Digital Transformation and New Approaches in Trade, Economics, Finance and Banking

1. Introduction

The emerging innovations in the field of computers have played an important role in daily life by changing and strengthening the interaction, communication and social interaction between people. At this point, we can list the mentioned technological transformation as the emergence of personal computers first, then the internet and finally the emergence of mobile devices. As the fourth wave, three-dimensional technologies such as virtual reality (Virtyal Reality-VR) and augmented reality (Augmented Reality-AR) have emerged. As a matter of fact, this latest wave has led to the emergence of a paradigm that will transform fields such as education, work and entertainment. The name of this new paradigm is Metaverse. Meta means after (post) while verse means universe (universe). So the word Metaverse means post-reality universe (Mystakidis, 2022: 486).

Some definitions are for the next stage of the internet to be metaverse (Moynihan et al., 2022). Or Metaverse is the next phase of digital development. In the metaverse world, that is, in the three-dimensional virtual world (immersive virtual world), we will be able to visit shopping malls, drive in the city and ←13 | 14→meet our friends in cafes. The first experience of the metaverse universe took place in online games with multiplayer (Financial Times, 2022). Although it seems absurd at first glance in the metaverse world, we have witnessed people proudly expressing their plans to buy land and build houses. On the other hand, we also witnessed them going to concerts with their virtual friends via avatars (Ezrati, 2022).

The pandemic process is very important in the development of the metaverse universe. If you think that the young people who stay at home during the pandemic stay away from social activities such as meeting, playing games, and having a birthday party, you are making a big mistake. For instance, Virtual online gaming platforms such as Roblox have become areas where young people meet and socialise. As a matter of fact, the value of this company, which has over 164 million members (one out of every two children under the age of 16 is a Roblox user in the USA), has increased from 4 billion to 29.5 billion dollars. Here Roblox is part of the metaverse or virtual world (Doko, 2022).

Metaverse is a virtual world parallel to the real physical world we live in. It is a concept that is well known to those who are interested in virtual and augmented reality and science fiction fans, but is unfamiliar to the masses. With Facebook’s decision to brand itself as a commodity in October, it suddenly became an agenda. Metaverse is described by many as the next phase of the internet. This virtual universe has the potential to bring about a significant part of the possibilities offered by the real universe we live in, and even more. Many technology giants have already started working on their own metaverses. Unity Software, Microsoft, Nvidia and Meta are among the companies investing in this space. The new name of the Facebook company is also of interest in this field. As a matter of fact, it is possible to evaluate Facebook’s acquisition of the Oculus company, which previously produced virtual reality devices, in this context (Doko, 2022). As a matter of fact, here, besides the personal computer, virtual and augmented reality devices entered into this virtual universe. Thus, one has the opportunity to experience other people or virtual objects directly with his five senses. The metaverse and the real world began to be so aligned that there are even churches in service in the metaverse environment (Kuş, 2021: 2).

There is no general definition of Metaverse that everyone accepts. It is stated that most definitions include the combination of physical and extended reality (XR) (Sudan et al., 2022).

The popularity of the word metaverse has increased in the past time period. It is possible to detect this increase from Google Trend reports. As a matter of fact, it is possible to monitor this increase when the October 2021 and January 2022 data are taken into account. Therefore, Facebook and Microsoft, which ←14 | 15→see the metaverse universe as a new market opportunity, have accelerated their investments in this field (Sudan et al., 2022). Augmented Reality, Virtual Reality, network technology, artificial intelligence and blockchain systems are the base components that made the Metaverse possible (Lik-Hang et al., 2021: 3). There are four features of the metaverse system. These are, realism, ubiquity, interoperability and scalability. According to these criteria, the metaverse should be realistic, it should be easily accessible through different devices, and the products that are produced in one part of a metaverse should be operable in other parts of a metaverse or metaverses. And a metaverse should be technically sufficient to host large numbers of people and contents (Dionisio et al., 2013: 2).

The Metaverse is an environment of engagement, connection, sharing and contribution. On the Metaverse, people play games, work, meet, collaborate, shop, and watch movies and concerts. In other words, what one can do in the real world, one does the same in the metaverse universe (Sudan et al., 2022). Therefore, it is stated that Metaverse is the perfect harmony of physical and digital life. There is not only one virtual dimension, but more than one world where social interaction takes place and deepens digitally. The boundaries of metaverse are being crossed and it is stated that access to products, services and experiences will be democratised (JP Morgan, 2022).

2. How Does the Metaverse Economy Work?

First of all, an avatar or digital identity is defined to the users so that they can enter the digital ecosystem. This ecosystem has its own money, goods, and properties. In the metaverse, users can perform transactions online, and during this time, many passwords and user accounts are not needed as in the current digital universe (Moynihan et al., 2022). Many new technologies have come together under the umbrella of metaverse. For instance, developing user experiences with Augmented reality (AR) and Virtual reality (VR) headsets is both cheaper and more powerful. Blockchain technology also enables digital currencies and NFTs. These new methods allow creators to monetise their goods through tokens. In addition to the possibility of redemption, token holders also participate in the management (voting right) of the platform (JP Morgan, 2022). NFT (Non-fungible tokens) store records of digital ownership on the blockchain, providing verification of ownership, forming the cornerstone of the metaverse economy. Every NFT is secured with a cryptographic key that cannot be deleted, copied or damaged. Virtual identity and digital ownership are essential to achieving success for metaverse societies and engaging with other metaverse societies. NFT also constitutes the digital art side in this context. However, like every digital ←15 | 16→entity in this virtual world, it has a long way to go. The developments are tremendous (Financial Times, 2022).

3. Opportunities and Risks in the Metaverse Economy

Small and Medium Sized Enterprises (SME) Venture Capital Investment Trust Inc. Business Development Manager Onur Öktem stated that crypto money and the Metaverse universe are a great opportunity to close the economic gap between Turkey and the rest of the world, and said, “Every day we fail to catch up with this technology by not taking action, the gap between us and the world widens. From concerts to e-commerce.” New markets are emerging in thousands of fields from education to banking,” Öktem said (ATO, 2021). Thus, it is very important for academics to analyse the opportunities and risks that will be present in the metaverse.

The Metaverse is a virtual world in which humans can interact both with each other and this virtual environment. The development of the Metaverse can only be matched by the discovery of the New World in the 15th century in terms of effect. Just as the first explorers and settlers enjoyed new economic possibilities such as new land and valuable mines in the discovery of the New World, they also faced risks and many challenges such as the malaria. There are also many economic opportunities in the metaverse economy but there are also some riks. In this section we discuss the economic opportunities and economic risks in the metaverse environment.

The first and foremost of the opportunities in the metaverse is related to its being a perfect environment for economic simulation modelling. Every transaction that is made in the metaverse environment is data for the economists. Because of its digital character, this data will be readily available to scientists trying to understand economic behaviour, markets and even macro economies. But there are also risks attached to this feature of the metaverse. Another opportunity is linked to the changing structure of the labour markets. With the metaverse, the growing importance of content creation will bring about new opportunities for technically skilled labour and the digital artisan class. Additionally, one can also speak of the lowered transaction costs in the metaverse economy. This is obviously coming from its digital character, meaning a more efficient economic system. One other opportunity might be that the metaverse, with its digital structure may help sustainable development by enabling lesser ecological footprints on the environment. But this is a rather debatable argument because the metaverse could also come with high energy costs, thus higher environmental costs. In the next section we briefly discuss the economic ←16 | 17→opportunities that may be present in the metaverse economy. Later we look into the areas of risks that may be observed in the metaverse.