So, What the Heck is the Metaverse?

The “metaverse” is a phrase that has been thrown around a lot lately as it quickly grabs attention, but why is the potential integration of metaverses into our everyday lives significant? First, let’s start with the basics.

What is the Metaverse?

According to Wikipedia, the metaverse “is a hypothesized iteration of the Internet, supporting persistent online 3-D virtual environments through conventional personal computing, as well as virtual and augmented reality headsets.” In more practical terms, the metaverse is a virtual environment through which people can interact with one another. If that sounds like an extremely vague definition to you, it’s because it is. This would then qualify games like Roblox and most MMOs (such as World of Warcraft) as their own metaverses. This means that there is no one all-encompassing metaverse. Instead, there are many. However, in 2021 (and at this rate, likely most of 2022), the ‘metaverse’ is seeing a resurgence in popularity (both in terms of web searches and media coverage) due to its applications in blockchain technology.

One of the more popular metaverse games is The Sandbox, boasting investments from notable brands and figures from Atari to Snoop Dogg, with lesser-known users purchasing individual plots of virtual land for hundreds of thousands of dollars. Blockchain technologies in the form of cryptocurrencies and NFTs (non-fungible tokens) have made investing in digital assets outside of digital artwork and cryptocurrencies more accessible to the masses, enabling investment in the metaverse at a scale never seen before.

Metaverses Come in All Shapes and Sizes

Do you remember a game called “Second Life”? It was extremely popular in the early 2000s, so much so that even the writers of The Office (US) couldn’t pass up an opportunity to incorporate it into an episode. Second Life is commonly viewed as one of the earliest, if not the earliest, iteration of the metaverse. It allowed users to create a 3D avatar and explore virtual lands and had such a large following that countless articles were published on some of those who quit their jobs during The Great Recession in 2008 to become full-time realtors in Second Life. The COVID-19 pandemic, similar to The Great Recession, brought about radical changes in the way we live our lives — arguably more so, as the world’s economies shifted to remote-first work environments, meaning more time spent at home and online for billions around the world. At the same time, blockchain technology had developed by leaps and bounds since the time it caught the media’s attention in 2017. So, while the future of work hung in the balance, metaverse games grew in popularity, seemingly overnight.

In my opinion, all of the major metaverses today can be best segmented into 3 categories: (1) games, (2) future of work, and (3) AR/VR extension (or potential future replacement for aspects) of everyday life.

Games

Metaverses are transforming what are considered games and, more importantly, how people can monetize playing videogames. The key difference between metaverse games and traditional videogames is in-game currency and economics. For example, many traditional videogames allow you to earn in-game currencies through trading digital assets. For example, creators on Roblox can create their own games and items to be sold to other users for Robux, Roblox’s native currency. This is similar to The Sandbox, where users also create their own games and items in exchange for SAND, The Sandbox’s native currency. However, SAND is a cryptocurrency, meaning that it can be traded on exchanges for fiat currencies such as USD. Robux is tied to Roblox, therefore the only way a user can convert the Robux they earn into a fiat currency such as USD is through Roblox. Currently, the only way to do so is through purchasing a subscription of Roblox Premium, with an arguably horrendous conversion rate that does not take into account the demand of their native currency, Robux. Further, SAND is a currency that can be traded outside of The Sandbox, allowing people to become involved in the game’s economy without actually playing the game, whereas everything bought and sold with Robux must be done through Roblox and according to Roblox’s decisions as a corporation.

While this opens up a world of possibilities for those who don’t consider themselves ‘gamers,’ this also means that gamers can better monetize their efforts. World-renowned gamers who compete for millions of dollars in tournaments rely on brand deals and streaming to supplement their income. With the rise of metaverse games, it will allow gamers to further diversify their income streams, relying less on YouTube ads and more on actual gameplay and creation.

