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What is the Metaverse?

By Denys Ostapenko, Updated on: Apr 07 2023.

The Metaverse refers to an online virtual world, which you experience through an avatar - a digital body or a character. It is a persistent 3D universe where people socialize, work, learn, game and engage with various activities. The Metaverse aims to connect billions of people through shared experiences within a virtual realm, and revolutionize the way we interact with the World Wide Web, predominantly with the use of Virtual Reality (VR) and Augmented Reality (AR) headsets.

Generally, it is believed to encompass a unified universe with many “worlds” within it, which you traverse with your digital identity. However, this remains mostly a concept for now. Game developers have been pushing boundaries by creating games that provide the closest metaverse experience with its own events and virtual economies. Some “worlds” or metaverses would be more regulated than others, such as online banking services and government instances. Through the use of emerging technology the metaverse aims to not only unify users, but also introduce new markets and expand economies. Experts anticipate its value to be $30 trillion in the next 15 years.

The “Metaverse” has been a heavily marketed buzz word of the 2022, many companies have already invested billions of dollars into development of VR technology and experimenting with their own unique concepts. Not coincidentally, Facebook renamed itself to “Meta” which only added to the hype. Google, on the other hand, has been developing Augmented Reality (AR) glasses, which look just like ordinary spectacles. They have many utilitarian features, such as live-feed translation right into the glasses of the wearer, navigation et cetera. Nike, Louis Vuitton, Gucci and numerous brands have embraced the metaverse, each with their own creative approach: from having offices within digital worlds, to collectibles and virtual fashion shows. Afterall, just like in the real world, we choose our attires, “digital fashion” seems to be a natural evolution in the perspective of many brands. Major labels are racing through the space with enormous investments trying to gain a competitive advantage in this new frontier. Similarly, governmental, banking and educational institutions will adopt metaverses' many benefits in the years to come.

Why is the metaverse important?

By now you may be wondering: “Why should I care? How can it positively influence my life?”. If so, I am rather glad you have contemplated. Imagine your life without a cell-phone, that is how people would feel without access to “meta-services” 10-20 years from now. From online bank tellers to shopping districts and offices, we would be able to optimize our lives and save time.

Web3 ethos and the metaverse

Web3 is a decentralized iteration of the World Wide Web. It upholds users' values and ownership of their data, unless clearly stated otherwise. It responds to concerns over personal data usage, distribution of revenue generated on platforms, transparency and ownership. It is a more democratic approach than its preceding Web2 counterpart by allowing anyone to participate. Many metaverses have already leveraged blockchain technology and Web3 for these and numerous other reasons, primarily for its decentralized nature.

Social Media dilemma.

Metaverse as a social medium will revolutionize the way we interact (interface transformation). It will enable and enhance where traditional means of socializing lack. No matter the distance people could connect within a setting of their choosing. Such as going to a (digital) museum, a concert or a cinema, having a meeting, or going to school. It is far more engaging than social networks that have flourished during the Web2 era (aprox. 2004 - now). Web2 is the internet we use on a daily basis, where we can read, write, create and interact as end users within the World Wide Web. However, the social media companies rendered the end users as a product: instead of charging customers for access to their network, the companies monetised our privacy and have auctioned our data to the highest bidder. Through the use of Web3, the metaverse shines and overcomes deficiencies of today’s social media.

Remote work

In recent years hybrid and remote work have been widely normalized and the trend is growing, as the aftermath of Covid19. Having work meetings face-to-face is mostly better than through a webcam. Simply put, a lot of nonverbal communication is missing in online meetings and presentations. Being able to close the gap between home and office, we achieve a greater degree of flexibility than other known means. Engineers, designers, factory workers, teachers, almost anyone could benefit from it. Imagine being in a class where a building model or a medically-accurate human anatomy hovers next to you, similar to holograms in “Star Trek” franchise.

How does the metaverse work?

The metaverse aims to blur the line between the real and the virtual worlds with the use of tech like VR and AR. The final iteration of the metaverse should render both worlds almost indistinguishable. It’s like an “Avatar” movie, where the protagonist synchronizes with his “other body” and experiences life anew, despite being handicapped. Imagine being late for a meeting and you wear the glasses, or a headset which “transports” you into the meeting room, or your best friend’s birthday party, or any other important moment of your life you wish you could attend but was unable to.

