What is the Metaverse
The word of the moment: Metaverse! Or would it be the place of the moment? After all, what is the Metaverse? We’re here to clarify your doubts and establish an overview of what to expect from Mark Zuckerberg’s newest “bet.”
The owner of Facebook recently announced the change of the company’s name to Meta. At first, the change made a lot of people twist their noses – but that was before we knew everything behind the operation.
To better elucidate what the Metaverse is about, imagine the following situation:
You’re walking down the street on an unpretentious walk, when you suddenly remember a missing product in your home – milk, for example. Immediately, a vending machine with a huge variety of milk brands appears at your side – Parmalat, Tirol, Batavo, etc. You stop, pick up an item from the machine, it is sent to your home and you continue your path.
Welcome to the Metaverse! Alternative digital realities where people work, play and socialize. You can call it Metaverse, Mirror World, AR Cloud, Space Internet, Live Maps or as you please! One thing is undeniable – it is coming, and to stay!
But where did this idea come from?
Second Life, the first Metaverse
To give you a better overview of the origin of the Metaverse, let’s go back a little in time, more precisely to 2003, with the release of the game Second Life. Although it is, in fact, a game, it says a lot about what would be to come and uniquely exemplifies what the Metaverse is.
It was in 2007, when Second Life reached the mark of 1 million users and it became possible to glimpse a “virtual world” of three-dimensional possibilities on the web. In it, users wandered around with personalized caricatures of themselves and enjoyed a wide variety of activities – listening to music, lecturing, attending digital versions of famous nightclubs and even buying clothes (virtual or not) at Armani.
That’s exactly what you read. Second Life pioneered the sale of real items through the game’s platform – and it was from this moment on that people got the first glimpse of what the Metaverse is.
Following the flow of the game’s success, Second Life founder Philip Rosedale secured a valuation of more than $100 million for his start-up and another $30 million in funding, including the amount of money from another investor who has been in the media’s name frequently in recent years: Jeff Bezos. At the time, still in 2007, Bezos and Rosedale spent most of their time thinking about the world of second life possibilities:
“We thought we’d spend half our time online as avatars,” Rosedale recalls. However, continuing the project would become much more difficult than he imagined. For this, it was necessary to increase the support to the game, something that would not happen without it having significant advances in the user experience.
For a while, Second Life made it seem like the Metaverse – an immersive 3D world idea originally conceived in a 1990s science fiction novel – was finally in our hands and available for a key turn on the web. No, i wasn’t. 2007 marked the peak of second life’s popularity. After that, its user count stabilized, then declined more and more, hampered by faulty graphics, slow internet connections and the emergence of a new popular place to gather online: Facebook.
As Second Life becomes increasingly deserted, with approximately 600,000 active users, Facebook now has 2.9 billion. And it’s already in decline. Rosedale moved away in 2008 while Jeff Bezos quickly turned his focus to mastering the conventional two-dimensional internet – and Amazon never established an official presence in Second Life.
Facebook, Meta and or Metaverse
Today, Zuckerberg hopes to finally – and more thoroughly – recreate the Metaverse. By irony of fate, the founder of Facebook was precisely the person who brought Second Life to ruin. Under siege on several fronts, he attributed his trillion-dollar company’s future to creating a Metaverse, renaming Facebook “Meta.”
Mark Zuckerberg said the concept will cost $10 billion this year – and more in the coming years – and the prospect is that the Metaverse will hurt the billionaire in these early years. Everything will “pay if you pay,” he says. The figures may seem daunting, but Facebook has the locker to bear those losses: it made $29.1 billion in profits and $86 billion in sales in 2021 alone.
Zuckerberg’s project is not entirely new. Fragments of it have been circulating in Silicon Valley for years – as Second Life and Bezos’ previous interest in the Metaverse make clear. But Facebook, or Meta, positions itself in very different realities of the past. One is the ability to deploy more money in the next two or three years than the total of all dollars spent on the Metaverse during the previous 30 years. Another is the simple fact that we are all much more comfortable with virtual communication now, especially after working from home for most of the time in the last 2 years.
“Our goal is for the Metaverse to reach one billion people and billions of dollars in trade over the next decade,” Zuckerberg said in a conference call with Wall Street analysts two weeks ago. Getting there, he noted, “will be a long way.”
The origin of Metaverse and Virtual Reality
The actual term “Metaverse” comes from a 1992 science fiction bestseller, Snow Crash. Its author, Neal Stephenson, imagined a dystopian world where the book’s main character, a hacker/pizza delivery man named Hiro Protagonist, travels from its dark reality to a 3D virtual urban landscape, the Metaverse, which spans more than 40,000 miles. Stephenson’s work would later influence the film Matrix and Steven Spielberg’s Ready Player One series.
