The Open Vs. Closed Metaverse

Open Vs. Closed Metaverse

Metaverse is a portmanteau of the Greek word meta meaning “beyond,” “transcending,” or “more comprehensive” and the English word universe, which describes “all existing matter and space.” Thus, the meta-universe is a world that is transcending the physical world we live in today. It is a digital reality that is not bound to the laws of physics and traditional economics but is a place of endless creativity and opportunities and will function according to its rules and principles.

And this metaverse is currently in the making. Hundreds of companies and teams are working on making their visions of the metaverse a reality. Enthusiasts of the metaverse forecast that it will be a multi-trillion-dollar digital economy that transforms the internet with shared virtual worlds. The siloed 2D internet we know today will be replaced by a 3D interoperable metaverse. Our physical world will merge with a digital reality resulting in a video-gamelike internet experience.

In some ways, the first signs of the metaverse are already here. People meet on Discord, work in Teamflow, game together in Fortnite and Minecraft, shop on Amazon, grocery shop and eat dinner from UBER Eats, study on YouTube, and tweet on Twitter. All of these activities connect people in the digital space, be it business to customers or users among each other. Today though, most of these services are disconnected. Users have to switch from one platform to another, log in with different accounts and interoperable inter-platform communication is almost nonexistent.

Private Web2

Even more critical than their siloed nature is the fact that all of these platforms are owned by large publicly owned companies. Consequently, the most-used internet platforms and services that have become an integral part of our everyday lives and on which we are dependent, at least to a certain degree, are owned by just a handful of tech companies.

Not surprisingly, that harbors the potential for conflict. These companies are no longer mere service providers, but they have become gatekeepers equipped with the power to decide who gets to use their platforms. This would not pose a problem if these companies did not have a quasi-monopoly within their fields. Users that get de-platformed are not only excluded from a particular platform but, first and foremost, from an important part of social life that is happening on this platform. They get silenced, lose their voice, and in some cases even their livelihood.

The same goes for users who do not agree with the business model of these platforms. And as they do not own their data, they have no leverage to negotiate. Either they accept the platform’s terms and conditions or they opt-out, which again can be costly due to the quasi-monopolies of these platforms and the social cost an exit entails.

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Our Hope: An Open Metaverse

The metaverse will dominate our lives even more than these platforms already do today. It will be a one-stop-shop for our digital lives, the gateway to all things online. Similar to an internet browser today, it will be the one place that connects all the different virtual worlds. Should a single entity build and control the metaverse, then this would yield even more power to this institution than big tech already has today. Such an institution could act as a digital nation-state that rules at will.

Thus, a major concern of the advocates behind a free internet is to ensure that the metaverse is built in an open and decentralized manner on the principles of Web3. An open metaverse that is built on blockchain technology, ensuring permissionless access and the ownership of data by the users. A metaverse that won’t yield the control in the hands of just a few but allows users to truly own their creations and data. In an open metaverse, digital items will be truly possessable thanks to NFTs, and users can monetize and trade their virtual goods and data at their will.

Currently, many decentralized projects are building and driving forward the open metaverse. At the forefront are Decentraland and The Sandbox, which have already built fully functioning virtual worlds on the principles of Web3.

The Threat of a Closed Metaverse

But not only Web3 and crypto enthusiasts are building the metaverse. Private industry is fully aware of the potential of the metaverse and probably has the most aggressive conviction about its future importance. Several companies have publicly announced that they are building their own version of the metaverse. This usually comes with a commitment to fund metaverse projects with large sums of money and to delegate their best engineering talent to it.

And the major tech companies don’t just want to be a part of the future metaverse, they want to define and own it, similar to how they control their Web2 platforms. Whoever controls the largest parts of the metaverse will be able to extract the largest profits from it. Meta (formerly Facebook) has even changed its name to openly communicate its intention AND claim to the metaverse. They have also purchased the virtual reality headset company Oculus, which allows them to control the hardware entry point to the metaverse.

Besides Meta, other early leaders in the metaverse space are well-known names in the tech industry. Microsoft, which had a dominant role in the “work“ economy for decades now, has announced Mesh for Microsoft Teams “to make collaboration in the metaverse personal and fun.” Further, Microsoft recently acquired Activision Blizzard, a video-game maker, for nearly $70 billion.

Then there is Amazon. Amazon wants to be the primary place to buy things. Whether that happens in Web2, Web3, or the metaverse, Amazon will go wherever their customers are. A good example is the streaming platform Twitch, on which Amazon recently started selling ads. But even more important is Amazon’s infrastructure play. Amazon Web Services (AWS) host a large chunk of today’s web and are one of the primary profit drivers for the company. As the metaverse will require enormous back-end infrastructure to run on, Amazon is likely to benefit from increased demand for their services.

No one mines and monetizes data better than Google. The company had already launched their Google Glass back in 2014 when no one was talking about the metaverse. Today, they have a wide range of products like FitBit, Google Assistant, and Street View that help merge the digital and physical world. Google is therefore a prime candidate to use their knowledge and data to design a unique metaverse experience. They have recently announced that Google started its own team working on blockchain and Web3.

And these companies are just the prime examples among many that are pursuing a metaverse vision. Unity, Valve, Epic Games, and Apple, to name just a few more, are also pursuing the metaverse as the next big thing.

Is the Battle Already Over?

Reading about the large tech companies racing into the metaverse space raises the question of whether the battle for an open and decentralized metaverse is already lost before it really begins. But unlike prior tech developments, the metaverse will be much more difficult to wall off and control thanks to two significant forces. The first is blockchain technology, which enables developers to build fully and truly decentralized applications, independent and outside of the reach of centralized tech companies. Unlike in Web2, successful decentralized protocols running on a blockchain can — by nature — not be possessed by a single entity and, therefore, not be sold to a large company with deep pockets. Thus, consolidation on the application level is less likely to happen.

The second is the developers and artists who are laying the initial groundwork for the metaverse. Thanks to new technical and economical possibilities like ICOs, DAOs, and NFTs that allow for the monetization of protocols and art, they are no longer dependent on VCs and large companies to fund and finance them. Thanks to blockchain technology, they have a variety of decentralized means to earn income. Thus, the metaverse does hold the potential to be open and independent of large tech companies. A world that rewards individual creators and artists for their contributions and lets users participate in projects and protocols from a very early stage.

It Is All About the Foundation

Ultimately, there is too much about the metaverse that we don’t know yet to have strong convictions on who will own and run it. In reality, the metaverse will most likely be the result of a network of different platforms, blockchains, and technologies cooperating and embracing interoperability.

One thing seems clear though. A solid foundation for the metaverse must be laid today. A foundation that is built on the principles of Web3. For the metaverse to be free, permissionless, and censorship-resistant, it has to be built on blockchain technology. Only blockchain technology allows for the true ownership of digital assets and guarantees access for everyone. And only blockchain technology allows users to own their data and monetize their creations at will.

If the goliaths of tech are willing to participate in the metaverse on this foundation, then the metaverse experience has the potential to become truly breathtaking. But it will be up to the users to demand and insist on a metaverse that is built on the solid foundation of a decentralized Web3. This time around, users will literally vote with their (Web3) wallet.

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