What is Metaverse
The metaverse is a collective virtual shared space, created by the convergence of virtually enhanced physical reality virtual space. It includes the sum of all virtual worlds, augmented reality, and the internet. So, it is typically used to describe a collective virtual shared space. This space is created by the convergence of virtually enhanced physical reality and physically persistent virtual space. Thus, the concept has been described as the next logical step in the evolution of the internet. The word "metaverse" is a portmanteau of the prefix "meta" (meaning "beyond") and "universe". Yet, it has been compared to the development of the World Wide Web.
What is KYC
Similarly, Know Your Customer (KYC) is the process of verifying the identity of clients and assessing their potential risks for money laundering or financing terrorism. It is performed by financial institutions, such as banks, and other regulated entities. Thereby, in order to comply with laws and regulations, including the Bank Secrecy Act and the USA PATRIOT Act.
Likewise, this process involves collecting and verifying personal information about an individual or entity. Such as the name, address, and date of birth, as well as assessing their risk profile are included in it. Also, this may include reviewing financial records and other relevant information, such as the purpose and intended nature of the business relationship. Ultimately, the goal of KYC is to ensure that financial institutions and other regulated entities have a thorough understanding of their customers. Hence, they can identify and mitigate any potential risks associated with doing business with them.
How are Metaverse & KYC linked
The link between the metaverse and Know Your Customer (KYC) is that both involve the use of digital identities. Particularly, digital identities are used to represent individuals within virtual worlds or online communities. These identities may include information such as a user's name, avatar, and personal details.
Alternatively, KYC, is a process that is used by financial institutions and organizations to verify the identity of their customers. Typically, this involves collecting and verifying personal information about an individual, such as their name, address, and date of birth.
Contextually, both the concepts may be used to verify the identity of individuals who are participating in virtual activities or transactions. For example, a financial institution operating within the metaverse may require users to go through a KYC process before allowing them to participate in financial transactions or access certain services. This can help to prevent fraud and ensure that the metaverse is a secure and trustworthy environment for users.
How to access the Metaverse?
Several ways are there to access it depending on the goal for which the virtual world needs to be accessed. The following ways are the most common ones to access the virtual world.
Use a virtual reality (VR) headset:
Some virtual worlds and online communities can be accessed using a VR headset, such as the Oculus Quest or HTC Vive. This allows you to fully immerse yourself in the virtual environment and interact with other users in real time.
Use a desktop or mobile device:
Many virtual worlds and online communities can be accessed through a web browser or mobile app. This allows you to participate in the metaverse from your desktop computer or smartphone, without the need for specialized VR equipment.
Use a gaming console:
Some virtual worlds and online communities are available on gaming consoles, such as the PlayStation or Xbox. This allows you to access the metaverse using a controller or other input device, similar to playing a video game.
Also Read: Digital Marketing & KYC
Regardless of the method, create an account, a digital identity or avatar to represent yourself within the metaverse. This may involve going through a Know Your Customer (KYC) process to verify your identity. Once you have created your account and avatar, you can begin exploring and interacting with the virtual world or online community.
Metaverse and Money-laundering
In 2021, the number of attacks on metaverse companies increased by 60% compared to the previous year, which has raised concerns among regulatory authorities globally. One of the main issues faced by these companies is money laundering, which has become a major challenge due to the decentralized nature of blockchain and the metaverse. Criminals are able to invest their illicit funds into the system and withdraw them in another country without revealing their personal identities, making it difficult to identify and prosecute them. To address this problem, it is important to implement Anti-Money Laundering (AML) measures that can automatically identify and prevent bad actors from using the system for illegal activities. The use of Know Your Customer (KYC) procedures involves verifying the identity of users and assessing their risk profile. It may also be useful in preventing money laundering and other illicit activities within Virtual Reality.
According to the statistics, $100 million worth of Non-Fungible Tokens were reported stolen between 2021 - 2022. Metaverse is the prime target of cybercriminals being the latest and trending concept. Not only this, but it is the ease of access & hacking has made it alot easier to penetrate it.
The concept of Web 3.0
Web 3.0 is a newer concept where metaverses are decentralized and gamified. Mostly, they are used for gaming & entertainment purposes. Traditionally, a virtual world or online community that is owned and controlled by a single entity. While a decentralized metaverse is owned and governed by the users themselves. This means that individuals have a greater degree of control over their experience within the VR. Likewise, they can participate in shaping the way it is built and operates. In a decentralized metaverse, users can own, buy, and trade a variety of assets, including goods, land, services, and applications. By using crypto-assets as a means of exchange the purchase is seamless & to some extent secure. This allows for a more open and interactive environment where users can engage in a wide range of activities. The transactions are done without being subject to the rules and regulations of a central authority. So, this makes Web 3.0 an insecure & unidentifiable means of transacting through cryptocurrency.
How to apply KYC and AML in Metaverse
Seemingly, the procedure shall apply with a higher degree of success against the criminals if the regulations & sanctions are strict. KYC/AML will be facilitated and the Money Laundering can be fought if the Metaverse is fully compliant to regulations. Lastly, it is necessary to contain Fincrime globally for the eradication of bigger threats like terrorism financing.
We hope that you liked our article. Please visit the following link for more informative articles: Evolution of Blockchain, A historic preview
