How will the metaverse come to life?

The intersection of fast-developing technologies such as digital tokens, hashing functions, consensus mechanisms and cryptography is enabling a new era of decentralization that spans applications, finance and even organizations.?

One of the most eagerly anticipated developments of this new era is the metaverse: a space in which identity and digital assets place humans at the center of a revolutionary new model of shared digital experience.

The metaverse is part of a wider Web 3.0 revolution, which will transform how we use the internet – from reading, writing, and commenting on content to provable ownership and sharing of digital assets. Blockchain technology has already made this possible, but it is just the tip of the iceberg. There is a large technology stack needed to bring to life the 3D worlds and virtual interactions promised by the metaverse.

New technology for new worlds

By 2030, 30 billion devices will be connected to the internet [1]. The metaverse technologies we will need will depend on the application, ranging from the simple (for example, gaming) to the extremely complex, such as surgery conducted virtually on a patient thousands of miles away.

Some of the devices and technologies will be very familiar – we will be able to use the same internet access, laptop, desktop, or smartphone, for example. And in the short term, the metaverse experience will also be familiar to many – 97% of gaming executives believe the gaming industry is the center of the metaverse today, according to an EY Gaming Industry Survey[2]

But new devices will be needed to capture and transmit data for immersive experiences. These include virtual reality (VR) or augmented reality (AR) glasses, and demand for these devices is forecast to increase more than 30% for the next several years, culminating in a total of 35.1 million units that will be shipped in 2026[3].

Participants in the metaverse will also need microphones, cameras to capture emotions (such as eye tracking), sensors to read movement and temperature, advanced processors, and edge computing to collect all the data in real time. And there will be a lot of data created and replicated for the metaverse – as much as three million to four million petabytes per year by 2025, according to one estimate [4].

We will also need 5G or 6G connectivity to reduce latency between multiple devices and the cloud to send all this data to one IP address without needing to synchronize across servers.

Once we’re living in the metaverse, we will need advanced analytics to react in real-time and blockchain to record and create trusted transactions.

How will we access the metaverse?

The interoperability of technology, such as operating systems, is a big issue in the internet as we know it today. The metaverse will change all that because the starting point of interactions will be through a wallet, which contains our ID, money, avatars and property. Our wallet will enable us to be identified and represented – and will guarantee interoperability.

However, cybersecurity will be more important than ever because of this single point of identification. Three-point authentication is strong, but with quantum computing, the market for which is projected to grow from US$ 486.1 million in 2021 to US$ 3,180.9 million in 2028 at a compound annual growth rate (CAGR) of 30.8% (Fortune Business Insights, 2022), the power of processing threatens today’s cryptography. But quantum key distribution (QKD) technology is starting to address this. QKD protocols provide a mechanism for two remote parties to agree on a shared secret key, where the key cannot be observed or tampered with without alerting the original parties.?These protocols are still vulnerable though – an actor could agree to individually shared secret keys with two parties who believe they are communicating with each other – so QKD protocols must also be deployed alongside cryptographic mechanisms that ensure authentication.?

Questions that technology alone can’t answer

The metaverse promises to show us some unique content. So, what are the IP rights to using what we find?

Broadly speaking, it depends on its origin:

1. Content created in a physical environment and cloned for the metaverse
2. Metaverse-native digital asset tokens

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In the second case, an individual who has provable ownership can decide to license a digital copy and the rights to royalties or new business cases based on it. But the metaverse will also host millions of AI-generated visuals. Imagine if, in a session, we see some content that we want to record or capture – how do we gain permission to use this? Even with blockchain, there is still a question over who owns the content created by AI, and this will need to be worked out as the metaverse evolves.

Many people have concerns about the metaverse on a social level. If someone has an issue in the space that they want to complain about, who provides customer service? Or if they have a disagreement or even come under attack, who regulates the space? Moderating behavior in the metaverse is a much harder task than scanning posts on social media platforms – moderators (or AI) have to process spoken language, visible gestures, how avatars are moving within groups, and much more. Again, these are factors that tech companies will need to watch closely and regulate adequately.

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Accepting and adopting new dimensions

It is estimated that we will?spend more than six?hours [5] in this digital dimension, and research suggests that already 60% [6] of people around the?world prefer a?digital experience to a physical one.?

To begin with, big tech companies will create distinct and separate worlds for their users. There will undoubtedly be intense competition for dominance over who creates the defining space, and in the short term, there will likely be a proliferation of spaces, all with discrete permissions for entry, just like venues in the physical world.

Ultimately the metaverse will likely evolve into a familiar model whereby one space will host all the services people want, payable by subscription or access fee. This will extend to all areas, from entertainment to healthcare to government services, and also govern movement in the physical world, for example, with virtual passports.

These worlds will dismantle and disintermediate the classic value chains, business models and even social contracts we all know. But only once the technology is both widely available and widely adopted.

And how long that takes is not a decision for the tech companies but for citizens and consumers. ?

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co-authored with Giuseppe Perrone, EY EMEIA Blockchain Leader & Italy Innovation Consulting Leader ( Giuseppe Perrone )

The views reflected in this article are the views of the authors and do not necessarily reflect the views of the global EY organization or its member firms.

[1]According to statista.com

?[2] EY Gaming Industry Survey, https://www.ey.com/en_us/tmt/what-s-possible-for-the-gaming-industry-in-the-next-dimension/chapter-3-insights-on-the-metaverse-and-the-future-of-gaming

[3]“IDC Tracker Finds Upward Pricing Putting Downward Pressure on AR/VR Headsets,” https://www.idc.com/promo/arvr, 21 December 2022

[4] “The Metaverse: Separating the Hype from the Long-Term, Real-World Technology Implications,” IDC, IDC Doc #US48466921, 20 December 2021.

[5] ?https://datareportal.com/reports/digital-2022-october-global-statshot

[6] McKinsey survey - https://amplify.nabshow.com/articles/ic-the-metaverse-will-mean-5-trillion-up-by-2030/