Bridging Virtual and Physical Worlds: From payment to property mapping (part 1)

When thinking about transactions, we typically associate them with payments made using money. However, this hasn't always been the case throughout history. This raises the question of whether the need for an intermediary exchange denominator, such as currency, will be challenged as more goods and services become digital, as seen in virtual worlds like the metaverse.

How will payments look when ownership and valorization become predominantly digital?

The history of payments

To explore these questions, let's take a brief look at the history of payments. It all started with the barter system, where goods and services were traded directly without currency.

Over time, precious metals like gold and silver became currencies, with the first coins minted in ancient Greece and later spreading throughout the Roman Empire.

Paper money appeared in the Middle Ages in China and was later adopted in Europe.

In the 17th and 18th centuries, banks began issuing paper money and providing credit to customers. The 20th century introduced electronic payment systems, revolutionizing how people paid for goods and services.

Today, central banks manage currencies that include both physical cash and digital currency, when there are also decentralized cryptocurrencies like Bitcoin.

A transition between digital payments and traditional currencies

In today's financial landscape, with the rise of virtual environments, we are experiencing a transitional phase that blends conventional notions from the physical world with innovative approaches to both value the exchange and evaluate solvency.

These traditional notions encompass agreed-upon currency values (such as dollars, euros, etc.) and the inherent worth of raw materials (like wheat, oil, steel, etc.), which are determined by basic market pricing driven by supply and demand, as observed in stock or commodity trading markets.

Digital assets and NFTs

In the virtual world, the distinctions between fungible and non-fungible monetary assets are becoming increasingly blurred, as most of digital world  transactions involve transferring identified ownerships relying therefore almost only on non-fungible assets.

Within a particular virtual environment that has its own asset management regulations and currency, the orchestrator of that world can effortlessly assume all roles.

However, as multiple virtual worlds and digital twins coexist, there will be a need for Trusted Payment Service Providers (PSPs) to address additional challenges: