Does the dream of a metaverse owned and built by the community still have a future when Facebook and Microsoft are involved in a virtual land grab?
A dinosaur walks into a bar, orders a whiskey straight, and sits down with a pink elephant and a purple, difficult-to-place and obscure anime character. You are watching a live NBA game. Everyone is having a good time.
That’s no joke. For a major crypto fund manager named “Simon” who prefers to remain anonymous (and not offer investment advice) that night in 2020 – that of the famous bar scene on Mos Eisley in. resembled War of stars – was the moment when the lightbulb went out. Decentralized country. This is a real thing, he thought.
Virtual, community-created worlds like Decentraland and The Sandbox come from a game market that enables people to host virtual events and buy or rent digital real estate. These non-fungible token metaverse platforms connect the real world with the surreal economy in what The Sandbox calls a “player-owned economy”.
The Sandbox raised $ 93 million from Soft Bank’s Vision Fund 2 last week, and NFT sales exceeded $ 10 billion in the third quarter of 2021. We are now at the beginning of the Metaverse era. Celebrities, including rappers like Snoop Dogg, and luxury fashion brands all get involved in the NFT game to monetize their products, pictures, and personalities.
It’s been a great year for space and the pandemic helped get the concept of the metaverse adopted in culture. “We have all lived a Metaverse life on Zoom for the past two years. It all ends in the Metaverse, ”notes Robby Yung, CEO of Animoca Brands – owner of The Sandbox and a major shareholder in CryptoKitties and NBA Top Shot creator Dapper Labs.
It’s also more than just a game: “What does it mean to join the Metaverse? It is more of a philosophical question how much of my time I will devote to this place. “
A lot of money is thrown around. In addition to Facebook, Microsoft is also involved. Those who become dominant early on can use the early network effects to become a gigantic player. While Facebook investors may be concerned about the $ 10 billion the company is spending on the Metaverse this year, why can’t Facebook join this glorious virtual world?
There is a certain logic behind the renaming to Meta, if you consider that it bought Instagram and WhatsApp in 2012 and 2014, as well as the VR headset company Oculus last year. It makes sense for this virtual reality game, and Facebook has the money and network effects to attract new players and interest in the space. Many die-hard cryptopreneurs and investors are enjoying the mass adoption sparked by the NFT frenzy in 2021, and Facebook would help this mass adoption goal.
But it also raises a lot of questions. Few are clear about what exactly the social media giant’s plans are, but unlike Decentraland, experts expect data to be gathered and the platform to be centralized.
The social media giant could pose a major threat to a community-powered metaverse. Should a centralized company like Facebook – which is constantly confronted with antitrust issues and criticized from all sides for data protection issues and the spread of misinformation and divisions – be allowed to take control of the Metaverse?
Many cultural and economic factors play a role. We look at them from three perspectives: The metaverse Investors, The founders of Metaverse and The Metaverse Players. What is the metaverse and where does it go? And could – or should – Facebook join this metaphysical universe?
For many (even within Cryptoland) it is probably still difficult to understand what is driving the Metaverse. Although the foundations are being built, at this stage it is still a concept – one that reflects our inner hopes and dreams, a huge digital cartoon playground that is woven into our physical world.
According to Mike Rubin, founder of Dreamium Labs and creator of the Dreamscape Open Metaverse initiative, the term is being misused. “The term is used both inappropriately and excessively to describe products and, as we just saw when we renamed Facebook, a company,” he says.
This is one of the problems with Facebook’s game: “We believe that there can only be one metaverse, and to be part of it there has to be networking and self-sovereignty of identity,” says Rubin.
“In practice, companies and products that refer to themselves as ‘Metaverse’ simply refer to apps and worlds – or, in the case of Facebook, to its own universe. Perhaps in the future, if they adopt a self-sovereign universal identity system, they can become part of the metaverse. “
Central to the idea of the Metaverse is that each person has their own interactive avatar that exists outside of a walled garden or service within the Metaverse. “Owning your avatar and all of its data is a fundamental principle,” he says. “If your interactive digital identity cannot be transported to a destination, that destination cannot, by definition, be part of the metaverse.” A metaverse shared and controlled by companies is therefore not a metaverse.
“That is the basis [each person’s] digital identity that enables all of their interactions and how they are represented in each interconnected experience, ”argues Rubin.
Digital ownership is made possible by NFTs, and blockchain technology is encouraging individuals to build the metaverse, in part because they own everything they create.