Future of work

Metaverses that fall into the future of work category are a bit different in that most do not have their own token/cryptocurrency, similar to their videogame counterparts. Instead, these metaverses focus on immersion and tools that make it easier to host and join meetings, visualize presentations, and collaborate with others. Some of the more well-known examples of this are Meta’s Horizon Workrooms and MeetinVR. Many future-of-work metaverses require VR headsets to participate, making it difficult to try out as headsets can cost hundreds of dollars — which, for many small teams, is unviable. However, the range of functionality in future-of-work metaverses is quite impressive. MeetinVR’s demo, in particular, shows avatars annotating diagrams and conducting presentations with ease — many presentation tools in real life are static and fail to allow collaboration. This also provides room for advanced expressions and better interpersonal connections, addressing WFH concerns over lackluster Zoom meetings.

AR/VR extension of everyday life

This category of metaverses is concerned with those that aim to provide users a way to interact with one another through gaming everyday social interactions — the most notable example of Meta’s Horizon Worlds. This segment of metaverses is highly questioned because it inspires ideas similar to the OASIS metaverse from Ready Player One and other futuristic dystopian novels. Similarly, Horizon Worlds drew criticism largely because, despite presenting itself as fantastical and limitless, it is basically a 3D social network that brings up the argument of “virtual interactions can’t replace real-life interactions.” The case can be more easily made for videogames and workspaces because videogames have existed for decades and the pandemic has forced many to work remotely anyways.

Why Does the Metaverse Matter?

The metaverse is here to stay, at least in some capacity. The infrastructure is there, with blockchains able to support thriving ecosystems filled to the brim with digital assets, from cryptocurrencies to virtual real estate to artwork. It’s not a matter of being too big to fail, but being too diversified and developed to fail. The main difference between the metaverses of the early 2000s and the goliaths of the 2020s is how far technology has come in the last 15 years and how deeply integrated it is with modern everyday life. Countless companies are going paperless, checking emails is mandatory, and my grandparents, who used to scold me constantly for spending too much time on my phone or laptop, spend more time than I do on social media. It isn’t just that technological advancement is inevitable, it’s that technological adoption comes with advancement.

This does not mean that you need to stock up on ETH or start buying random plots of virtual real estate in Decentraland. Instead, it means that it’s worth keeping an open mind and considering the different ways you can interact with metaverses. It’s worth remembering that fads eventually fade because people realize they are impractical. Technological innovation stands the test of time because it improves the overall quality of people’s lives.

Our Observations

Pros

Metaverses offer a great way to be more productive in immersive environments, fundamentally transforming how we work and go about our daily lives. We saw a glimpse of this due to the pandemic as many professionals began working from home, joining meetings through Zoom or other applications. This enables people to spend less time commuting and more time attending to emails, calls, and other tasks. This was also massive for students. Instead of rushing between classes and making meetings in between on top of work and running to and from a dorm or apartment to switch out notebooks or textbooks, students have been able to take classes on Zoom to make it easier to study, catch up on other work, and better manage their day-to-day. Cutting down on time spent on administrative tasks can now be reinvested into leisure or focused, productive time.

Metaverses also provide a way of democratizing access to economic opportunity. This has especially been the case with games such as Axie Infinity, which soared in popularity in SE Asia.

Cons

One of the main concerns of ‘the metaverse’ is its longevity. Second Life has long since come and gone, and people are starting to wonder if the same will be the case with games such as The Sandbox and Decentraland. While we can all make educated guesses, no one can tell for sure as many larger metaverses are still in their infancy. We believe that no matter what happens, the long-term popularity of metaverses across gaming, future of work, and AR/VR extensions of everyday life will be determined by the (in)ability of the blockchains upon which these platforms are built to be adopted by the masses, in addition to how well the developers are able to execute against their respective roadmaps.

Summary

While metaverses are drawing criticism left and right, there are a few key takeaways that make it easier to cut through the noise:

• Metaverse tokens (cryptocurrencies used in metaverse transactions) are tied to the popularity and use cases associated with their respective metaverses
• There are benefits to working in a metaverse environment, similar to how the pandemic has shown us that in some cases, working remotely makes us more productive
• The lifespan (and intrinsic and economic value) of a metaverse is primarily determined by its community, developers, and partnerships

The hype of metaverses is likely here to stay, with big-name retail brands making their foray into the digital landscape. Regardless, the ability of metaverses to generate revenue is linked to their tokens, which adds another layer of potential and complexity thanks to this new wave of interest in Web3.0.