Everyone in the accounting profession has the potential to transform their business using the Metaverse. Whether you are a freelance bookkeeper with a handful of clients, or a large global accounting firm, Metaverse accounting is coming. Knowing what the Metaverse is, the value that it could bring to both firms and clients, and how to leverage that value for maximum growth in the coming decades, is key to entering this new digital world with confidence.
What Is the Metaverse?
While it sounds like the stuff of science fiction, the Metaverse is a rapidly developing sector of the economy. Touted as the future of the Internet, the Metaverse is a way to experience the digital world in a fully immersive way. Many different companies have been creating their own versions of the Metaverse. Facebook and Microsoft are some of the most recognizable players in the Metaverse world today, but developers are creating more and more virtual reality platforms with different focuses, worlds, and experiences available.
While gamers have been the first pioneers of living as an avatar and the virtual reality experience, this technology has potential for companies across many different industries. THE Metaverse has the ability to permanently change the way businesses around the globe serve their clients. This will mean new or previously inaccessible markets. Seismic market changes like this are both a blessing and a curse for business. There are new problems, such as identity verification, to solve, and new opportunities, such as the rise of digital real estate. We are already seeing some of these changes. The virtual meeting, for instance, will soon no longer be a video stream of your coworkers or clients. Instead, it will be a simulation of actually sitting in a boardroom with avatars of your team members.
How Accountants Can Use the Metaverse
Since accountants provide their services to clients across the entire economy, developments in the Metaverse will touch the accounting world in many different ways. Large firms like PwC are already investing in virtual real estate, and a few have even opened virtual offices. As more and more companies follow suit, the Metaverse will lose some of its “Wild West” flavour and become more like a digital version of the physical world we know today. Metaverse accounting will become just one more channel to serve clients, both online and in the physical world.
Accounting and the blockchain
In some ways, blockchain technology will make accountants’ jobs easier. Since the blockchain, at its simplest, is a digital ledger with checks and balances for verification, the idea will be intuitive for accountants, who are already familiar with the idea of debits and credits, to understand. Experts predict that blockchain technology will be very prevalent in the Metaverse, as it is used to “patent” digital products similar to a patent or copyright in the physical world. The built-in verifications in blockchain, whether it is used for NFT’s, cryptocurrency, or simply trust for peer-to-peer exchanges, will potentially make Metaverse accounting more intuitive and automated than it currently is￼. How? The built-in authentications in blockchain, like a complicated version of the debits and credits in an accounting ledger, create a traceable chain of verification across the entire lifespan of the digital entity. This means greater potential for automation or AI to collect, organize, and input data into an accounting program, with far less human effort and a much lower chance of error. This means that transactions between identity-verified avatars buying and selling digital assets in the Metaverse could be accounted for in a completely new way.
Serving other businesses selling digital products in the Metaverse
Accountants will also have to overcome new challenges in the profession when it comes to Metaverse accounting. New legal developments, such as tracking royalty income related to NFT’s and digital assets, will have to be resolved and integrated into current accounting guidelines. This is such new territory for the economy that the world of digital assets is yet largely uncategorized. For instance, the rise and recent fall in the value of many cryptocurrencies may impact accountants. As more and more companies see crypto as an acceptable currency for digital transactions in and out of the Metaverse, accountants will have to become more familiar with the mechanics of cryptocurrency.
Experts also estimate that digital products that can be bought, sold, and used in the Metaverse, such as digital branding, designs, avatar “skins”, artwork, and virtual buildings, will continue to grow as a yet untapped sector of the digital economy. Tracking income from these new sources will present accountants with a new income subdivision on financial statements that is predicted to grow year over year over the next decade. Digital real estate also presents some interesting questions that the accounting profession will have to solve. For instance, should digital real estate depreciate? Will income or expenses derived from digital real estate be treated similarly to those derived from physical real estate, or will it require its own categorization? We will soon see GAAP and IFRS updates that cover answers to these questions and more.
Enhanced client interactions
The ability to have “face-to-face” interactions with clients who may be on the other side of the world will be invaluable to accountants. So much of the financial service industry is based on building relationships and creating trust. Facial expressions, body language, and more that is lost in the written word or two-dimensional video will be able to be effectively transmitted in a VR world. The Metaverse will also allow a higher degree of professionalism. No more strange backgrounds in home offices or household noises heard over unmuted video calls. Accountants can meet with their clients in the Metaverse in a simulated office setting.
Immersive work environment
The potential for Metaverse offices will also be a useful productivity tool for freelance accountants or any other remote workers. Simply putting on a VR headset will transport them to a distraction-free environment where they can work on projects or meet with clients. The Metaverse will also be a useful educational tool for employers training new employees. Metaverse seminars and training programs will be able to create a much richer learning environment than audio lectures, video lectures, or Powerpoint slides can currently provide.
Looking to the Future
While full participation in the Metaverse is still years away for most small accounting firms and freelance accountants, gaining an understanding of how Metaverse accounting could shift the profession is important now. The Metaverse has the potential if implemented properly, to shift our world as radically as the original Internet did 20 years ago. Learning about its possibilities now, and dipping a toe into these new waters, will pay off.