Metaverse is a confusing word.
Over the last few weeks, people not just in the cryptoverse but beyond have been searching for the answer to what it actually is. There are several different interpretations of the metaverse and thus varying definitions. I, however, will explore the core idea of what it is and the challenges that must be addressed before building one (or even several metaverses).
Before we dive deeper, I want you to stop reading for a second and think about what a metaverse looks like to you.
Now that you have an idea, let me try and paint that picture for you here.
- Did you think of a virtual world where your friends, work and/or family can interact together?
- Maybe a world where you could have more immersive experiences? Maybe more than what you ever experienced in real life?
- Did you imagine a world where you can interact with everyone you know in real-time?
What if I told you that the metaverse potentially offers much more than what you have imagined. It’s almost like a utopia where your experience might far exceed your expectations in some cases, and in some cases, you’d just go — Meh. Perhaps an example that falls somewhere in the middle of these extremes is when someone placed an order for a Dominos’ pizza in Decentraland, and it got delivered to their home — in real life.
But, to build a place where “all” of this can be made possible, there are challenges that need to be addressed.
Facebook is building a metaverse; Microsoft is making a metaverse; Decentraland has built one — and every new project popping up has a metaverse narrative. When we have so many metaverses, with the possibility of different users, will there be one metaverse to connect them all?
- Or will your needs be fulfilled by different platforms and you would need to switch between them subject to what you are looking for?
- Another crucial point is that decentralized platforms have their DAO for governance. But will the same (or something similar) concept be applicable to centralized platforms as well?
Also, how will the economy of the metaverse function? There could potentially be a singular token that can be ported over to different ones. Or, there might be (similar to what we have with different L1s) siloes of metaverses with each having their own tokenomics.
Most of the underlying technological infrastructure — VR, high-speed bandwidth, blockchain, etc. — has been independently developing over the past few years and most of it is “almost” there. But, building a platform where there is a perfect balance of these technologies requires a ton of resources and capital.
Given the current infrastructure we have, the metaverse (apart from being still a pipe dream) is nothing more than a place where we seek entertainment. But that too comes at a cost because trust me, VR headsets hurt. (I hope there is more seamless hardware to enter the metaverse.)
For Facebook and Microsoft, capital and resources may not really be a problem considering deep pockets. However, for a decentralized product, when the market is pumping, the DAO treasury may have a ton of cash and when it falls, those reserves may get depleted. I know the volatility will go down, but you feel the vibe? Yes?
This can impact the development in the favor of centralized players who might end up taking a larger market share. They could even end up crushing the decentralized platforms completely.
The other aspect is partnerships; to build the infra to support immersive metaverses, the core entity may not have the resources to build and sometimes rely on partnerships. Again, these partnerships may come much faster for centralized players considering their reputation and lower risk profile. Also, partnerships between decentralized and centralized players are relatively unchartered territory. While there have been some, those are mainly marketing plays and nothing to write home about.
Let’s come back to the metaverse you imagined. You must have imagined one where everyone you know is present. Switching between different metaverses is a challenge of its own, as discussed above. Users generally go to platforms where users (friends/family) already are. The network effect of the social product disregards its flaws or drawbacks.
Take Facebook, for example. Irrespective of the criticism around the world for its privacy practices, it is still the leading social network with close to 2B users. However, most users on the platform are largely inactive.
If Facebook takes the lead and builds the metaverse, activating these idle users will not really take a long time. And once that happens, it would become very difficult for other metaverses to compete with Facebook.
Remember libra? If that becomes the platform currency, there are no limits to incentivizing actions and bringing more users.
Decentralized platforms may then only exist to satisfy a particular need for a cult, and the rest can be gulped by a centralized player that already has mindshare in the users around the world.
Imagine integrating services that we use on a daily basis: WhatsApp, Instagram etc…this only makes other metaverses less attractive to users.
Hoping for a Brighter Future
Challenges aside, what is interesting is the rapid rise and the validation the web3 community is getting by larger players pivoting their business models and adapting them to this rapidly growing space.
A virtual world has been a dream for many, but blockchains have suddenly made it possible because historically, digital scarcity was not verifiable, and ownership could be revoked. This may change drastically, and we may also see changes in how the centralized world operates today only if we are optimistic and open-minded.
The tech stack relying on making it happen is taking shape faster than imagined, but we need to also keep in mind our expectations. Remember the exercise we did at the start of the newsletter? The way you imagine a metaverse to be is drastically different from the other persons’ imaginations.
Our references are purely based on movies, existing platforms and technology, and narratives that may actually be drastically different.
If all goes well/or worse, everything that we do in the real world could be supplemented by something in the metaverse. However, we need to ensure that we always keep a track of what’s real and what isn’t. Having the ability to get out of the metaverse when we want to should be completely in our control. Otherwise, just to cure inherent loneliness, we might end up living in a virtual world forever.
These were some of my thoughts; I am still trying to wrap my head around the concept. If you have some ideas, do share with me on Twitter @mohakagr