Meet me in the Metaverse
In which we talk about what is the Metaverse, who is competing for the key to its kingdom, and why it will transform our concept of reality
✨ Hi, I’m Sara Tortoli and this is the November edition of The Plunge Club, a monthly newsletter dedicated to product management, tech culture, and crypto.
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Dear Plunger,
In this issue, we are going to explore the Metaverse and why it is crucial to understand what it means for us. Before jumping into the article, I am going to make the assumption that you are already familiar with some concepts I covered in past editions, such as that of Ethereum, Web3.0, and NFT. They will come in handy as we unpack this new world.
🛑 Important: this article is not in any form or shape financial advice. Always do your own research. A good place to start, it’s from the resources I used to prepare for this article. You can find the link with all the references at the end. 🛑
This Metaverse is going to be far more pervasive and powerful than anything else. If one central company gains control of this, they will become more powerful than any government and be a god on Earth.
Tim Sweeney - CEO of Epic Games
Meet me in the Metaverse
A dream house floating upon the stars. The possibility of attending epic events and feeling like you are truly there without leaving your sofa. Be whoever you want by changing your appearance as you would change your clothes. Go to any place you desire with just a thought.
Sounds too good to be true? And yet, these are some of the promises that the Metaverse is waiting to fulfill. But what is really the Metaverse and how should we think about it?
According to Matthew Ball, who has written some notable articles on the topic, we tend to often confuse the Metaverse with the concept of virtual reality. This is misleading because “virtual reality is merely a way to experience the Metaverse. To say VR is the Metaverse is like saying the mobile internet is an app.”
More to the point, Ball describes the Metaverse as an evolution of the Internet, or rather “a quasi-successor state to the mobile internet”. The Metaverse is supposed to transform the Internet and the way we experience it, creating a new ecosystem and set of infrastructures, tools, and governance.
To truly understand the Metaverse it is useful to think about its ultimate vision, the end state, vs. what it is right now.
Starting with the end, it’s difficult to define the Metaverse ultimate vision. There are many Metaverses that are being built and Zuckerberg’s Meta is only one of them (more on this in a minute).
To the best of my understanding, the ultimate vision of the Metaverse is to build a better world. It will be to be an improved virtual immersive version of the real world, a place not bound by the limitations of the physical laws. If it proves good enough, the Metaverse will redefine the entire concept of reality.
In its final form, the Metaverse will allow us to do the same things we can do in the physical space, plus all the things that the law of physics won’t allow us to do, like traveling instantly from one location to another. Whereas right now we are limited to experiencing the Internet through a screen, in the Metaverse everything will feel real, like being there in person. We will be represented as one or multiple avatars of ourselves, and we will change them according to the occasion. We will be able to own properties and objects and bring them with us everywhere we go. We will go to events and concerts and we will feel like being there in person.
The ultimate goal of the Metaverse is to blur the lines between reality and fiction, to generate an alternative, better version of it, that offers a more rewarding experience.
But if this is the ultimate vision, the reality today is very different.
In fact, the Metaverse does not really exist yet, it’s not even close to the form envisioned in its final state. Today the Metaverse is an MVP. It looks like a crossroads between 2D plots of badly designed land and a virtual Vegas-looking carnival that hosts gaming, casinos, and occasional events.
We are years away from an actual Metaverse, as we lack the fundamental structures and technology to make it available. This ranges from the hardware to access the Metaverse, which needs to become as widespread as our mobile phones are today, to the actual platforms that will host the Metaverse and that will need to populate it with the kind of experiences that will attract people and drive mass adoption.
If the promise of an immersive alternative world is yet to materialize, however, the building blocks are here and it’s important to understand what they are because whoever owns these blocks might become “more powerful than any government and be a God on Earth”.
Battle of the Gods: building and owning the Metaverse
Earlier this month Facebook has announced that it will be rebranded as Meta and its intention to focus on the Metaverse.
According to Mark Zuckerberg, Facebook's ultimate goal is “to connect people”, and while up until now the solution has been delivered through messaging (Whatsapp) and social media (Facebook and Instagram), in the future, this will look different. With the changes in technology and the advent of Web 3.0 and VR/AR, connecting people will require a much more interactive and boundless approach.
Facebook envisions itself as the focal point that will build the infrastructure to host the Metaverse, as well as some of its experiences. In other words, Facebook aims to become the Apple of the Metaverse, the gateway through which you will be able to gain access, and its operating system, exactly like today the Apple app store is the gateway to our favorite apps on the phone.
Meanwhile, Apple is not exactly sitting around passively. Apple is also competing for its own slice of the cake, although we don’t know much about it yet, and they might impose their infamous 30% cut on all transactions.
In his recent piece about Meta, Packy McCormick argues that an Apple-dominated Metaverse will actually be worse than a Facebook-dominated one. Facebook competition, would be healthy as it represents a solid and much more “equitable” alternative, if Zuckerberg’s statement that they aim to make fees as low as possible is to be believed.
