What is the Metaverse?

Credit: Decentraland

If you haven’t heard about the metaverse by now you may have missed the headlines. Since Facebook announced their name change to Meta in October 2021, a flurry of brands, companies, celebrities, banking institutions, and even entire countries have invested in the metaverse and related technologies.

But while the term is buzzing all over the internet, many people still don’t know exactly what it means — and it’s not their fault. Details about the metaverse can be vague, and at times contradictory. Is it a video game? The next generation of the internet? Or something like a Zoom with virtual reality glasses?

The truth is not everyone agrees on what the metaverse is and even less so on what it will become. That’s because the metaverse — like the internet in the 1970s and 1980s — is still a work in progress.

What we do know is some of the technologies (augmented reality and virtual reality headsets, cryptocurrencies, the blockchain) that are involved in creating metaverses, and some of the big players that are investing in software and hardware for virtual worlds.

But what exactly the metaverse will be in five, ten, or twenty years is still a mystery. And for many people that’s the exciting part about it; the fact it is still being born.

In this article, we’ll break the metaverse down into its composite parts, examine its history, and take a look at what is happening in the metaverse today.

Overall, we aim to give you a better understanding of a term that, quite frankly, isn’t easy to understand.

What Does the Metaverse Consist of?

Some claim the metaverse is a 3D iteration of the internet (or the “embodied internet”) that will consist of augmented and virtual spaces and worlds so convincing they’ll drastically change how we live our lives. Others, like Meta’s founder and CEO Mark Zuckerberg, believe the metaverse will be a place for humans to socialize and form deeper bonds in an increasingly digital world.

But what is the metaverse exactly? And is it even a place?

Perhaps the simplest definition of the term metaverse is a shared and immersive digital world or worlds built to be experienced in augmented and virtual reality. And in these virtual worlds, you’ll be able to do everything you do in real life — socialize, shop, attend concerts, exercise, go to museums, bank, rent an apartment in a building, play games, show off a new pair of digital shoes and maybe even get married.

Perhaps more excitingly, the metaverse will let you do things that are impossible in real life, like teleport or take your spaceship out for a spin through the digital Milky Way. Imagine the educational opportunities for kids to explore the edge of the 3D universe, or how much time you could save by teleporting!

But the metaverse isn’t just a 3D virtual world with video game-like qualities and educational implications. It’s a combination of different technologies and ideas coming together to create something new.

And one good way to understand it is by breaking it down into its composite parts. Below are some of the basic elements that comprise the metaverse:

  • Avatars. Avatars will play a major role in the metaverse. Think a Bored Ape Yacht Club PFP avatar rendered in 3D prancing around a digital jungle and meeting up with other Apes and avatars. Or even a 3D life-like avatar of yourself dressed up for an important virtual meeting. Besides interacting and socializing with other avatars, you can teleport to other places, experiences, and worlds.
  • 3D worlds rendered in real-time. Experiences, interactions, and 3D graphics are rendered in real-time. And unlike most video games that shut off when a user turns off the console, the metaverse is experienced synchronously and persistently by an unlimited number of users and does not end when you leave it.
  • Virtual reality. Computer-generated simulations of 3D avatars and environments are one of the biggest differences between the metaverse and most activities we currently enjoy online. Enhanced VR aims to give users a sense of having real, life-like interactions in the metaverse.
  • Augmented reality (AR). AR superimposes computer-generated images on a user’s view of the real world. Think holograms and AR glasses, which involve more difficult technologies than VR and will take more time to perfect.
  • Continuity of data. A critical component of the metaverse is that your identity, objects, entitlements, and history will follow your avatar and won’t be lost. You will be able to log in and out without the need to save your data.
  • Digital spaces. In the metaverse, entire worlds will need to be built and already are being built that are well-suited to be used with virtual and augmented reality headsets. Users can purchase plots of virtual real estate, go shopping, have adventures, and do anything they would do in real life in these spaces.
  • Interoperability. Ideally, there will be many metaverses and interoperability between them. That means if you buy a pair of digital shoes in one metaverse like Decentraland, you will be able to wear them in Meta’s metaverse as well.
  • Social and work aspects. Games will be important, but the vibe of current metaverses is that they are less competitive and game-oriented and have more social interactions, concerts, entertainment, and even work-related tools.
  • Virtual economies. Because of new technologies like blockchain and NFTs, individuals and businesses can buy and sell digital and physical goods in the metaverse. This opens the door to a new virtual economy that experts predict will become a huge market.

