METAVERSE 101

Blockchain, News, Opinion | June 13, 2022 By:

What is the metaverse?

Ready Player One is often cited when describing the metaverse, but for those who have not read the book or seen the movie, just imagine the concept of a metaverse being the idea that there are multiple worlds. While there will be many different ideas of what a metaverse is, let’s start from the foundation of “multiple worlds”.

But what does ‘multiple worlds’ mean?

Well, there is the “IRL” (In Real Life) world—where we all live and were all born into. When we think of the world we live in, we think of the things we like to do in this world in the most general terms possible. Perhaps words like socialize, work, play, love, learn, etc. will come up. 

Pre-internet, you could argue the only place you could do any of these things would be in IRL. But since the advent of the internet, things like social media and online games have allowed people to do all the features listed above in a completely virtual environment. 

The metaverse, therefore, is this concept that there is more than one place where we can live out the most fundamental experiences of life and therefore the constraints that we see in one world shouldn’t cause one to be in despair, but rather start to search out for other “metaverses” that fit better. Similar to the way Reddit has become the home for niche communities to find their tribe, these different spaces can differ in ways that go beyond what is possible in the physical world from how you look to how you engage with the brands you love. 

Just as we are not forced to be confined to Facebook (we can be on Snapchat, Wechat, Line, Instagram, etc.) the ability to choose where to engage is a core benefit of the metaverse existing. Similarly, while countries have borders and inherent differences, they are all places we can visit freely IRL. Furthermore, thanks to rapidly maturing graphic engines and 3D model marketplaces such as Unity and Unreal Engine, we are already seeing worlds like Roblox, Sandbox, etc. create worlds that are more immersive and interactive as ever.

So, why is the metaverse important?

While it’s a bit of a hyperbole, the idea that metaverses can represent the “next internet” does have truth within it. While when we look at movies like Ready Player One and see how it takes place in a far distant future, the idea that people would spend all their time in a virtual world seems crazy, that was part of the “sci-fi” nature that make the story compelling. But in 2022 what makes that movie interesting is not that the premise is ridiculous, it’s that its actually plausible. Just look at how much time we spend in front of a screen. 

When Facebook (Meta) started, they wowed investors by having a product that was getting used for dozens of minutes a day to becoming an ecosystem of social networks that can eat up several hours out of our day. The amount of time we spend in these virtual worlds is only increasing. The freedoms we thought we had only in videos games start to spread to contexts that are not normally described as play. How you look, act and sound is redefinable and under your control within the metaverse for work or play. 

Therefore, the metaverse is important because it’s already clearly important to our lives. 

Is Web3 and metaverse the same thing?

Web3 is essentially a broader concept relevant to the metaverse in the sense that a metaverse has no single definition. To start, let’s go back to what Web1 and Web2 are seen to be:

  • Web1 – Read-Only – The early stage of the web where content was posted only by those technically savvy enough to post code. The large majority of users were essentially an audience of read only files. In a sense, the internet was an almanac of information that was slowly getting uploaded and formatted for public consumption.
  • Web2 – Read and Write – In the age of hallmark businesses such as Wikipedia, Facebook and Amazon, the feature Web2 will be most known for is the ever-increasing two-way flow of information while the barrier to posting content became even lower. While it greatly increased the utility and stickiness of the web as a tool in our everyday lives, the fact that information was so easily posted meant that even our unintentional personal data (cookies and other data trackers) were getting fed into the network.
  • Web3 – Autonomous and Decentralized – Web3 continues this bilateral flow of information where the line between content creators and content consumers are ever blurring. As a result, the need for corporate behemoths such as Facebook, Amazon, Google, etc., are put into question. Personal ownership and control of one’s own data become possible when browsing the web and the evolution of the web is no longer determined by a few big corporates.

So, what does blockchain have to do with the metaverse?

One key distinction to make is that metaverse and blockchain are NOT the same thing. Facebook’s ecosystem is a part of the metaverse, Fortnite is a part of the metaverse, real life is technically also a part of the metaverse. Essentially whatever distinct place or product that can provide socialization, learning, play, work, can be one of the “-verses” within the broader metaverse. 

