Does the metaverse require a blockchain? Or can it work without it?
The short answer is yes, virtual worlds can indeed exist without blockchain networks, but they’d have to be powered by a different system, and won’t work the same way. Here’s why.
The metaverse’s journey towards its true identity is an exciting saga in and of itself, as it becomes the new battleground for Big Tech to assert its dominance in the emerging space. In fact, Apple and Meta are currently in a deep philosophical and economical battle over how the metaverse should or should not be.
And with all the smoke and dust involved in defining it, how can we truly determine how a metaverse should operate? The truth is that no one really knows right now, but there are a few distinct aspects that help us visualize this innovative concept.
How to Define the Metaverse?
We know that it will involve “persistent” virtual worlds and digital economies that go with them, as well as devices with virtual and augmented reality (AR/VR) capabilities. Many of today’s advanced smartphones already possess AR features, but VR might be tricky.
But many platforms have been called metaverses even with the absence of AR/VR functionalities, including Second Life and Decentraland. Decentraland plans to roll out VR features eventually, but Second Life managed to stay relevant for nearly two decades while only supporting Windows and macOS devices.
Web3 vs Big Tech
But apart from a standardized definition, widespread adoption is likely to be a huge obstacle in the short term, considering that most of the so-called metaverses we have today are a far cry from what’s being “promised” by either Big Tech or the “crypto bros” of the web3 space.
Both sides claim that their vision is the true Utopia, but only the web3 people think that blockchain technology will be an integral part of the technology’s future. Platforms like Meta and Roblox don’t appear to be as excited in incorporating crypto tokens and NFTs, and are leaning towards creating an upgraded more interoperable version of Second Life.
But removing blockchain from the equation, or at least making it less significant, is enough to be construed as a declaration of war against what the web3 industry stands for. Big Tech doesn’t necessarily represent the widely popular ethos of web3, which is to empower the average user (or creator), and instead, centralizes control to themselves so they can determine the flow of the virtual economy.
Instead of having individual creators building digital assets and selling them on metaverses as NFTs, it’ll be corporations like Meta or Epic Games that determine how virtual assets are bought and sold. For sure, these tech giants will do everything they can to make the platforms fun, but will that be enough?
What Will a Metaverse Without Blockchain Look Like?
Many view blockchain technology as a critical piece to the metaverse because it allows true ownership of virtual assets, the kind that platforms cannot confiscate even if you misbehave on their ‘turf’. It also allows transactions to be transparent and publicly verifiable. By these features alone, you can easily discern why Big Tech isn’t too thrilled to go crypto.
But according to Stanford University professor Jeremy Bailenson, some of the most prominent figures in the extended reality (XR) space (and even in the web3 space, to some degree) agree that metaverses can exist without blockchains. And yes, it is technically possible but comes at a steep cost.
This is because eliminating the blockchain aspect effectively eradicates the decentralized characteristics of metaverse platforms, which rolls us back to web2 instead of moving towards a new type of Internet. Virtual spaces will come with the same problems as legacy platforms, such as user censorship, forced eviction, arbitrary changing of policies, and asset confiscation.
And allowing the metaverse to evolve this way could, God forbid, serve as a foundation for the dystopian world envisioned by Neal Stephenson in his 1992 novel called “Snow Crash,” which depicts a virtual universe centrally controlled by a corporation where individuals go to escape the desolate physical world. The problem is, even in this particular virtual world where anything was possible, people of lesser means typically had limited experiences and are often looked down upon by the elites. In fact, there is a greater disparity in wealth amongst the virtual citizens of the Snow Crash lore, which is insane considering that technology is supposed to fix problems, not make them worse.
If we go down this “centralized” route, where a single corporation gets to control the system instead of a decentralized autonomous organization (DAO), the endgame could be as horrific. Big Tech, through the years, have shown how far they are willing to go in the name of profit, even if it means conducting unethical practices, with large-scale selling of personal data serving as the tip of the iceberg.
And since metaverse platforms can potentially mine richer data from users, including facial, body, and finger movements, and brain activity (possibly soon), it’s quite troubling what companies might do with our personal information.
Centralized Metaverse Case Study
While the risks of a blockchain-less metaverse have been laid out, one platform has proven that this type of digital universe can work in the real worldーwell, almost.
Second Life is a highly successful virtual game that serves as one of the earliest forms of the metaverse with active communities, a vibrant economy, and millions of players. It currently has 70 million registered users, 350,000 accounts each month, and a yearly gross domestic product (GDP) of $500 million.