As you can see, the metaverse is not one thing but a combination of different technologies and components coming together to make a new virtual world. Similarly, though some metaverses could potentially dominate the market, it’s unlikely the metaverse will be one place, but rather a combination of places or metaverses.

One metaverse might be hyper-realistic and another pixelated, and as technology advances the goal is to enhance the feeling of human connection and “realness” that can be felt in these digital worlds. This will be done through a combination of software that can run digital worlds and hardware like VR headsets that enable you to enter them.

Blockchain, NFTs, and Cryptocurrencies in the Metaverse

The metaverse is not just a video game rendered in real-time, it’s a virtual world where digital assets can be bought, sold, and traded. It’s a virtual marketplace. And for this virtual marketplace to be safe and secure, blockchains, NFTs and cryptocurrencies must come into play.

NFTs are unique, verifiable digital assets that are securely stored on blockchains like Ethereum, Solana, and Tezos. Because blockchains run on a decentralized system of computer networks around the world, digital assets can be safely stored and authenticated, and bought, sold, and traded using cryptocurrencies.

Early NFT projects like CryptoKitties, CryptoPunks, and later Bored Ape Yacht Club (BAYC) have proven that digital assets can have enormous value. And in a future where digital objects like clothes, shoes, weapons, homes, concert tickets, plots of land, and other digital objects will be important to our avatar selves and needed to fill out the metaverse, NFTs will play an important role.

Blockchain, cryptocurrencies, and NFTs changed what is possible with digital assets and now they are working together to shape the virtual economy and the future of the metaverse.

A Brief History of the Metaverse

Now that we’ve established an idea of the metaverse and some of its basic components, let’s take a step back. How did we get here?

It might be hard to believe, but Mark Zuckerberg didn’t invent the Metaverse or even come up with the idea. Virtual worlds where people can socialize, shop, have adventures, play games, be entertained, work, and do remarkable things like fly have been imagined, written about, filmed, and even manifested to an extent in video games for decades now.

The etymology of the word “Metaverse” first appeared in Neal Stephenson’s 1992 sci-fi novel Snow Crash, where it referenced a 3D virtual world that was inhabited by avatars and real people. In the novel, the protagonist is a pizza boy in real life but a warrior prince samurai who has katana swordfights with his avatar in the metaverse.

Another origin point comes from the 2011 novel “Ready Player One” by Ernest Cline, which depicts a virtual world called OASIS that is an escape from the real, dystopian world.

Early Virtual Worlds that Shaped the Metaverse

Sci-fi literature coined the term and helped shape and elevate the world’s imagination regarding the metaverse, but there were also companies creating early games and digital worlds.

Two of the most notable metaverse-related projects early on include:

  • Habitat. In 1985, Lucasfilms’ Games developed this popular massively multiplayer online role-playing game (MMORG), arguably the first attempt at a large-scale commercial multi-user virtual environment. The game used a dial-up telecommunications service and basic home computers to support interaction but managed to create a real-time animated view of an online simulated world where users could socialize, go on adventures, play games, start businesses, wage wards, and self-govern. In 1990, a paper was published by the developers called the “The Lessons of Lucasfilms’ Habitat” that offered several important lessons for future “cyberspace architects,” or as we might call them today, metaverse architects.
  • Second Life. Launched in 2003 by Linden Lab, this online multimedia platform provides “residents” with a blank-slate digital world. Residents can buy, lend, and spend real money on clothing, socialize in virtual spaces, have meetings, and create their 3D objects and tools which can be sold using an in-game currency. In 2009, the height attendance of residents at one time hit 88,200. Interestingly, the founder Philip Rosedale claims his vision for a virtual world predates Stephenson’s Snow Crash.

Habitat and Second Life were two of the first digital spaces where people could go as avatars to socialize, create, and communicate with each other, and they were influential in shaping the worlds and games that came after.

Is Gaming the Metaverse?

People familiar with gaming technology might say gamers have been entering virtual worlds with avatars for years and communicating in real-time. So, what’s the difference?

