The term metaverse is not new, but Facebook founder Mark Zuckerberg recently gave the word a new relevance by declaring virtual space to be a corporate priority. What the Metaverse is about, why Facebook is betting on it and what opportunities there are for the crypto sector.
One of the big questions of our decade is: Who will gain the upper hand in the digital economy. The central platform economy or decentralized alternative offers? Perhaps the largest and most distant battlefield that will decide this question is the metaverse.
Facebook founder Mark Zuckerberg recently made it clear where he sees the future of his company: in the so-called Metaverse. What sounds like science fiction is increasingly becoming a reality. Instead of “passively” surfing the Internet using the keyboard and mouse, you are right in the middle of the virtual space. It’s about nothing less than a life in digital space. Meeting friends, working, shopping, doing sports, going to the cinema and so on and so on: Everything that can be done in analogue life should in future also be shown in purely digital worlds. The physical handbags and sneakers then become, for example, digital counterparts that you can buy in a virtual shop and wear to a business meeting.
At the same time, an economy of its own is emerging in this digital world. Up until now it was possible to order new shoes on the Internet on websites like Zalando, but the Metaverse is about making these new shoes accessible to your digital avatar. Virtual or augmented reality, such as that developed by Facebook, for example, with its VR simulation Horizon and its VR glasses Oculus, is used here.
We are still a long way from commercial practice as one might imagine it in the future. However, in the last few months several projects have emerged that are setting out to shape the future Metaverse according to their ideas.
For crypto enthusiasts it may be clear that these new worlds have to be created on token-based infrastructures. After all, it is also about digital identities or digital property – tokenization is quickly becoming a basic requirement for a functioning economy. Without a token economy, the question arises of how else to guarantee a transfer of property or unequivocal identification.
Without a decentralized blockchain solution, anyone who owns something that is an original or a copy would remain with the middleman, such as Facebook. As great as the influence of Facebook is today, it would be significantly exceeded by the successful development of the Metaverse. The dependency would be gigantic, since the organization of our digital life would depend to a large extent on one or a few corporations.
Democracy only with the blockchain?
Depending on how far you travel in the future, Facebook could become a new form of digital state. According to the current state of affairs, however, this digital state would not be democratic. After all, there is a lack of the basic rights of co-determination and control of digital residents.
Conversely, a decentralized metaverse, as projects such as Decentraland or Somnium try to build, would be much closer to our western democratic conception of the state. The blockchain protocol in the Metaverse could be understood as a constitution, with the participants voting on what is implemented or changed and what is not. The protection of property and digital identity would be automatically protected at the same time, since the different tokens remain in the control of the individual. As distant as these scenarios and considerations may be, the competition for sovereignty in the Metaverse is already taking place today.
Token economy preprogrammed
Now you can hook that Facebook will also use tokens and blockchain-like infrastructures. The Metaverse will definitely be token-based, regardless of whether it is decentralized or not. It can be strongly assumed that Zuckerberg is also targeting the Metaverse with its own stablecoin project Diem. It is obvious that tokens will be used to enable programmable payments.
But as already mentioned, it depends on the decentralization. Digital central bank money can also be used in token form in the Metaverse. This in turn has nothing in common with decentralization and with blockchain in the original sense. Facebook’s Diem is not really decentralized either, as few companies with homogeneous interests control the infrastructure. The decisive factor is the basic infrastructure, the “operating system” or the base layer – less the question of whether token-based or not.
The greatest opportunity for cryptocurrencies
The metaverse, as it will emerge in the future, could become the greatest opportunity for cryptocurrencies. The commercial use as well as the full potential of cryptocurrencies and especially non-fungible tokens (NFT) can fully develop in the exclusively digital environment. Blockchain metaverses such as Decentraland NFT are already being used in the still unfinished blockchain metaverses. Among other things, you can acquire and trade digital properties via NFT.
In addition to NFT, the concept of social tokens could also benefit from the metaverse. The “social tokens” are about the tokenization of the personal reputation and the social interaction that takes place on Twitter, for example. In the metaverse, different types of tokens, such as payment, utility or NFT, come together to map the different rights and accesses.
How it goes on
As promising as the metaverse may be, it must not be forgotten that the necessary laws do not yet exist. A transfer of ownership by NFT, for example, is not legally possible at all. So it is not just the technology, but also the legal situation that still puts a few obstacles in the way of the creation of the digital worlds.
From the point of view of user-friendliness and the offer, a centralized Facebook Metaverse project should be superior to the blockchain alternatives. For the majority of end users, an exciting VR experience will initially be in the foreground. For most people, approaching the topic of Metaverse is more of a playful nature. The awareness that there is much more at stake – such as digital city centers where people can work and shop – is unlikely to cultivate until much later. The economic dimension, which makes a decentralized concept or governance so important, will only be imprinted in the users’ consciousness at a later stage of development. Until then, it is to be hoped that the “old players” will not depend on the blockchain alternatives.