Luckily for us, these privately owned Metaverses are not the only alternative available. This is where crypto and Web 3.0 come in.
The infrastructure hosting the Metaverse, much like the Internet, can in fact be either centralized and stored in a few proprietary servers or can be decentralized and distributed across the network.
Facebook is not the first one going after the Metaverse. In fact, they are joining a party that has already started….elsewhere. The decentralized version of the Metaverse is already in the making and some platforms are gaining a considerable amount of traction and investments, and have seen their tokens exploding in the last few weeks.
The most popular ones, such as Decentraland and the Sandbox, are built on top of Ethereum, and use ERC tokens to generate land and items available as NFT for purchase in their universe. Much like Meta promise (but hasn’t yet), in these decentralized Metaverses you can already buy land, own assets and avatars in the form of NFT, play games, and even attend concerts and events.
In the race to build the Metaverse, the stakes are incredibly high because of the god-like power that building an entirely new universe will grant.
Thinking that one company can have that kind of power is a scary thought, no matter how good or glittery their universe will end up being. A decentralized and distributed universe, that is community-owned and where decisions are made by the collectivity, is a much more desirable alternative than a privately owned one.
Closed vs. Open Metaverse
The reality is, however, that the battle is yet to start and the future might not look so promising for decentralized Metaverses. There are some indisputable challenges that they face and that put them at a disadvantage compared to the closed and privately owned Metaverse.
User Experience: the suboptimal user experience and learning curve are probably some of the main reasons why crypto and Web 3.0 are still misunderstood and not wildly adopted by the masses. This is where companies like Facebook and Apple truly shine and beat decentralized platforms every day. They put users, rather than technology, at the center so that the user experience feels effortless, easy, and painless, something that crypto and Web 3 are not yet capable of doing.
Governance: decentralized projects like Decentraland commonly adopt community-based governance, in most cases under the guise of DAOs. While this is great in the long run, in the short term and especially in the building phase, a distributed decision-making process makes things slower and lacks vision in the absence of someone that truly takes the lead. Apple and especially Facebook, certainly don’t have such problems. This could make them faster in the inceptions phase, albeit crypto with its open-source code can catch up quickly.
Interoperability: the redeeming quality of a decentralized Metaverse is that it should be interoperable, meaning you will be able to move across Metaverses without barriers. However, due to technical constraints of the underlying blockchain, Ethereum, full interoperability is not yet possible.
Hardware: even if the decentralized Metaverse building ends up being as good or better than that built by Facebook, you still need a gateway to access it in the form of a gadget, be it headsets or glasses. Whoever owns this gateway, owns the key to this new Universe. To this date, unless a way to decentralize hardware products can be found, it looks like the key to the new Kingdom will likely belong to Apple and Facebook (and maybe to Google and Microsoft).
Despite the start might look challenging, ultimately I believe that the open-source nature of the decentralized Metaverse might prevail. This is because as much as Facebook can hire the best talents, it will never be able to employ the entire force of the available network. That is, unless Zuckerberg decides to turn Meta into a fully open-source company, and his call for an interoperable space might hint into some openings in this sense.
Meta Wild West
The Metaverse might be the ultimate Utopia or Dystopia, depending on how it will be built (and by whom). It will create social connections without borders, physically boundless.
Regardless of whom wins the race tomorrow, today the Metaverse is like the Wild West of our generation, a gold mine rich with possibilities, especially for creators.
In fact, while both centralized and decentralized companies are building the infrastructure, the entire universe itself, with its activities and assets will also need to be built to attract and drive mass adoption. No one company or project can build this on its own and populate an entire universe, this is why the focus is on attracting creators. From NFT artists, to virtual land brokers and designers, the Metaverse is a universe full of new opportunities waiting to be explored.
And since the Metaverse does not abide by any laws besides that of technological constraints, imagination is truly the limit.
👉 📚 All materials and references I used for this article can be found here
The “Now” section
🎧 What I am listening: the episode of Bankless with Chris Dixon about the 5 mental models for Web 3.0, a set of frameworks to help understand crypto and Web 3. I found particularly interesting his take that “Web3 is the internet that is owned by builders and users, orchestrated with tokens”
📚 What I am reading: I’m halfway through Dune, a book that I picked up and set aside multiple times in the past, until I finally decided to give it a go now. Dune was written in the ‘70 by Frank Herbert and under the guise of a sci-fi novel, it’s actually a parable on human politics and religion, with very complex characters.
🥁 What I am doing: Last week I had the pleasure to guest lecture again at SDA Bocconi University, talking about product and innovation. It’s always an honor to be able to speak in front of Bocconi’s senior students.
🧐 Question I am asking myself:
What would be the governance system of the Metaverse and who (or what) would be the ultimate decision-maker?