Into the Metaverse

Metaverse Intro

The decentralization of 195 countries in our world defines a wide-range of human values, beliefs, economies, languages and cultures and now decentralization is entering the digital realm. Leading DeFi lending platform Aave just released the Lens-Protocol, a decentralized version of twitter, and streaming company Audius has created a decentralized music platform allowing artists to generate and monetize timestamped and immutable artwork secured by a network of operators, which removes middlemen. Actual virtual representation of the real world is impossible unless ownership of the virtual representation is decentralized to allow differences in user values, beliefs and cultures. Bitcoin, although not perfect, is a blockchain powered by a proof of work consensus mechanism that creates a trusted medium of exchange, unit of account and store of value without government backing. Bitcoin basically proves ownership and identity by immutable code on a database distributed among a vast number of computers across geographic borders. By expanding upon the first principle ideas behind bitcoin, an achievable future vision of Web3 and the Metaverse starts to form.

In Web1, users could read (think reading newspapers)

In Web2, users could read and write (think writing blogs)

In Web3, users can read, write and own (think monetizing content)

Web3 equals digital autonomy, which allows individuals to virtually socialize, earn, play and work in real time like in the physical world. Obviously, Web3 and the Metaverse requires advancement in both hardware and software to create a digital world that allocate resources efficiently among users like in the real fiat world. In addition to improving technology, discussing the amount of decentralization is important to facilitate Web3 and Metaverse development. Ethereum founder Vitalik Buterin believes that architectural, logical and political design are the main independent axes behind software decentralization. Architectural design is the number of computers/worlds that makes up the system/Metaverse and how sensitive these computers/worlds are to influence. Logical design is how the data structure and interface are maintained by the system/metaverse. Finally, political design is who controls the system/Metaverse. The optimal blend of decentralization and technology in Web3 and the Metaverse is the loadstar for the next step in the digital evolution.

Crypto, Web3 and VR

Moore’s and Metcalfe’s law

In a way, Web3 can exist without the Metaverse, but not the other way around. Web3 is concerned about who owns the internet of tomorrow. If the owner is a centralized institution, then Web3 is not really different from Web2. The development of the Metaverse will therefore reflect Web3 advancement. Metcalfe’s and Moore’s law are the two most powerful ideas behind the internet boom and they provide a framework for the future adoption rate of Web3 and the Metaverse. The former states that the value of a communication network is proportional to the square root of its number of users, while the latter refers to the fact that the number of transistors in microchips doubles every two years. Computers and microchips go hand in hand and transistors in integrated circuits of microchips are the electric railroads. If the railroad conducts electricity faster, then computing power magnifies. The exponential increase in computing power is why computers today are so tiny that they fit in our pockets. These flexible computers made it possible to establish huge networks like social media and internet itself. Improving technology that is more user friendly leads to adoption, which means that services built by the technology becomes more valuable to the community already using that technology. The Metaverse requires powerful microchips to become immersive. Qualcomm has, for example, teamed up with Microsoft to create custom microchips allowing users with augmented reality glasses (AR glasses) to beam a realistic likeness of themselves into the headset of another user so that it feels like the two people are in the same room. Per Moore’s law, the Metaverse is no longer science fiction and per Metcalfe’s law the value of the Metaverse should increase exponentially like the internet. I have no idea what the Metaverse will look like, but depending on Moore’s law there are some really exciting potential outcomes. Let’s discuss these potential outcomes.

