What is the Metaverse?

“NFT” may have been Collins Dictionary’s?word of the year , but another concept from the technology sector made its way into the mainstream consciousness in 2021: the “metaverse.”

Everyone’s talking about it. Partially driven by macro factors such as COVID’s digitization of our lives—and likely tipped over the edge by Facebook’s recent rebrand to Meta—the topic is top-of-mind, from?op-eds ?in the New York Times to casual dinner table conversations.??

It’s a topic that’s been covered at length elsewhere; I’ve even touched on it in?several ?of ?my ?recent ?pieces. But, at the risk of sounding like a broken record, I think the subject is still worth a deeper dive.

What even is the metaverse?

Defining “the metaverse” is an impossible task from the start.?

For one, it’s so early that it’s hard to predict what the metaverse will morph into and eventually mean to us, similar to how predicting Snapchat immediately after the release of the iPhone would have been miraculous.?

To add to the mess, there are so many semantic battles. Some people think “metaverses” (plural) is more appropriate since there will be multiple different virtual experiences that will be accessed by various interfaces. Some don’t like to use the term at all because of much of a buzzword it has become—the “metaverse” has come to encompass almost anything in the virtual world. Maybe “metaverse” itself will eventually be retired for another term, who knows!

For now, it’s useful to at least try to arrive at a precise definition for the concept. The best one I’ve been able to find comes from?Matthew Ball , an investor whose?write-ups on the metaverse ?are must-reads. While he acknowledges that a perfect description is impossible, he?defines ?the metaverse as:

“a massively scaled and interoperable network of real-time rendered 3D virtual worlds which can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of data, such as identity, history, entitlements, objects, communications, and payments.”

There’s a lot to unpack there, but some of the elements that stick out are: it’s 3D, open to near-infinite numbers of people, and has some element of continuity, similar to real life.

Source:?Matthew Ball

For some, this may bring up images of Second Life, a popular massively multiplayer online role-playing game (MMORPG) from the early 2000s. While this analogy has some merit, it’s a visualization of what a?single?type of metaverse?could?look like. In reality, the design space for metaverse-builders will be wide and, ultimately, will be driven by us, the users.?

Source:?Second Life

Who, then, is building the metaverse? So far, they’ve fallen into two camps: non-crypto and crypto metaverses. And, until recently, they’ve been building more or less in parallel to one another.

Non-crypto: Big Tech’s metaverse

Due to the metaverse’s longstanding association with virtual reality, what we would consider “the metaverse” has been in development for several years by a number of VR companies.?VRChat ?and?AltspaceVR , for example, have been two of the most prominent platforms for working and socializing in virtual reality. Particularly with COVID, the virtual events use case found early traction.

Source:?AltspaceVR

This year, two Big Tech companies—Facebook (now Meta) and Microsoft—made big bets on the future of the metaverse, incorporating it directly into their immediate roadmap.

For Microsoft, this was Satya Nadella’s?announcement ?in May that their new suite of Azure products are a part of an extended “enterprise metaverse”:

Finally, as the virtual and physical worlds converge, the metaverse made up of digital twins, simulated environments, and mixed reality is emerging as a first-class platform. With the metaverse, the entire world becomes your app canvas. With Azure Digital Twins you can model any asset or place with Azure IoT and keep the digital twin live and up-to-date. Synapse tracks the history of digital twins and finds insights to predict future states, and with Azure, you can build autonomous systems that continually learn and improve. Power Platform enables domain experts to expand on and interact with digital twin data using low-code/no-code solutions. And Mesh and Hololens bring real-time collaboration.

This is certainly less exciting than going to a rock concert in virtual reality, but this enterprise angle may be how the metaverse—and virtual reality—initially targets an actual problem, that of telepresence and remote collaboration.

Source:?Stratechery

Facebook, of course, rebranded to Meta later in the year, unveiling their own?Horizon Workrooms ?product for VR-based teamwork. They seem to have bigger ambitions though, not only from a financial standpoint (~$10B per year for miscellaneous metaverse-related R&D) but also in scope. Zuckerberg, at least from what he’s saying publicly, seems to “get” why interoperability and openness matter and, since he views this as a new era of the company, claims to be building in that direction.

In?his words :

I think it’s probably more peer-to-peer, and I think the vocabulary on this matters a little bit. We don’t think about this as if different companies are going to build different metaverses. We think about it in terminology like the Mobile Internet. You wouldn’t say that Facebook or Google are building their own Internet and I don’t think in the future it will make sense to say that we are building our own metaverse either. I think we’re each building different infrastructure and components that go towards hopefully helping to build this out overall and I think that those pieces will need to work together in some ways.

We’re trying to help build a bunch of the fundamental technology and platforms that will go towards enabling this. There’s a bunch on the hardware side — there’s the VR goggles, there’s the AR glasses, the input EMG [electromyography] systems, things like that. Then there’s platforms around commerce and creators and of course, social platforms, but there will be different other companies that are building each of those things as well that will compete but also hopefully have some set of open standards where things can be interoperable.

Talk is cheap, so we’ll see what Meta ends up doing. At the end of the day, they remain deeply embedded in the profit-maximizing, zero-sum competition cycle of Web2 technology companies, so I don’t expect them to build the metaverse that we hope for, necessarily. But I also wouldn’t jump to conclusions too quickly.

Crypto: a community-owned metaverse

In our industry, the approach has been different. The core principles of decentralization, trustlessness, pseudonymity, and community ownership have been ingrained from the start.

Some of the earliest virtual worlds to be created with blockchain technology include?The Sandbox ,?Decentraland , and?Cryptovoxels . While they each have different elements and in-world economics, the power of blockchain and NFTs allows for true digital land ownership, which opens up entirely new types of activities from leasing your plot to custom-building a home for someone else.

A lot of early activity has been from buyers hoping to reserve their plot of land in the metaverse for posterity, but a number of interesting uses have begun to pop up. On Decentraland, for example, there are events almost every day that users can hop into and experience—you can find the full list?here . Dominos, Atari, and other big-name brands have also purchased plots of land to advertise their goods, host events, and build awareness in the virtual world.

Source:?Decentraland

Many games, too, are beginning to see themselves fall into the “metaverse” category. Axie Infinity, the canonical?play-to-earn ?game, has different plots of land that can be purchased, guilds that different players can join, and so on.?GuildFi , one of our recent investments, seeks to be the gaming guild tooling solution built for the metaverse, not simply another scholarship platform.

Where we go from here

We’re still a long way from the metaverse going “mainstream.” Frankly, we’re not even close.

It will start with the enterprise (e.g., Microsoft, Meta) and gaming (e.g., Decentraland) and will slowly branch out from there. I personally think that the open, decentralized, and community-owned metaverse will beat the closed, rent-extracting, and surveilled systems, for many of the same reasons why I think Web3 will disrupt Web2. But this future is by no means predestined; it needs to be built!

In so many ways, we’re still in the picks and shovels phase of this industry. The metaverse needs its own currency—we’ve more or less already got that covered. But the metaverse also needs its own sovereign infrastructure stack that doesn’t go down?when AWS does . Or ways for groups of people to easily collaborate with one another, from decentralized messaging to project management tools. Or standards for NFTs as they cross between “metaverses” and different rendering environments. In short, there’s a lot that needs to be built for this new future.

If you’re building something to help the open metaverse win, shoot me a message. I’d love to chat.

- Paul Veradittakit