But despite its winning streaks, Second Life was also involved with several yet serious issues that might serve as cautionary tales to the absence of blockchain on metaverses. These issues include security flaws, hacking, banning players and destroying their digital creations, virtual land repossessions, and more. Talk about an appropriate sneak-peek of a dystopian metaverse!
Meta, one of the leading players in this budding industry, also has a muddy history when it comes to user privacy. It was involved in some of the largest privacy scandals to date, including the Cambridge Analytica incident, the violation of the Biometric Information Privacy Act, a massive mood-manipulation experiment, and the tracking of users on third-party applications.
These real-world examples might give us a glimpse of what Big Tech could do, should they possess the power to control virtual worlds. Blockchain could effectively prevent this if executed properly.
To give credit where it’s due, Meta has also done some commendable acts in protecting its users, which are enforced mainly through its community standards. But it seems that the company has an inclination to fall short when it comes to handling its users’ data.
The Need for Interoperability
Now that the ‘dark side” of a blockchain-less metaverse has been explored, let us take a look at the exciting prospects of blockchain-powered 3D worlds. One of the integral characteristics of metaverses, which is even more significant than decentralization, is interoperability.
Interoperability allows owners to bring their avatars and assets with them as they hop across different virtual spaces (or mini metaverses). Imagine owning a Bazooka from Fornite and being able to use it in other games like CS:GO, or flex them to your bros on Decentraland.
While the web3 crowd is ecstatic over this, as it would obviously benefit users, Big Tech corporations are less vocal about the idea, despite their “open support” for interoperability.
With multiple large corporations aiming to exert influence or secure their footing in the future of the metaverse, creating standards for interoperability may or may not be their priority. But thankfully, there is already a movement in that direction, even among centralized platforms.
A group of companies formed what is now called the Metaverse Standards Forum, which attempts to lay the grounds for interoperability and standardization, and has more than a thousand members, with Google, Meta, Microsoft, and World Wide Web Consortium (W3C) as some of the largest members. While a united organization like this could help move the needle towards a more interoperable metaverse, regulatory ruling could expedite things further.
For instance, the General Data Protection Regulation (GDPR), which is billed as the strongest privacy and security law across the globe, requires platforms serving European Union (EU) customers to provide interoperability features. In other words, metaverse servers are required to offer “data portability,” which allows users to seamlessly transfer all their digital assets from one platform to another.
This can be both a challenge and an opportunity for current and future metaverses, as it would force companies to abide by the ruling or miss out on such a large market.
And as interoperability’s significance expands, blockchain’s importance will follow, and tech companies may find fewer excuses not to integrate it into their metaverse. The trick is to find a way for traditional companies to monetize blockchain-based systems, which are currently being explored in the web3 space (with tons of struggles).
Blockchain is crucial for interoperability as it eliminates centralized and siloed systems, enabling multiple virtual worlds to be interlinked even more seamlessly.
But to further appreciate the power of interoperability, let’s use Axie Infinity and OpenSea as examples.
When a trainer puts up a trained Axie monster on OpenSea, the character’s entire stats and other current development remain intact, even if it was transferred from one platform to the other. Why? Because both platforms run on the same blockchain network, Ethereum, making every data transfer secure and seamless.
Now apply this to virtual avatars that can hop from one metaverse to the next, bringing their digital “backpacks” filled with all their assets across worlds. This scenario gives us a glimpse of what a world of blockchain-powered digital spaces might look like. Whether this type of metaverse is possible without blockchain or some form of decentralized ledger remains to be seen.
Blockchain Might Not Be Enough
While some of the tech industry’s biggest players have been caught by the ‘meta bug’ since Facebook’s bold metaverse announcement, not everyone shares the same optimism over this venture. You can count Ethereum co-founder Vitalik Buterin as one of them.
The man behind the world’s second-largest blockchain warned everyone (and CEO Mark Zuckerberg) that Meta’s overly-hyped metaverse effort would misfire.
And while Buterin acknowledges that the metaverse will be the next phase of today’s technology, he highlighted that it wouldn’t evolve based on what Meta and big corporations want. Moreover, he conceded that no one really knows how the metaverse will progress in the future, and the billion-dollar efforts to build it, in his own words, “aren’t going anywhere.”
This means that even web3 metaverses are vulnerable too since many projects are also raising tens to even hundreds of millions each. Safe to say, we are still in the “innovation” phase. Look at the graph below. We are currently in the 2.5%.
A lot of things will go wrong. This is also the reason why you shouldn’t be afraid to start now. We all know some of the largest companies, both in the web3 space and Big Tech, are going to fall due to the reasons mentioned earlier. And you could start a company now and become the dominant player in 5-10 years. An opportunity like this comes once in every decade. Your choice if you want to make your move now or later, but the clock is ticking.
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