A computer scientist named Jaron Lanier coined the term “virtual reality” for the first time in the 1980s, and the first vr (virtual reality) applications were airlines, car manufacturers, NASA and the military. At the time, they were the only ones who could afford the technology. A VR headset could cost up to $3 million dollars at the current price.
A limitless 3D digital world accessed as easily as the internet, where we do things like take your dog for a walk, play a game, watch a show, a football match or even participate in a work video conference. This is the virtual reality of the Metaverse.
Outside of books and movies, how close did we get to a Metaverse?
In addition to Second Life, the closest examples of Metaverse versions came from video games. The most famous example of these online game worlds is World of Warcraft, which for 17 years has led the MMORPG market with about 5 million subscribers. The place is a parallel world of battles and sorcery with an undeniably relevant social component: there are many people who have known their spouses playing the game. It’s also a financial giant. Activision Blizzard, the company behind World of Warcraft that was recently acquired by Microsoft, has already made more than $8 billion in lifetime revenue from the game.
Snap also de-depthd into space, but focused its efforts on augmented reality, a slightly different concept from VR. Augmented reality revolves around using your smartphone or special glasses to enhance the real world with virtual elements. Niantic’s Pokémon Go game is the most popular and popular use of augmented reality. The main difference is that AR does not fully block reality; a VR headset strapped over his head does. Microsoft also got into the fray, recently announcing that it would soon develop a work-focused Metaverse – where teams workflow software would have VR and digital avatars.
Epic Games’ Fortnite, which debuted in 2017, has come closer to a Snow Crash-type Metaverse than any other. Fortnite players see your real online battle game as a place to socialize; they chat through audio and video capabilities integrated with desktop computers and game consoles, or through third-party applications such as Discord. There are also virtual concert events by artists such as Travis Scott and Arianna Grande, who have further expanded their universe.
What’s different about Zuckerberg’s metaverse view?
Spoiler alert! Zuckerberg seems to expect people to access his virtual world through a VR headset/viewfinder – just like Hiro did in Snow Crash. It’s an important distinction. Fortnite, Second Life, and most other multiplayer online games are typically displayed on a PC or TV monitor connected to game consoles such as an Xbox or PlayStation. The rest of Zuckerberg’s metaverse idea looks like a work in progress. But he shared images from a virtual reality office environment called Horizon, anticipating that he would take advantage of the change from pandemic to virtual work. Marketing move? Perhaps. But not just that.
In fact, Zuckerberg began preparing for this in 2014, when he bought Oculus, the maker of VR headsets, for $2 billion. Since then, Facebook has acquired more than half a dozen other VR-focused start-ups – including the recent purchase of Within, a Los Angeles-based boutique game developer, for more than $1 billion.
Shortly after Facebook launched its first Oculus headset in 2016, Vanity Fair asked Stephenson what he thought about the prospect of Facebook moving to virtual reality:
“There is no fixed process to predict results and control what happens,” Stephenson said. “On some level, it all comes down to people’s ability to act as ethically and socially responsible individuals.”
Why is Zuckerberg so focused on the Metaverse?
It is undeniable that Facebook has lost space among younger users to YouTube, TikTok and Snapchat. While Instagram remains popular with teens, the original Facebook app doesn’t follow the same stream. Increased attention on antitrust issues means Facebook is unlikely to be able to buy new competitors. If you want an app to win back young people, you’ll need to build it yourself, and Zuckerberg seems to be convinced that a VR-centric Metaverse is the way forward.
But that still doesn’t answer the question: Why is Zuckerberg so focused on the Metaverse?
The Metaverse is Money
From what we’ve talked about so far, you might be imagining the Metaverse as a bunch of interconnected virtual spaces – the world wide web, but accessed through virtual reality. This is largely correct, but there is also a fundamental and a little more enigmatic side of the Metaverse that sets it apart from today’s internet: blockchain.
In the beginning, Web 1.0 was the oversight of information from connected computers and servers that you could search, explore, and inhabit, usually through a centralized enterprise platform – AOL, Yahoo, Microsoft, and Google, for example.
At the turn of the millennium, Web 2.0 was characterized by social networking sites, blogs and monetization of user data for advertising by gatekeepers centered on “free” social media platforms, including Facebook, SnapChat, Twitter and TikTok.
Web 3.0 will be the basis for the Metaverse. It will consist of blockchain-enabled decentralized applications that support a user-owned asset and cryptographic data economy.
What is Blockchain and what is its relationship with Metaverse?
