Coinsights #11: The Metaverse needs blockchain(s)
Hi!
Yesterday we attempted to define the Metaverse, and I got a few DMs about what that had to do with web3. Well, today’s the day! Let’s explore why the Metaverse needs the blockchain and how it’s going to happen.
Interoperability
Official definitions of Metaverse aside, it’s clear that there will be a world where previously self contained economies and industries will be able to interact. How this world manifests itself is unclear, whether it is entirely virtual, blended into our physical surroundings, or something else entirely.
Twitter has a hard time agreeing on most things, and how the Metaverse (for lack of a better word) will play out is no exception. However, there is one key characteristic of the Metaverse that everyone seems to agree is necessary: interoperability. Furthermore, out of the traits of the metaverse listed below, I would argue that the main feature missing from today’s products is “highly interoperable.”
There is currently no way to easily port my friend graph from Facebook to Fortnite or transfer the karma I earn on Reddit to bootstrap my profile in Quora. These products all have my data, why shouldn’t I be able to use it how and where I please? Enter the blockchain. (It’s worth noting that some products do support interoperability to a degree, but by and large much of the web exists in siloed containers.)
Blockchain & The Metaverse
The first benefit of interoperability via the blockchain is that it prevents a single party from hoarding all of the data, which fundamentally misaligns interests between the party and its users. In fact, Facebook checks off most of the required attributes in above image already, but it most definitely isn’t a Metaverse despite the recent name change. Since it already has a critical mass of users and content without supporting interoperability, Facebook has no incentive to open up its ecosystem to others. As a result, users suffer. This is why supporting interoperability from day 1 on a shared set of protocols is important for the future.
NFTs (Non Fungible Tokens) are one feature that blockchains enable to serve as a basis for interoperability. From Piers Kicks:
What NFTs enable for the first time is a decentralized, universal digital representation and ownership layer through which scarcity, uniqueness, and authenticity can be transparently managed.
A concrete example: if I’m attempting to trade my Axie for a Fortnite skin, there needs to be some way to understand the relative value of both assets. Without transparency into the rarity of the Axie or how well it performs in game, it is difficult to price it against another asset. As we covered in an earlier edition, this idea of ownership is also powerful: users now have a way to benefit from their in game work.
It is a wonder that players continue to spend time and money on in-game items that exist on heterogenous, centralized services that are owned by a single company, provide no ongoing cash flows, and offer no real ownership/control prospects for the investor.
Perhaps the above quote speaks more to the skill of current developers, but as games like Axie Infinity gain popularity I think that there will be large push from the community for all games to officially support interoperability.
What’s Next?
We’ve mainly talked about NFTs in a gaming context, but the idea of digital ownership extends to anything we consider virtual entertainment today. In fact, Jake Brukhman argues that all content is going on chain! Digital art has already hit crypto mainstream via sites like OpenSea, and new startups are forming daily to help people trade in tokenized music and even physical real estate!
One of the Metaverse’s macro themes is a “users first” mentality, which will be achieved by transferring data from siloed institutions back to where it originated: the users. Given two similar projects, the one that taps into an expansive ecosystem powered by transparent protocols and gives the freedom of choice back to its users will ultimately win. As a result, the Metaverse will compound on itself: each new project added will encourage (force?) others in the same space to also integrate, or else they could be left behind in a web2.0 world.
Thanks for reading! Do you agree with the takes in this article? Come chat in the Coinsights Discord or leave a comment!