The Man behind Moore's law Gordon Moore

Metaverse

If the power of Moore’s law slows down, the Metaverse most likely becomes a three dimensional videogame and communication platform, which is an extension of Xbox and Zoom. However, if Moore’s law growth continues, the Metaverse will replace Web2 social media giants and also yield to users in the immersive and decentralized virtual Web3 community power to monetize their own data. The most obvious future is that the Metaverse becomes a place for leisure and videogaming, which means people spend between 1-2 hours a day online. A slight addition to the most obvious potential future is that companies use the Metaverse to create virtual office space and stores. Imagine, for example, having a virtual boardroom meeting where the discussion flows like an in person meeting or using an XR device to shop at the virtual Amazon store. Instead of looking at a screen for the latter, consumers test the products directly in virtual space before purchasing them for physical delivery. The most immersive future is when the Metaverse exists in parallel to the real world. If the most immersive version of the Metaverse comes true, the potential market size per some analysts is over 10 trillion dollars. Well respected crypto asset manager Grayscale, for example, believes that the Metaverse space should surpass over 1 trillion dollars in future annual revenue. To access that revenue, talented developers are necessary, as more talented developers obviously increase the probability of creating the preferred Metaverse platforms, smart googles and XR devices for consumers. That’s why FANG firms like Apple, Facebook and Google invest heavily in recruitment for new Metaverse projects. Keep in mind that FANG companies are centralized players with an objective to monopolize hardware or platform access for Metaverse applications, which is an extension of Web2 rather than the democratized Web3. However, less well capitalized decentralized companies including Somnium Space (SS), Decentraland (DC) and Sandbox (SB) are competing and are building extremely popular worlds and important infrastructure for the Metaverse.

Somnium space

The Hollywood Metaverse

These decentralized companies like SS, DC and SB aim to create the most immersive Metaverse future that is practically possible, which is a future often depicted in Hollywood movies like Ready Player One (RP1). The plot of RP1 takes place in an online and digital world called the Oasis. In RP1, humanity prefers the online world over the real world because individuals have the autonomy to be whoever they want and do whatever they like. Like in the real world, RP1 characters enjoy feeling all five senses like touch, vision and smell. For the Oasis to become a virtual reality, one of the most important components besides advancements in technology is who sets the rules. There is no doubt that conservative people believing in the importance of physical interaction will refrain, but my guess is that many of us will choose virtual over actual reality due to the unbound nature of the internet; virtually we can be anyone we want!

Ready Player One poster

Why Decentralization Matters

Using Vitalik’s definitions of decentralization digging deeper into what decentralization really means is possible. For example, Governments and traditional companies have one President/CEO, congress/head office and country/company that is impossible to split in half. These governments/companies are therefore not politically, logically or architecturally decentralized. Common law on the other hand has logical centralization, but architecturally common law is decentralized since there are many judicial-courts that rules with discretion. Language, however, is logically decentralized, as there is no institution or person controlling the Spanish language. The Metaverse includes language, law, economics and governance and these components must follow a system that is flexible and decentralized. The Metaverse cannot be the rules of one country, judicial court, economy and government, as the virtual world extends beyond borders. Obviously, more advanced technology like VR glasses and holograms are needed, but we also need multiple virtual currencies, economies and worlds to create a decentralized virtual environment for users. If technology advances enough, then perhaps the world is entering a player one future in which people increasingly interact virtually rather than in reality. Outside of the virtual gaming world, I see a future where meetings, shopping and dating is done in virtual reality. Fifth avenue in New York will therefore be complemented by a virtual mega avenue in the most popular land of the metaverse. In a way, time spent in the metaverse through social media, video games, video chats and email already surpass physical interaction for a majority of western civilization

Example of decentralizations

Conclusion

For a virtual world to function properly a virtual economy needs to be created. Like the physical economy, the virtual economy will facilitate transactions and allocate resources between users and companies. In addition, a virtual economy will reward creators for creating new games or virtual worlds. Friendships usually lost in the past because people moved apart for school and work instead remain through social media and video games. Status signaling by owning fancy artwork is now done through NFTs and video game skins. Work meetings and conferences in person has been replaced by video software such as Zoom and Microsoft teams. Content is distributed by individuals rather than large news and content gatekeepers. Decentralized wallets allow people to lend, borrow, wire and transfer money outside of the traditional banking system, which means awesome projects to solve problems in India can be supported by someone in Peru. New projects and DAO’s launched on blockchains allow for censorship resistant democratization of information and pooling of resources. Frankly, the Metaverse allows for a more equal playing field as long as people have similar access to the internet.

Thanks!

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