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What is the Metaverse?

The Metaverse is likely to dramatically change society as we know it in our lifetimes. It will transform the way we live, work and socialise. But how do we define the Metaverse?

Metaverse |
What is the Metaverse?

The Metaverse is likely to dramatically change society as we know it in our lifetimes. It will transform the way we live, work, and socialise. Yet the term ‘Metaverse’ currently lacks even a common definition and remains broadly misunderstood.

Part of the challenge is that the Metaverse’s emergence sits at the intersection of multiple fast-evolving industries, all with their own complexities and considerations. While the concept of the metaverse has long existed in the world of science fiction, it is only a recent combination of technology and belief inflections that are now enabling it to begin to emerge into reality.

This article presents a high-level primer on the topic before exploring its development and broader implications in more detail.

Drop the word Metaverse into conversation these days, and if it doesn't create a look of bemusement, the first reference that will often be made is to Steven Spielberg's 2018 film adaption of Ernest Cline's book "Ready Player One".

Other popular comparisons include Illy & Lana Wachowski’s film, “The Matrix” released in 1999 and Star Trek's holodeck.

The Matrix (1999), Ready Player One (2018), Star Trek: The Next Generation (1987-1994)

While these films bring greater awareness and interest in the Metaverse, we shall see from our further discussion, that they all have characteristics that deviate from the values and definition of the Metaverse.

Where did the term metaverse originate from?

The term metaverse was popularized in the 1992 book “Snow Crash” written by Neal Stephenson. The word Metaverse as made up of “meta” meaning beyond, and “verse” which is a back-formation of universe.

A range of names such as the spatial internet, multiverse and omniverse have all been used as alternatives to the Metaverse but have failed to gain widespread adoption.

What is not the Metaverse?

Such is the confusion in the present stage of development, it is worthwhile clarifying what the Metaverse is not, in order to help define what it is.

  • It cannot be reset or paused
  • It is not scripted (it evolves organically with participants actions)
  • Your actions are not meaningless (they have consequences)
  • It does not serve a single purpose (therefore is not just entertainment)
  • The number of overall participants is not restricted, in total or at a point in time
  • Data and digital assets are not restricted in ownership, transfer or interaction
  • It is not owned or controlled by any one person or enterprise
  • It is not a single place, with a single set of rules
  • It is not a 2D environment (or only offers limited spatial data)
  • There is not only one way to access the Metaverse

The Metaverse: A Definition

In order to have a framework to evaluate many of the products and narratives that currently exist around the Metaverse today we need to have a clear definition of its characteristics.

The metaverse is a persistent virtual world that enables synchronous social presence, is emotionally real to participants, and provides the ability to engage with an open virtual economy. It has no single purpose or objective and evolves as participants create and influence the world. The metaverse has multiple access points and operates as a gateway to a full range of societal experiences.

It should be emphasised that VR and AR technologies do not alone meet the criteria for the Metaverse, but do clearly play an important part in enriching the experience (including via VR's unique characteristics).

The video games industry provides important technology components which will help create the Metaverse, yet it should be clear from our definition that it is not in any way a game.  Society's current perception of the gaming industry does though have implications for the initial adopting demographic of the Metaverse in its formative stages.

Terminology: The Metaverse ? or Metaverses?

Despite great steps forward in technology, enthusiasm and resources to create the Metaverse, we remain very much in the infancy stages of its evolution.

As the term is gathering wider initial understanding, there are many references to individual metaverses created by companies, such as Facebook’s Horizon, Epic’s Fortnite or Decentraland etc.

In today's world, it would seem odd to refer to "Microsoft's internet" or "Facebook's internet". It is commonly accepted that there is only 'the internet' which is made up of a collective of websites and applications.

Logically, it should be apparent that there should only be one Metaverse; The term should refer to the collective of virtual worlds, which are joined by a principle of openness, that enables seamless movement, and transfer of assets.

I believe as this space matures, the common usage of the term will eventually standardise.

Terminology: Open or Closed Metaverse?

You cannot go far in a discussion around the Metaverse without hearing someone express a desire or belief in an "Open Metaverse".  But what does that mean?

The fear from many circles is that the Metaverse currently being born will be dominated by large corporations, adopting the same extractive approaches for commercial gains that exist today. Implicit with this is a lack of ownership and restrictions on freedom of movement of data and digital assets between virtual worlds.  This is often the dystopian image of the metaverse that is described.

Opposite to this is the idea of an "Open Metaverse". One where the movement of identity, data and digital goods can transition freely between different virtual worlds that make up the Metaverse.  While there is likely to be parts of the Metaverse that have restricted access (just like in real life) this should not be confused with a 'closed metaverse' which by nature is restrictive in all aspects.

This discussion is closely intertwined with the principles of Web 3.0 which focuses on empowering the individual with sovereign control over their own data. This is in stark contrast to Web 2.0 where technology companies monetise your data through centralisation, surveillance and advertising.

Where does blockchain come into this?

The Metaverse is often confused with Web 3.0 given the speculation around NFT land sales in social virutal worlds. Its important to remember that the Metaverse is made up of various technological tools and industries.

For all the polarisation and speculation around the crypto economy, the underlying distributed ledger technology has the potential to be a building block for an open and accessible digital economy that the Metaverse needs to flourish.

A functioning economy requires ownership of assets, means of transfer and payment. Blockchain enables these functions to theoretically occur in a decentralised and permissionless manner. Further to this, many of the geographic frictions we see with the current fiat payment infrastructure are removed. In its place is a globally accessible form of payment, with near-instantaneous settlement and programmable in nature.

Where is the Metaverse today?

Despite the euphoria around the term, we remain at the very early stages of its development. Many of the projects and businesses that currently get mainstream media attention fail to fulfil the definition of the Metaverse we presented above.

However, we have recently reached an important inflection point.  A combination of enabling technologies, standards, and beliefs have set the stage for the Metaverse to begin to rapidly emerge. The future is bright.

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Matthew Scott Jones

Matthew Scott Jones

Founder & Macro Investor. Focused on the emergence of the Open Metaverse, XR: VR AR, digital asset innovation and global investment trends

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