On 28th Oct 2021, Mark Zuckerberg introduced Meta, which brings together Facebook apps and technologies under one new company brand. As stated, Meta’s focus will be to bring the metaverse to life and help people connect, find communities and grow businesses. Check the Founder’s Letter, 2021.

What is Metaverse and Why So Hype?

Technically, the original vision and definition of the Metaverse was a point in time when the blurring between the physical and digital happens. This has typically been thought of in the context of AR (Augmented Reality) and VR (Virtual Reality), together known as Mixed Reality, becoming ubiquitous.

Think of Metaverse not as a destination, but a journey or process, and this process is multi-dimensional and has already begun through the creation of new virtual worlds both in the context of gaming with MMORPG (Massively Multiplayer Online Role Playing Games), and also other social venues and experiences. Each exists on a spectrum with several conflicting characteristics; where the production of content is both by studios and independent creators, value transfer is bi-directional (from digital to physical and physical to digital), where value is both transformed entirely or just represented and is both passively or actively consumed.

Much of this process is bottom-up and driven by market forces and the general direction of technical innovation. However, we also believe it will increasingly begin to interplay and be informed by top-down government policy around data rights, privacy, antitrust and, most importantly, financial legislation, all of which of course vary wildly around the globe.

Furthermore, people today still make a distinction between the physical and digital economy, even though in reality a company like Amazon is a hybrid of the two. On the one hand, direct-to-consumer has dematerialized much of the retail supply chain, but it’s still both a virtual mall and network of physical fulfillment centres moving around physical goods, as well as a business with a growing number of virtual goods and services like ebooks, music, and video streaming, all of which are consumed entirely on its proprietary devices and platform.

So is a company like Amazon part of the Metaverse?

Key Characteristics of Metaverse

It seems one of the defining characteristics of a metaverse was that somehow it was an economic system independent of, and enjoys supremacy to, old fiat based economies controlled by nation states. It seems one of the defining characteristics of a metaverse was that somehow it was an economic system independent of, and enjoyed supremacy to, old fiat based economies controlled by nation states.

This is not true for a platform like Amazon, primarily a US-based company, that uses the local fiat currencies for customers and staff and is increasingly entwined with the US state and its various agencies, but still ultimately at the mercy of central banks and various governments policies.

If we look at Facebook’s efforts to launch its own digital currency with Libra (which presumably would have extended into its VR platform, Oculus), because it is a highly centralised and fiat-based company, it has been aggressively constrained and in effect neutered as a genuine disruptive and sovereign crypto-currency. It could be considered partially true some games platforms are so big they are closed microeconomies, with their own currencies which they control centrally and value systems, like experience points systems, in-game items (skins) and marketplaces, where significant amounts of the wealth are held and traded.

This is even more substantial when you think of that as a proportion of a person’s wealth, when seen in younger generations. But the reality is only a few even let you transact in and out of their closed platform using fiat in order to interact with the ‘real’ world because of limitations imposed by governments around fears of money laundering.

But even more importantly, wealth is not directly transferable between these microeconomics into a virtual meta economy with its own sovereign currencies. And you can’t generally borrow against virtual wealth to buy physical assets, putting digital natives at an economic disadvantage, where 63% of gamers said they would actually spend more on skins if they had ‘real world value’.

It is because of this perhaps the defining characteristic of a true Metaverse is that it needs its own economy and currencies native to it, where value can be earnt, spent, lent, borrowed, or invested interchangeably in both a physical or virtual sense and most importantly without the need for a government.

Timothy Dean Sweeney (born 1970) is an American video game programmer, businessman and conservationist, known as the founder and CEO of Epic Games says, “Metaverse is going to be far more pervasive and powerful than anything. If one central company gains control of this, they will become more powerful than any government, and be a god on Earth.”

This leads us to …

Open Vs Centralized Metaverse

There are competing visions for the Metaverse and it is not yet clear if they can and will co-exist or must be in competition. To put it simply, there are at least two versions of the Metaverse we observe emerging: one dominated by closed platforms and Big Tech like Facebook / Oculus and the other built on open protocols leveraging blockchains like Decentraland.

But the distinction of open and closed isn’t just limited to technology choices and the extent to which platforms embrace open source principles with their code and data, but importantly whether they have a closed economy, within or across their own proprietary games, or whether they allow transferability of value outside their ecosystem, how that interacts with fiat based systems, and to what extent they do or don’t control the monetary and fiscal policy of the underlying economy itself.

Secondly, the technical and philosophical distinction between visions and emergent actualities of metaverses which could be described as “low-fi to hi-fi.” There are Hi-Fi Closed Lo-Fi Open 6platforms that deliberately push the technical boundaries of the experience through both software and the hardware requirements like Oculus and those that design for the lowest possible device and bandwidth requirements for universal accessibility like Cryptovoxels. Although it must be said, to our knowledge, all of these virtual worlds still require at least a smartphone, which still currently excludes 6/10 of the global population.

You can take these as a form of axes which allow for a crude classification of metaverse platforms and virtual worlds to emerge. We believe these two axes are the most important to consider, because when combined they represent the cost to enter the economic system and the ability to offset that cost by earning value for different demographics.

It could be said there is a third classification about whether the platform allows for user generated content or not, but we think this difference will fade away with time. Most platforms to varying degrees will allow for UGC like Roblox or Minecraft, and will fall under the degree to which the virtual world is generally ‘open,’ so UGC is not important as a separate dimension when looking to project into the future of the Metaverse.

With time an open metaverse built on shared open source protocols, open infrastructure, and a single unifying yet open financial system will erode, or ‘eat,’ and potentially replace closed platforms due to powerful network effects. Leaving the only remaining distinction between virtual worlds; if they are low-fi or hi-fi. This final point is important and something that we believe we as an industry should always maintain in order to be as inclusive as possible and onboard as many people out of the old economy and into The Open Metaverse.

In Conclusion…

Every human on the earth finally have the ability to directly contribute to the first truly universal and permissionless economy humankind has ever known. As pioneers and active participants in this future we must also not go into this blind to the fact that, like Web 2’s social media, whilst it benefits likely outweigh its dangers it is a seismic societal shift that will cause immense disruption including, and perhaps most especially, in the context of the nation state and fiat based economies of today.

Let’s directly contribute to the convergence of web3 & open metaverse and control our personal destiny as a user, creator and consumer in the first truly universal and permissionless economy humankind has ever known.

Related reading: DAOtising Traditional Organization: The Future of Work Culture

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