The metaverse has become of paramount importance within the last several years, being a virtual universe where individuals and companies can interact. While the metaverses are still in their nascent stage, there has been increasing interest and capital inflow into these universes. For Shariah-compliant focused financial investors and participants, this represents a considerable challenge given the existing lack of Islamic financing frameworks for the metaverses. This chapter outlines options for providing Shariah-compliant financing in the metaverse, outlining the challenges and aspects that have to be taken into account for creating Shariah-compliant financing forms in the metaverse. The framework adapts conventional Islamic financing options, such as Murabaha and Sukuk, to the metaverse, ensuring that both the contracting and crypto-payments are Shariah-compliant and supportive in the metaverse. The framework provides an important step towards the development of Shariah-compliant financing forms within the metaverse.
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The word “metaverse” has been encountered everywhere in recent years, with Facebook changing its name officially to Meta (Park & Kim, 2022). Non-fungible tokens (NFT) have become one of the major words of the year, where these tokens form a key part of the virtual universe. This has also led gamers and developers to move into this space, making it more and more attractive to conventional consumers. While there has been considerable attention around the virtual universe, understanding the environment behind the virtual universe and what value it creates is of critical importance. The land prices related to digital land have been on the rise, with Republic Real Estate launching a fund for investors to purchase virtual land (Narin, 2021). The fund will purchase virtual land across various online metaverses and transform them into hotels, stores, and other uses. This shall lead to an increase in the value of these properties amongst consumers.
While virtual land has, due to its connotation with physical land, attracted considerable interest, the art sector related to NFTs has experienced an even more significant rise, and there is the expectation that equities and bonds will be hosted on a digital asset platform that is built around blockchain technology. Another key area of the metaverse is the gradual online-only shopping and experience, which implies that individuals purchase assets that are entirely virtual. There are several stores that sell clothing and accessories entirely online, which only exist in the metaverse. Furthermore, there are virtual fashion shoes solely for the virtual world, which has attracted considerable investment amounts. The growing remote work operational model, in addition to the growing utilization of artificial intelligence and virtual technologies, has opened up new business models providing customers with different experiences in the virtual world. Another key change is the move towards remote work, where the metaverse can make remote work more permanent and immersive in order to maximize efficiency and interaction. This will enable stronger interaction and engagement of the employees (Wilson, Karg, & Ghaderi, 2021).
Given the growing importance of the metaverse, the financial industry has been looking into how to create value within the metaverse space and how fintech solutions can deliver financial services in this new environment. Furthermore, metaverse technology creates new business model opportunities that may strengthen the utilization of crypto-technology as an alternative financial system.
The technologies behind the metaverse combine technologies such as virtual reality (VR) and augmented reality (AR). This leads to an interactive, immersive and collaborative virtual 3D universe. The idea is that these individual universes may be integrated with each other as well as allow to connect across the world in various environments. This may be in the form of games but also in terms of real estate, commercial transactions, and other associated environments (Wohlgenannt, Simons, & Stieglitz, 2020).
As outlined by Facebook’s transformation into Meta, financial data and transaction management will become key parts of the metaverse enabling individuals and corporations to transact and operate within these universes. For example, there are digital assets for purchase, such as the World of Warcraft and the Habbo Hotel, and these assets may be even moved from one universe into the other (Park & Kim, 2022).
The current metaverse is a composition of the capabilities of various social media and video game enterprises that build upon their user base and platform in order to connect these individuals. While this first glance may give the impression that the metaverse is solely about gaming, it has become more of another virtual world where individuals may be fully immersed and conduct most of their life within the metaverse. This may range from dating to having their social interactions within the metaverse, but also conduct business across it. This may be in the form of leading a real enterprise or a digital enterprise within the metaverse. Overall, this will lead to someone being completely immersed in the metaverse and living their daily lives within this universe.