What is the Metaverse and Why it Matters
Elon Musk is striving to take humans to Mars. Another race is on in our backyards, to take humans beyond reality! It is likely that you have heard the term metaverse. But what exactly is it?
Facebook announced its rebranding to Meta with a $10Bn chest and stated - The metaverse will feel like a hybrid of today’s online social experiences, sometimes expanded into three dimensions, or projected into the physical world. It will let you share immersive experiences with other people even when you can’t be together. Zuckerberg envisages a metaverse as an array of virtual worlds across work, play, entertainment, social interactions, meshed together to form a virtual parallel to the real world.
Neal Stephenson coined the term 'metaverse' in his 1992 cyber punk novel “Snow Crash". More recent inspiration come from the Sci Fi movie "Ready Player One" based on the Earnest Cline’s 2011 novel of the same name. However, metaverse is no longer in the realm of sci-fi. It is here.
It is not easy to define metaverse in a single line. Wall Street Journal loosely and simplistically defined it as
An extensive online world where people interact with each other as digital avatars
Metaverse is an extension of the physical world into the virtual, until both begin to coexist in a seamless manner. To quote from Ready Player One, this as a parallel universe where you go at will for all the things you can do and stay for all that you can be via avatars you choose, your alter ego. An escape from reality, into a world as real. However, metaverse is much more than that. Metaverse has real life, value creating use cases for artists, creators, celebrities, service providers, and brands. Entire economy is being rolled out at this very moment.
What is enabling the metaverse now?
For the metaverse to be successful, it must allow for currency, goods, and services to be traded successfully.
Rapid development of blockchain tech and the applications that run on it, are enabling creation, and development of the metaverse. Apart from a robust mechanism that enables exchange of value, it is imperative that the ownership of digital assets remains immutable and verifiable.
Proof of ownership in the digital world has always been a challenge and the solutions available until now have been restrictive and only marginally successful. Anything in a digital format has been easy to copy with provenance exceedingly difficult to prove. Advent of NFTs (non-fungible tokens) on blockchain has solved for this.
The architecture inherent in NFTs grant a digital certificate of verifiable ownership to its owner. Ownership of every asset can be verified on chain and transacted via smart contracts that execute irreversibly. No need for intermediaries. Defi apps on blockchain have democratised finance making it easy for anyone and everyone to participate in this new economy. No one is 'unbanked' anymore.
Number of crypto users doubled over a five month period to cross 200mil by Jun 2021. The global Metaverse revenue opportunity could approach $800 billion in 2024 vs. about $500 billion in 2020, based on analysis by Bloomberg, Newzoo, IDC, PWC, Statista and Two Circles data. This is not trivial and early movers are entrenching themselves to gain disproportionately in the immediate future.
The first applications are around gaming and fashion. Decentral land, Sandbox, Axie Infinity are popular P2E (play-to-earn) games that are making rapid progress. Top brands and celebrities have staked their claims in the new virtual world by owing virtual real estate and other assets. Snoop Dogg has built his virtual mansion in the Sandbox and recently held a concert for his followers. A piece of virtual land next to Snoopverse, sold for US$450K.
Address matters in the metaverse, as it does in the real world. 'Exclusible' a premium NFT platform has bought lands next to Snoop Dogg's and will be commercialising its villas as it hosts parties for its exclusive club of NFT holders. Luxury house Burberry created NFT accessories for the Blankos Block Party video game. Louis Vuitton has launched its own NFT-studded video game, 'louis the game'. Gucci has digital items in Roblox.
Nike has just acquired the bespoke virtual sneaker company RTKFT and has created NIKELAND in Roblox. Adidas Originals twitter handle has a bored ape PFP. It owns real estate in The Sandbox and recently launched its NFTs with great collabs with BAYC, gmoney and PUNKS comics. This space evolves as I write.
It's not all gaming. Microsoft is introducing a metaverse for office workers. By next year, users will be able to appear for team meetings using avatars and share immersive experiences with team members in virtual rooms. Organisations are building virtual offices. The metaverse makes physical location irrelevant. WFH will soon evolve into WIM (Work in Metaverse).
Metaverse is changing not just how we live in the world but also how we participate in it.
The business model for virtual worlds underpinned by blockchain, NFTs and DeFi promises exciting times and untold gains for those who start early.
How might your industry be impacted?