Logically, Facebook could still attack in the metaverse due to its network effects, but this becomes a war of ecosystems, not just businesses.
The key battle is between Facebook and other companies trying to control the metaverse and the crypto kids who want it to be built, owned and run by the community. The history of the internet suggests that unless the decentralized nature of blockchain technology has dramatically changed the balance, businesses are likely to gain the upper hand.
Rubin, a tech veteran, argues, “Since no entity should control such an important system for the Metaverse, we are encouraging the entire ecosystem to join forces in a collaborative and powered open Metaverse: the Dreamscape MetaDAO. Only together can we accelerate the first innings of the Metaverse era. “
Whether a decentralized autonomous organization is more or less successful than Facebook is an interesting question that may depend on possible commercial partnerships, platform creations and gaming preferences.
Part of the problem is that the Metaverse is still being built so rentals are still possible. For Rubin, a baseball analogy is appropriate: “We’re still warming up and doing punching exercises. The game hasn’t even started, but there are already many players on the field preparing. “
Interoperable gaming and the adoption section
The Metaverse has the potential to change the way we work. Decentraland and The Sandbox, for example, allow players to monetize their time spent in the Metaverse in a number of ways, also known as play-to-earn.
For Mitch Penman-Allen, co-founder of the play-to-earn startup Perion, Facebook doesn’t fit into the definition of the metaverse. “The Metaverse is the idea that we build interoperable digital networks based on digital asset ownership and platform-independent usability,” he says.
Perion is a digital gaming guild that buys and leases NFT assets to players who use them to get the best returns and “bring staking into the gaming arena”. Co-founder Amos Whitewolf was number 1 at Axie Infinity for several months in 2021 and reinvested those profits from the game back into his startup. He even got his 13-, 15-, and 17-year-old sisters into making pocket money.
“The people who really get this are the crypto natives who have been very focused on what’s going on locally from the start. The people who are quick to pick up this place will be gamers – nothing is new to a gamer here except real possession. The struggle for decentralized ownership of the Metaverse is not new. “
He notes that the first NFT project created on the Ethereum blockchain was “Etheria,” a decentralized virtual world where players owned tiles and farmed them for blocks to build things. It was intended to offer an alternative to “whatever Google and Facebook can come up with” with regard to the Metaverse.
In November 2017, Dapper Labs’ CryptoKitties popularized the then revolutionary concept of NFTs, with co-founder Mik Naayem telling the magazine last year that it was a strategic game.
“The reason we chose entertainment – games in particular – is because we thought it was just a much easier way of getting people involved in decentralization,” he said. “Gamers are the perfect target group because they already understand virtual currencies and virtual worlds.”
The gambling that leads to the advent of crypto is a long-running crypto prophecy that finally seemed to dawn in 2021, argues Whitewolf. “Gaming is where the next wave of people interested in crypto will take place. People understand games – they don’t need to learn finance or technology to be part of this movement. In-game assets are not a new concept. Ownership and truly interoperable assets are the next step. “
Incentives are key to the community-created metaverse
Under the play-to-earn model, Filipinos started playing games en masse during the pandemic instead of looking for manual work or a call center job. While this social phenomenon is not unique to the Philippines, it is certainly most pronounced there, with a significant portion of Metamask’s growth this year coming from the country. Discord Groups (AKA “Slack for Gaming”) now include tens of thousands of members from the Philippines, and there are now more SLP wallets (one of Axie Infinity’s tokens) than credit cards in the Philippines.
Adoption is a “good game to earn and good game” mechanism, according to Yung – a tech veteran in the online gaming industry, majority shareholder in The Sandbox and an investor in Decentraland.
Economics and the opportunity to earn in the Metaverse will also be an important part of building the ecosystem. The Filipino player “Water Emperor” joined NFTs due to the pandemic and played Axie Infinity. In July 2021, he joined a Whitewolf-run guild and hired an NFT to play the game as a “Scholar”. In Metaverse parlance, scholars play the game of someone else’s NFT with a revenue sharing model.
Water Emperor uses this model to “pay my tuition” and hopes to become a doctor one day. His parents support him and hope to invest in crypto soon. In a country with such a volatile political system as the Philippines and with mass unemployment during the pandemic, it is easy to see why this new source of income offers new hope to Filipino gamblers.