This year blockchain and metaverse became synonymous because of hit projects such as Sandbox and Axie Infinity which were very much metaverses where people devote their time, attention, and capital to. 

But of course, adding blockchain to these games does not prove the value of blockchain in the metaverse. To explain that, there are two key ideas commonly touted as a benefit of a blockchain enabled metaverse: interoperability and verified ownership.

  • Interoperability – Interoperability is the concept that the assets you generate or earn in any of these metaverses continue to matter and impact the experiences you have in other games, world, social areas, etc. For example, you could win a rare sword in an action game and that sword could still mean something or impact your gameplay in a completely different game. 

In other words, besides making items transferable, the idea of interoperability is to enable a bridge that allows you to carry your identity that you built up from one world and ensure that it can mostly be transferred back and forth to a new world.  

  • Verified Ownership – In order to get to interoperability, there needs to be a way to track ownership of assets that is not dependent on the existence of the continuation of the original game. For example, if someday World of Warcraft servers get taken down, the current business model of the game is that players get their accounts wiped with little to nothing to show for it in the future. Blockchain is trying to enable players to “move their items out” and carry it from world to world over time, regardless of publisher, regardless of game, in perpetuity. The same way you can carry a watch in real life from country to country.

With crypto in particular, the connective tissue that will enable the bridging and link between worlds are initiatives like Ethereum, Avalanche, Solana, etc. 

The vision here is that if different games, worlds, places, etc. can be created and all connected by a network such as Ethereum, then it is no longer a case of what game or social network will have the share of users, but rather how many total users will enter in this interconnected ecosystem. In a prior world view where games like World of Warcraft can be considered extremely successful it’s its peak well over 10 million players, the overall metaverse, which will contain everything from fun games to serious institutions like schools and social gathering venues could easily contain billions of people. 

Does a multi-billion user ecosystem sound crazy? Take a look at Facebook (Meta) with its nearly 3 billion users.

So, what are some of the key trends that are occurring in this space?

The first wave of blockchain metaverse projects have garnered a lot of mainstream attention. Play-to-Earn games as well as ‘sandbox world’ games including Decentraland and Sandbox have both contributed greatly to the concept that worlds can be built on-chain that have compelling experiences to drive users into the community to start to engage and really “live” in this world.

That being said, this is just the tip of the iceberg in terms of developments for the space. Once the foundation is laid and early adopters come in, the next step is bringing the various things you see in the real world into this space. 

An easy one to see is: Retail.

You might have seen in recent years the Louis Vuitton x League of Legends collaboration or Balenciaga in Fortnite. These are not just instances of companies trying to pander to a new audience, but rather the start of an overall trend of traditional retail trying to plant their presence in the worlds the future consumer will spend most of their time in, which in this case, are the virtual worlds of the metaverse. Increasingly, we will see more immersive experiences that not only bring in the social and experiential feeling of being in a store, but also find ways to exceed the experience of what is possible in a physical location. 

For example, at Highstreet (Highstreet.market), we are focused on enabling retail companies to push the boundaries of their enterprise even further. While this vision of the virtual world is itself a booming industry, we are bringing tools enabled by blockchain (from Bonding curves, yield bearing staking, NFTs, etc.) at the disposal of retail brands within our VR enabled metaverse.

One example we are enabling is via our “home offering” system that is an upgraded take on the “membership card” of a store. Instead of a printed or emailed card that enables benefits to its owners, we allow those that buy the virtual homes on a plot of land owned by the brand to access exclusive brand experiences and benefits otherwise not possible before.  

Imagine buying a snow cabin on the land of an outdoors sporting goods company (let’s call it Adventure Isles) that is not only decorated with items you collect from going on quests in the snowy wilderness of Adventure Isles, but the items you buy from this sporting brand transform into items you equip in this virtual world that strengthen your avatar in the game. Furthermore, imagine that as you play the game you are also in turn earning virtual currency through going through these quests and simply just holding onto your virtual real estate that receives a dividend from all the economic activity occurring on Adventure Isles. 

Its tools like these that are not only a further extension of this Web3 concept, but also extend to a bilateral exchange of value. We believe that the metaverse is not simply just making new worlds for the sake of it, but rather taking this new frontier to define new rules that were thought fundamental between brands and their consumers to grow together.