Blockchain is a technology that permanently records financial transactions, typically in a public and decentralized database called a ledger. Bitcoin is the best known blockchain-based cryptocurrency. Every time you buy some bitcoin, for example, this transaction is recorded on the Bitcoin blockchain, which means that the registry is distributed to thousands of individual computers worldwide.
This decentralized registration system is very difficult to cheat or control. Public blockchains, such as Bitcoin and Ethereum, are also transparent – all transactions are available for anyone on the internet to see.
Ethereum is a Blockchain like Bitcoin, but Ethereum is also programmable through smart contracts, which are essentially Blockchain-based software routines that run automatically when some condition is met.
For example, you can use a smart contract on blockchain to delimit your property over a digital object, such as a work of art or music, for which no one else can claim ownership of blockchain – even if you save a copy to your computer. Digital objects that can be owned – cryptocurrencies, titles, works of art – are cryptographic assets.
Items such as works of art and music on a Blockchain are called non-fungible tokens (NFTs). Non-fungible means that they are unique and not replaceable, the opposite of fungible items such as cash and cryptocurrencies – any dollar is worth the same and can be exchanged for any other dollar, just as a Bitcoin is worth the same as any other Bitcoin.
It is important to note that if you want to market an NFT, for example, you can use a smart contract that says you are willing to sell your digital artwork for $1 million in ether, the currency of blockchain Ethereum. When I click “Agree”, the artwork and ether are automatically transferred between the parties via blockchain. There is no need for a bank or third-party deposit, and if any of us dispute this transaction – for example, if you claim that I paid only $999,999.99 – anyone could easily point to the public record.
In addition, the Metaverse is not being built so only by Mark Zuckerberg, Facebook or even Meta. Different groups will build different virtual worlds and, in the future, these worlds will be passable to each other – forming the Metaverse. If two virtual worlds are passable to each other, Blockchain will
authenticate proof of ownership of your digital assets in both virtual worlds. Essentially, as long as you can access your cryptocurrency wallet in a virtual world, you can access everything encrypted in that virtual world.
Don’t forget your wallet!
After all, what to keep in your cryptocurrency wallet? You will obviously want to load cryptocurrencies into the Metaverse. Your wallet will also contain your unique Metaverse digital assets, such as your avatars, clothing, animations, virtual decorations, and other NFTs.
Just as you probably already do, shopping over the internet will be a whole new experience with Metaverse. Clothes, music, movies, games, apps and any real-world physical items. You’ll be able to view and even “hold” 3D models of what you’re buying, making your purchasing decision easier.
Are you one of those who have had an old leather wallet for years, that already has sentimental value and that does not trade for anything? Well, don’t be so: you can make a replica of it in the Metaverse and use it as a cryptocurrency wallet.
This option even facilitates transactions that require legal verification, such as buying a house or a car in the real world. Because your ID will be linked to your wallet, you won’t need to remember the login information for all the websites and virtual worlds you visit – just connect your wallet with one click and you’ll be logged in. This feature is also used to control access to age-restricted areas in the Metaverse.
Your cryptocurrency wallet can also be linked to your contact list, which allows you to take your social network information from one virtual world to another. Through the Metaverse, you can make invitations to parties, meetings, happy hours and even baptisms – in the real or virtual world.
At some point in the future, wallets will also be associated with reputation scores that determine the permissions you have to broadcast in public places and interact with people outside your social network. If you act as an internet troll or spread misinformation, it could damage your reputation and potentially have your sphere of influence reduced by the system. This can create an incentive for people to behave well in metaverse, but platform developers will have to prioritize these systems.
A great business opportunity
If the Metaverse is money, big companies will certainly want a slice. The decentralized nature of Blockchain will potentially reduce the need for gatekeepers in financial transactions, but companies will still have many opportunities to generate revenue, possibly even more than in today’s economies. Companies like Meta, the pioneer, will provide great immersive platforms where people can work, have fun and get together.
Major brands such as Nike, Adidas and Dolce & Gabbana have already entered the world of NFTs. In the future, by buying an item from the physical world of one of these market giants, you can also get ownership of a linked NFT in the Metaverse.
For example, when you switch cars to model of the year, you can also become the owner of the cryptographic version of that car and drive it to the Travis Scott show. And just as you would possibly involve your old car in business, you can do the same with the NFT.
These are just a few examples of a multitude of examples by which business models in the Metaverse are likely to outnumber the physical world. These transactions will become more complex – and at the same time less complex – as augmented reality technologies become increasingly into play, blending even more aspects of the Metaverse and the real world.
Although the Metaverse itself is not yet here, technological foundations such as blockchain and cryptocurrencies are constantly being developed, setting the stage for a seemingly ubiquitous virtual future with a universe of possibilities.