To explore the futuristic potential of the metaverse for trade finance, TFG spoke with Megha Shrestha, co-founder and CEO of Metabloqs.
When Metabloqs was launched at the outset of the pandemic, the initial plan was for the platform to operate as an event space where people could come together virtually despite the physical distancing restrictions.
Soon thereafter, corporations began requesting to help set up digital office environments.
Shrestha said, “So, we extended our horizons from just being an event and education platform to a complete metaverse where we have our economy.
“What we found during our research is that a lot of the metaverse solutions that currently exist are based on games and are in fantasy or sci-fi spaces.
“But we think that the future of metaverses is going to be based in the normal world.”
It seems that there is a mass desire from the market to create a space where users can perform simple or everyday tasks such as; going to a bank, going shopping, or partaking in education.
Within this realistic economy-based metaverse, there are several key practical applications for trade finance solutions.
Trade finance in the metaverse
Experts often discuss a technological development in this regard: the non-fungible token (NFT).
NFTs are digital tokens that can represent ownership of unique items and can only have one owner at a time.
If applied to common trade finance instruments like a promissory note or a bill of exchange, these technological traits can lay the necessary groundwork for process digitalisation.
Shrestha added, “That’s where we see how we could include these kinds of systems that are already in the real world as an NFT to ensure that these kinds of trades are being safeguarded.”
The metaverse also has implications for trade beyond just transactional efficiency.
The global nature of trade naturally introduces challenges related to geographic distance.
Over the years, technology––from the telegraph to the internet––has facilitated cross-border commerce and made trade more efficient.
The metaverse may just be the next development in this line.
“Geographic restriction brings opportunity costs but also real financial costs,” Shrestha said.
“The metaverse can bring people together in both business and social contexts, facilitating genuine interactions between intermediaries without needing to spend the corporate budget––and carbon footprint.”
With the aid of visualisation technology, these interactions could even be more fruitful than a traditional boardroom meeting.
For example, participants could use the metaverse to visualise the entire supply chain, creating a better understanding of the problems they face.
Trust concerns in the metaverse
“In the crypto world, there is a benefit of anonymity, but with this also comes a lack of trust,” Shrestha said.
“If you don’t know who this other avatar is, how can you initiate a conversation and be 100% sure that they are an honest actor?
“For business, trust is one of the most important factors.”
Metabloqs and other metaverse designers are attempting to overcome these systemic trust issues by ensuring that the network adheres to a widely accepted and sound regulatory system.
This includes having levers in place to maintain proper Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance.
Without these guardrails, the ecosystem, but more importantly, the businesses within it, will have an opportunity to flourish.
“If you look at the metaverse space today, it’s filled with people having NFTs about art, music and so on––but actual business is not happening,” Shrestha said.
The primary goal for metaverse designers and developers is to change this status quo.