Martin Giesswein explains.
Computer games are another way to make a lot of money: “Metaverse operators build self-contained economies and distribute tokens or bonuses to the players,” Konrad Holleis says.
The gaming platform Roblox is just one example: “You can prepare food in a digital restaurant and deliver it to other avatars. You can then use the money you earn this way to purchase accessories or skins,” Giesswein explains. The Web3 game “Axies Infinity” takes this a step further: you can keep digital animals, raise them Tamagotchi-style, and then sell them at a profit. The animals might not be real but the revenues made this way can be turned into very real money.
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