It is still in its early stages of development, we are yet to see a more complete and well rounded implementation and utility. As it stands today a fully fledged metaverse, in its broader sense, does not yet exist. It is too new to be defined, and it is up to us to pave the way towards the kind of future we want.

How to buy or invest into the metaverse?

There are a few interesting approaches to investing in metaverse projects such as:

  • Buying digital plots of land
  • Investing in metaverse coins
  • Investing in companies that provide critical infrastructure for development of the metaverse

Let’s dive in each one of these and explore their pros and cons:

Digital plots of land

Buying digital plots of land has been the easiest, most common and somewhat the riskiest way. The idea is akin to aquiring physical properties and plots of land in hopes they would mature and then be sold for a higher price. However, unlike the physical land, which mostly matures and gains value over the years, the metaverse real estate market is significantly more volatile; just like the cryptocurrency market - it has noteworthy bearish and bullish trends.

2021 had 700% price increase with, then by mid 2022 price sank by 85%. The average price per property was $16’000, the same year it went down to $2’000; trading volume maxed at $229 million USD and went down to only $8 million.

Having this in mind, I hope you would make educated decisions and evaluate the risks - metaverse land is very different from physical real estate. However, just like in anything you do, every risk presents an opportunity to make some money. The initial “virtual world real estate bubble” has already burst, and the market will recover and become even stronger.

Metaverse related coins

  • The Sandbox (SAND), has performed well with its native token. Essentially it is a game with a heavy focus on the creation and trade of Non Fungible Tokens (NFTs) using SAND tokens.
  • Decentraland (MANA), many NFT collectors, virtual digital art collectors, showcase their arsenal of art pieces through owned and rented spaces. And yes, you read it right, you can sublet your land or property for events like showcasing art and fashion. It is one of the older projects that has gained recognition over the years, with market cap. over $1 billion.
  • Axie Infinity (AXS), inspired by the likes of Pokemon and Tamogotchi; it is one of the biggest play-to-earn games. Players compete against each other to win in-game tokens which are used for different in-game assets and governance. By staking it also allows its holders to vote for game’s development, the AXS token could also be exchanged to stablecoins, coins and other tokens. 
  • There are plenty of metaverses, some focus on a range of utilities and activities while others pivot to niche communities, such as fashion, e-commerce & so on. Whatever you do, avoid owning assets and lands from just one metaverse. Instead, diversify it across a range of projects with solid use cases.

Critical Infrastructure for metaverse development

The subject at hand is massive, it involves e-commerce, centralized and decentralized payment solutions, advertising, security, corporate and educational metaverses and the whole IT infrastructure. Tech and gaming giants are steering the way forward, while the “unicorn companies” and smaller agencies are aiming at a proof of concept by leveraging existing tech respectively.

A few examples of that would be server hosting for digital worlds. Amazon has been developing tools to do so and to develop upon, it is uniquely positioned with their experience in retail market space.

Apple has been active with AR development since 2017. Sony has worked with IBM, Microsoft and Oracle on dependable solutions to play, connect and work through Sony PlayStation VR headset (PSVR).

Nvidia is a graphics processing company which has heavily invested into the development of Graphic Processing Units (GPU) and Artificial Intelligence (AI); these two technologies are imperative to the metaverse.

Facebook’s subsidiary Oculus is a VR headset with a number of working games already, they are also exploring virtual work environments, and it has its own set of tools to develop advanced metaverses. Heavyweight companies are bullish on the metaverse and it is a promising sign, these are but a few big players who have a vested interest in the growth of the Metaverse.

Honorable mentions for the infrastructure development include Google, Decentraland, Shopify, Unity Technologies, Roblox, and Epic Games to mention a few. The number of innovators and developers within the field grows by day, it is an exciting investment opportunity and the possibilities of where it will go are endless.

Risks of investing in metaverse projects

Many projects will not stand the test of time and some concepts will become obsolete. The metaverse is volatile and new. Many novice investors will fall prey to FOMO (fear of missing out). We should stay on top of new tech and analyze market demands - this will surely help in minimizing risks involved with metaverse investments.