“Axie Infinity – it’s a good game, much like card games when I was a kid. Constantly changing, another universe is constantly changing, ”he says. “That’s why I play to open windows to explore, and it helps me finish my studies.”
Most of the people in the Philippines gamble on cell phones, and high internet charges sometimes affect the profitability of gambling. Even so, he saved 2021 by turning his passion for gaming into a profession. The crypto-economy made this possible.
In short, incentives are key to a community-created metaverse. “We are at the beginning. Crypto-asset protocols created the infrastructure the metaverse needed, ”says Whitewolf.
“The metaverse doesn’t start in virtual reality – it starts with owning assets, [the] Ability for everyone to create value and act. VR will come later when the technology becomes available. “
Several metaverse already exist
For Simon, the crypto fund manager, his interest began with Decentraland – a walk through a virtual bar and a live NBA game with random avatars. Then the “penny” fell. For him this is the next step for the internet and social engagement. “Young people are more digitally engaged, and people with a sub-optimal standard of living could live happier in a digital world.”
In this respect too, it is obvious how Facebook fits into this world. Facebookers already live online. Posts – and more importantly, how often a person posts – can often reveal a lot about a person, from mental health to happiness to their attitudes towards privacy.
Facebook clearly believes the Metaverse is the next evolutionary step in social media, putting it in the spotlight based on its users, but its play-to-earn implementation will also be important to its global success.
Several socio-economic metaverses already exist and this can play in favor of Facebook if the right to play is free and the existing network effects remain strong. There is a limited amount of square feet in The Sandbox and Decentraland, and companies are likely to buy up much of that land, according to Simon.
Gas fees can also be prohibitive, especially with Ethereum, where it costs a fortune to mint and trade NFTs, locking out large swaths of the population. As alternative networks such as Solana, Cardano and Polkadot are used and when Ethereum sidechains are built and the blockchain moves to proof-of-stake, the barriers to entry will decrease.
“NFTs are currently relatively inaccessible to non-crypto-natives. This is a limitation of the infrastructure on which NFTs are published, ”argues Whitewolf. In a way, this is a race for widespread adoption.
Corporations are already intruding into the metaverse and taking it away from people by recreating the real world divide of the haves and the haves. Simon realizes that growth is not all egalitarian. Whales bought blocks in Decentraland for “$ 20,000 in May which is now about $ 800,000”.
Companies like the 1980s gaming superstar Atari have also invested heavily in Decentraland and The Sandbox. “It’s more than a poor man’s game,” he says. “As advertising moves forward in the real world, land becomes more valuable than Times Square,” says the crypto fund manager.
The metaverse is the opposite of Facebook
The term “metaverse” comes from Neal Stephenson’s 1992 novel Snow crash. It’s one of Facebook founder Mark Zuckerberg’s favorite novels that he reportedly gave to all new hires.
Yung of Animoca Brand says the book was also his own “gateway drug to technology and angel investment,” and his first angel investment in 1997 was based on building one Snow crashStyle metaverse. The CEO of this startup is now an investor in The Sandbox – hopefully a good harbinger for the crypto kids who have long been waiting for this moment of evolution.
Yung believes the metaverse is the opposite of Facebook. “Sci-Fi has always reached for this idea. Now we have the tools. A blockchain economy makes it real, ”he says, adding that crypto has so far managed to stay one step ahead of corporate control:
“Crypto companies had to move forward as quickly as possible so the giants couldn’t buy them. Even Facebook and Google can afford to buy Ethereum longer. “
Whitewolf isn’t sure where the metaverse is going, but he knows it will be huge and remove the barriers between developing and developed countries. “Crypto gaming will integrate massive billions into the blockchain. The crypto narrative about banking the bankless has never been so realistic, ”he says.
Reddit co-founder Alexis Ohanian recently said the Metaverse is being built by the community, not businesses, and he hopes it will stay that way
“Right now there is this bottom-up movement to create the metaverse. You can see how much of this is happening in the crypto community. You see how many people are building a world that I think is a much more organic type of world than the top-down one imposed by Facebook.
For Rubin, the open community and open source network effects have always been the key element, which in his opinion are more powerful than any company. “We don’t see it per se as a battle between Facebook and crypto kids. The latter will address their efforts with decentralization at the forefront, while the big established tech companies will see blockchain and crypto as a necessary bolt-on rather than the core, ”he says.
“Time will show which approach will prevail and which will also be sustainable. We have bet that a decentralized, open and community-owned blockchain base layer will win. “