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What is the Metaverse?

By: Dr. Elham Mousavidin

From the Digital Assets to the Metaverse

Would you pay $4,000 for a digital Gucci bag? That is, for a bag that you cannot actually carry, but can only own as an image on a computer?  It is hard to believe, but in May 2021 someone actually did that.  The digital Gucci bag in question, which was purchased during an auction, is an example of a Non-Fungible Token (NFT).  These newly created digital assets, like their close competitors, the cryptocurrencies, rely on the use of very advanced programming methods.  More specifically, an NFT is essentially a digital record on a block-chain associated with a digital file such as a photo or a piece of art.  The NFTs thus provide public proofs of the ownership of the digital products.  As a result, the NFTs are unique and, hence, non-fungible.  A good example of a non-fungible asset is the digital passport.  Each digital passport is a unique and therefore irreplaceable entity.  Although the first NFT was created in 2014, it was only in 2021 that the NTFs as a class of digital assets became really popular, resulting in some 200 million dollars of transactions in the first quarter of that year alone.

The cryptocurrencies, the NFTs, and their underlying block-chains are merely aspects of the so-called Metaverse, a term that is being thrown around a lot these days without a clear and solid understanding of exactly what it is.  

Misconceptions about the Metaverse

Considering the scope and novelty of the Metaverse, it may be easier to first think about what the Metaverse is not! Here is a list:

  • Metaverse is NOT Blockchain
  • Metaverse is NOT FACEBOOK!
  • Metaverse is NOT Virtual Reality (VR) or Augmented Reality (AR)
  • Metaverse is NOT a  virtual game like World of Warcraft (WoW)
  • Metaverse is NOT cloud computing

The Metaverse is not Blockchain but Blockchain would probably play a big role in creation and existence of the Metaverse. The Metaverse is not Facebook but Facebook appears to be trying to monopolize it by branding itself as the leading force behind creation of the Metaverse. On October 28th, 2021 Facebook announced a change of direction and as a result a change of name to Meta. Although this announcement has brought significant attention from the public to it, Metaverse has been in the making for a quite while now. In fact, some of the leading companies that have been pioneering initiatives in development of the Metaverse are Roblox, Fortnite, and EPIC to name a few.

Contrary to the widely held belief, the Metaverse is not Virtual Reality (VR) or Augmented Reality (AR). The Metaverse provides immersive and persistent environments such as those created by AR and VR technologies. But the main idea behind Metaverse is to be available 24/7/365 in any platform including mobile devices and not to be bound to only high-tech equipment. The Metaverse is not a three-dimensional virtual game per se, but it is heavily based on the idea of gamifying things that are traditionally non-game. For example, in Roblox, users develop 3-D objects and games. Companies such as Gucci (with the creation of Gucci Garden Experience) use Roblox and its game-like object as a gateway platform to the Metaverse. The Metaverse is not cloud computing, but it sits on the cloud. At this point in the life of the internet, what really is not cloud-based any more?

Envisioned Characteristics of the Metaverse

The question still remains: But what is the Metaverse?

The most honest answer is that no one can be certain yet simply because the Metaverse is still unfolding and developing. Moreover, the Metaverse is not one thing but a phenomenon that has emerged as a result of many different inventions, technological developments and philosophies. The Metaverse is the natural evolution of the world wide web or maybe a natural evolution of our experience on the web. We have seen three main waves of the evolvement of the web since inception:

  • Traditional Web, called Web 1.0 in retrospective
  • Web 2.0 or the Semantic Web
  • Web 3.0 or the immersive Web

Web 1.0 was the era of static, one way, publisher-generated content. The end users were mainly the consumers of information. Web 2.0, also called the Semantic web, or Social Web, marks the period that social media were born and gave way to the explosion of the user-generated content and crowd-sourcing. Web 3.0 is what we are experiencing now! Experiences on the web are becoming more and more immersive and persistent. The Metaverse is naturally and quite organically emerging in this era of immersive web experience. The Metaverse is still in the making in the realm of Web 3.0 and naturally there is no one definition of what it is. This is always the case with a new technology or technological phenomenon. Take the internet itself as an example. When it was introduced to the general public in the early 1990s, there were so many different interpretations of what it entailed or what it would become. Today, the internet is a household name.

Since the Metaverse is still evolving, the potentials for how a stabilized Metaverse will look like are endless. Some characteristics that Web 3.0 community hopes to achieve for an ideal Metaverse include:

  • Rea-time 3-D environment
  • Complete democratization
  • Opensource code
  • Compatibility on any type of device
  • Interoperability across platforms
  • Vastness
  • Persistence of the environment
  • Total immersion
  • Co-creation by the community
  • Digital economy

These characteristics make the current revenue business models of the social web not compatible with the Metaverse. The paid advertisement, as an example, would not be a long term successful approach to profit making in such an envisioned Metaverse. In turn, experts suggest that, businesses would be better off to engage deeply with the existing Web 3.0 communities and co-create content that people would be willing to pay for. The NFTs are one example of such attempts. Some experts anticipate that big tech companies may not be the most successful in leading the way in creation of the Metaverse unless they truly adopt and adapt to the characteristics listed above. They believe that smaller Web 3.0 communities would have a better chance at being at the forefront because the essence of these communities are based on characteristics such as opensource and democratized platforms co-created by the community.

Conclusion

Does it all sound too crazy? Far-fetched? A Fad?

Maybe! But we need to keep in mind that Web 2.0 and the social media also seemed like a fad at the inception and were ignored and dismissed by many companies at first. Here we are though, twenty year later, with the social media with all their gloom and glory being an inseparable part of most institutions’ presence on the web. So, perhaps the Metaverse is the next natural phase that the world wide web will have to go through. In this process, the definition of the Metaverse will remain fluid for a while and will be shaped and reshaped through the many interpretations of the communities it serves. These various interpretations will eventually converge to a common understanding of the Metaverse when it becomes a stabilized technological phenomenon.

References:

Chow, A. (2021) “NFTs Are Shaking Up the Art World—But They Could Change So Much More,” https://time.com/5947720/nft-art/

Escalante-De Mattei, S. (2021) “Has Been the Year of the NFT. But What Exactly Is an NFT?” https://www.artnews.com/art-news/news/nft-guide-1234614447/

Into the Metaverse: A Bloomberg Intelligence Podcast, By (Matthew Kanterman and Yonatan Raz-Fridman)

Sharma, R. (2022) “Non-Fungible Token (NFT) Definition,” https://www.investopedia.com/non-fungible-tokens-nft-5115211

About the Author — UST Cameron School of Business

UST Cameron School of BusinessThe Cameron School of Business is fully accredited by the AACSB, the most respected accrediting body in business education worldwide. Many of the professors who will teach you have the highest degree in their field.

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