How to join the Metaverse?

First you should have an idea of what you would like to experience. Explore the market and scout for what is right for you. All the existing metaverses have different audiences and intent in mind. Some are places to socialize and engage with one another within a setting, like a park or a bar, others are art galleries, some are video games of varied genres, some even host events and fashion shows. A good way to explore would be to focus on the type of activities you wish to experience. However, if you feel impatient, a good kick off would be Decentraland (not sponsored or associated with them). Without a headset, nor registration or downloads you can check out what the digital hype is all about, try to have some fun while at it!

A few examples of metaverses you may have heard of:

  • Decentraland: It is built with the use of Ethereum blockchain that is user-owned. It allows users to interact with others, develop, experience and monetize content. Participants play games, buy land within its immersive worlds and trade digital collectibles (NFTs). There are a number of similar metaverses with each one trying to bring something unique to the table.
  • Minecraft: It is a sandbox game where players are free to explore, build, create and survive within the game. Minecraft’s in-game economy overlaps with real-world assets. Players can buy in-game items for hard earned cash; as well as buy digital in-game assets for fiat currency.
  • Sandbox VR: I usually compare it to a laser tag game with a VR headset. It is an experience set within the real world with up to 6 players. Briefly speaking, as you roam through the room wearing a headset and proximity sensors, you compete against the monsters or other players. It is a fun activity for family and friends. It definitely feels more realistic than being seated at home wearing a headset. You feel “submerged” and you would utilize your whole body to perform actions, like running, walking, shooting, etc.

Challenges of the metaverse.

Virtual Reality (VR) headsets

In just 3 years Meta (formerly known as Facebook) invested over $36 billion into development of a headset. Microsoft, Sony, Nvidia and Alphabet (Google’s affiliate) have poured billions more into R&D. Current headsets are expensive, heavy, lack battery life, require a considerable amount of abstraction-less space to navigate, should you want to walk or interact with digital worlds safely.

Internet Bandwidth

Internet speeds will have to withstand massive loads and sustain gigantic traffic - thousands times faster than what we have today for a truly immersive and real-time experience. That in turn, may force the current internet infrastructure to change from being centralized to decentralized.

Big Data and Big Storage

These are amongst the largest technical challenges that will prevent scalability of the metaverses. Some sets of data are so large and dynamic, structured and unstructured, that they could be virtually impossible to process or made sense of. Big data analysis can reveal patterns and trends that humans won’t be able to identify easily, if at all. This is imperative for making critical decisions for business’ growth, untapped market opportunities and improvement of products & services. Big storage is a must when processing Big Data. Thus, cost, scale, security, compatibility… the list goes on. Thankfully cloud storage and cloud-based computing could aid us here.

Haptic Suits

Haptic technology relays interactions of your digital avatar to your actual body through a wearable device, such as a vest or a suit. Thankfully they don’t hurt, not yet at least. Current designs are more suited for First Person Shooter (FPS) games where a wearer may feel a pinch imitating a bullet impact. A proper suit is at least a decade away from inception to the masses. After all, the metaverse experience is not only about taking punches in games, imagine feeling a breeze down your spine as your avatar walks through tundra, or ticklish sensations of feathers from your digital meta-dragon-pet of some kind. Users want it all, a two-way interaction haptics is along shot, but as you know - demand drives the supply.

Blockchain and Metaverse Economy

There are already Decentralized Applications (dApps), and metaverse-like applications which enable people to earn money leveraging the Distributed Ledger Technology (DLT), also known as the blockchain. Use of utility tokens and (NFTs), these addresse many items in question such as exchange of digital goods or services, interoperability, digital identity and infrastructure as whole. Axie Infinity is a prominent example of that as a play-to-earn game.

What is the future of the Metaverse?

We will have to wait to find out the exact direction and future of the metaverse. Would it be an escape from reality, or a nice addition to it? Surely, it is amongst the key technologies that will shape our future. Some researchers suggest that over 70% of businesses amongst major industries would benefit from metaverse inception into their daily operations. Augmented reality and virtual reality will create a new series of sub-industries and markets within the metaverse. It is a very exciting time to be alive and to witness its growth, and hopefully make a number of good investments.