“The metaverse”, it is everywhere. Breakfast shows, news headlines, and even at local Westfield shopping centres, there’s a metaverse exhibit.
What was once a fringe sci-fi idea, a topic for nerds and their Discord servers has bridged into the mainstream. In 2022, it’s thrown around like a frisbee in a park.
Tech giants are creating metaverse divisions and announcing an intent to build, own or compete in the metaverse. It’s the hot new macro goal, and this rise in corporate interest coincided with a surge in cryptocurrency interest driven by a narrative that blockchains and metaverses were made for each other. Up until 6 months ago, crypto was setting new all-time highs and several of the best performing coins were metaverse projects.
That’s how we got here. To a world where Snoop Dogg has an avatar and a plot of digital land, he paid over $2 million for. A world where Facebook bought Oculus and changed its name to Meta to build their Horizons metaverse. A world where Adidas, Nike, and Gucci have all hosted virtual events powered by NFTs on virtual land in 3D environments.
- What is the Metaverse?
- Properties the metaverse must have
- Internal economy
- What’s cryptocurrency got to do with the metaverse
- Infrastructure Layer of The Metaverse
What is the Metaverse?
If you’re unsure, you’re in good company. To put it as simply as possible, the metaverse is a digital universe. It’s a massive 3D virtual environment on a previously unfathomable scale. The idea is that people like you or I will all connect to the same 3D world and once inside it we’ll interact. We’ll play, create, go on quests and we’ll buy stuff.
The metaverse does not exist yet. It’s a theorised future technology.
We are in the proto-metaverse stage. We have all the metaverse technologies: virtual reality, servers able to host 10,000 – 100,000 concurrent players, and gigabit per second internet connections. The metaverse happens when we haven’t put this tech together.
If you’re thinking, “hey that’s every massive online multiplayer game ever” you’re not wrong. There’s a tonne of crossover and the technology from video games is vital for building the metaverse.
There are however several expectant properties that separate the metaverse from the large-scale 3D virtual environments that we’ve seen in video games for decades.
Properties the Metaverse must have
The metaverse never turns off. If you Banksy a wall at the metaverse subway station, when you come back your street art will still be there. If you buy land and build a branded showroom in a prestigious downtown area that receives a lot of digital foot traffic, it’s yours forever.
Continuity turns games into places. It allows for ownership. If domain names were deleted every time a PC was turned off they wouldn’t be worth much to anyone.
Now we are getting down to what makes the metaverse the metaverse.
At the moment there are many digital worlds, platforms and services that are independent of each other. To get the metaverse we need a quantum leap to occur. All these island worlds need to sign EU-style freedom of movement agreement and become interoperable.
When the avatar you buy in one world can walk into another, then additional worlds are just new places to visit in the same digital universe.
We are basically describing the internet. There’s a parallel universe out there where 5 different corporate networks compete with one another, but we got lucky and instead, we have an interoperable group of networks we call the public internet.
The difference between the internet and a network is that the internet’s protocols and infrastructure enables multiple networks to communicate with each other. The difference between a 3D world and the metaverse is the same thing.
No matter how hard the Zuck tries the metaverse isn’t going to be owned by a single company like Facebook, now Meta. It will emerge as a collaboration between different platforms, working together and embracing interoperability. With all their resources, Meta’s Horizon Worlds will likely be a large part of the Metaverse, but it can’t be all of it. If they don’t open up to interoperability they lose, and Facebook understands the power of the network effect better than most.
Capitalist forces have motivated humanity to dominate the planet. We’ve got stuff on every corner of the earth. The metaverse needs an internal economy, so it can achieve the same incredible rate of growth.
One company making assets and designing spaces can only get so much done, but in a free market economy where individuals and companies can create virtual assets and buy/sell them from/to other metaverse users, that’s unstoppable.
The metaverse will be filled with user-generated content. Together we’ll design virtual cities that will surpass anything in the real world. There are all kinds of theories about what will be for sale in the metaverse: Avatar skins, items, weapons, houses, land, services, access to experiences, and more.
What’s cryptocurrency got to do with the Metaverse
Cryptocurrency was a focus of significant metaverse investment. Sandbox and Decentraland are the 34th and 35th largest cryptocurrencies by market capitalization. Both are metaverse projects.
The narrative investors are speculating on is that blockchain ledger technology is a great way to store metaverse assets, and facilitate their trade.
Sandbox and Decentraland have both built persistent virtual worlds with a marketplace for digital assets. All assets are stored as NFTs which links them to the public and immutable Ethereum blockchain.
The graphics in these virtual worlds are reminiscent of Minecraft (the game where everything is made of cubes) but the user-generated content, and internal economy, are unprecedented. Outside the crypto-space, An earlier example of a proto-metaverse with an internet economy is the game Second Life. In 2009, the total size of the Second Life economy grew 65% to US$567 million, about 25% of the entire U.S. virtual goods market. Gross Resident Earnings are $55 million US Dollars in 2009 – 11% growth over 2008.
Infrastructure layer of the Metaverse
The metaverse engine encapsulates how data is rendered in the 3D universe, the interface humans use to see and interact with it, and the consensus layer responsible for tracking who owns what
In Ready Player One, Wade Watts’ interface with the metaverse was constrained by his purchasing power. This is true of the internet today, and it will be true of the future metaverse.
At the beginning of the book/movie, Wade is connected to the OASIS with a simple haptic glove. As the story and his finances evolved, he upgraded to a full haptic suit.
Likewise, our eyes in the metaverse will range from headsets like the Oculus Quest to monitors to neuralink chips.
The first VR headsets were only released in 2016 and are already achieving sales figures in the millions each year. Not to mention there are dozens of Chinese headsets doing just as well that no one in the west has ever heard of.
Ai is front and centre in the race to improve scene rending and scene creation. Unreal and Unity are leading game engine creators and both are heavily invested in the metaverse.
Every new iteration of their engines relies more heavily on Ai to keep up with the incredible computations required to plot virtual photons, and do more with less computational and human resources. While software tries to achieve more with less, hardware improves and the results are exponential progress.
Unreal Engine 5 was just released. It’s noteworthy for the new Lumens Dynamic global illumination and reflections systems which are raising the bar for the level of realism possible in 3D scenes. Overnight everything made in the engine looked significantly better with little to no additional time spent on the improvements for the artist.
It’s not a sure thing that blockchain and cryptocurrency will be a part of the metaverse tech stack but it’s probable.
Blockchain solves a lot of problems. If we own digital avatars, skins, goods and services across multiple platforms, it would be nice to not need to trust these platforms. Interoperability between blockchains is fairly straightforward and possible without trust or intermediaries.
If the data is stored on company servers there’s no other choice than to trust that company. Blockchain, on the other hand, is like a public server that’s maintained by everyone and protected by cryptographic permission systems that with current tech are unbreakable. It’s beyond the scope of this article to explain blockchains, but the short and sweet is that an economy built on a blockchain wouldn’t be dependent on the company that owns the servers running it. Trading would be easier and borderless, and it’s what James Halliday would have wanted.
Let’s wrap this up
The metaverse isn’t here yet, but we do have all the technologies to realise it. Tech companies are investing big trying to get a foot in the door before the house is built, and we are seeing what many are predicting will be the next iteration of the internet. The difference between the metaverse and a 3D world is a question of scale. It needs to persist, encapsulate many different interoperable worlds, and include an economy of user-created content. Will blockchain play into this? We think yes, but it’s too early to say. Remember, some tech comes from nowhere and changes the world. Other tech is predicted years in advance and is just as revolutionary once it finally arrives.