There’s no doubt that gaming has had a huge influence on the metaverse, that some games are their own metaverses, and that gaming will play an important role in the future of the metaverse.

There are 2.5 billion gamers online experiencing virtual worlds every day, and some games like Fortnite have gone beyond gaming to throw live digital concerts that bring in millions of fans.

Besides Fortnite, other important games worth mentioning with the metaverse include Minecraft, World of Warcraft, and Pokemon Go — all noteworthy for expanding what’s possible in digital worlds.

Web3 & the Future of the Internet

Literary references and gaming are not the only angles to view the evolution of the metaverse. Some see the metaverse as a fundamental part of the next iteration of the internet — Web3.

Although Web3 and the metaverse are both buzzwords and so closely intertwined they’re sometimes mistaken for the same thing, they are different concepts.

Web3 is the decentralized internet built on blockchain technologies and decentralized autonomous organizations (DAOs) instead of centralized on servers that are owned by individuals or corporations.

The metaverse fits within Web3 the way social media fits within the larger context of the internet or Web2.

Let’s look at the different stages of the internet and how we arrive at Web3:

  • Web1 (1979-90’s). Text-based communications and online communities that existed in the mid-1980s and expanded in the 90s with AOL Instant Messenger and chat rooms, the first social media sites, and email. Devices: home computers and the worldwide web.
  • Web2 (1999-present). The current phase of the internet is more media-based (images, video, live streams). This includes social media as we know it and tech companies like Facebook, YouTube, Google. Devices: Mobile phones, laptops, home computers.
  • Web3. The integration of blockchain technology, cryptocurrencies, NFTs, and virtual and VR and AR hardware. Ideally, systems, servers, and networks where applications run will be owned by the users themselves. Whereas Web2 was a flat, 2D experience, Web3 will be 3D and rendered in real-time. Devices: AR/VR headsets and glasses, mobile phones, laptops, home computers, future technologies.

Proponents of Web3 hope that instead of huge corporations like Facebook, YouTube, and Google controlling our experiences and holding our data, Web3 will enable a more democratic, decentralized internet.

Matthew Ball, a digital media analyst and former head of strategy at Amazon Studio, says the metaverse represents the fourth wave of computers. Mainframe computers, personal computing, mobile computing — and now the metaverse.

Either way, pitching the metaverse and Web3 as a distinct break from the current internet (Web2) certainly makes it intriguing, and the futuristic ring to the terms creates excitement for technologists and fans.

If it’s simply a marketing technique remains to be seen. But companies investing for the future of Web3 and the metaverse seem to think otherwise.

Popular Decentralized Metaverses

Tech giants like Meta and Microsoft are investing billions in the metaverse, and we’ll get to that. But much of the movement and current state of the metaverse revolves around decentralized projects that run off blockchain technology, cryptocurrencies, and NFTs.

The two most notable decentralized metaverse projects today include:

  • The Sandbox. The Sandbox is a virtual world built on the Ethereum blockchain that allows users to create and monetize pixel-like worlds. Virtual land in The Sandbox has sold for up to $4.3 million, and a myriad of companies, brands, and celebrities have invested in the metaverse including Adidas, Warner Music Group, Gucci, The Walking Dead, Snoop Dogg, and HSBC bank.
  • Decentraland. A 3D decentralized virtual reality platform that consists of 90,601 parcels of digital land that can be purchased using the MANA cryptocurrency. It is also based on the Ethereum blockchain and plots of virtual land have sold for as much as $2.4 million. A few major investors include Miller Lite, Samsung, Vice, Crocs, Snoop Dogg, and JP Morgan Chase.

According to MetaMetric Solutions, sales from the four major metaverse platforms (which also included CryptoVoxels and Somnium) topped $500 million — and The Sandbox and Decentraland were a big part of that.

A few other projects worth mentioning are Roblox, an online video game company that allows users to create virtual worlds. Officially released in 2005, the game has over 5,000,000 creators and 200 million active players worldwide.

Axie Infinity is another gaming company that’s been called a blockchain version of Pokemon that rewards players for game-play. It’s built on the Ethereum blockchain and allows players to use their Axies NFTs to battle, breed, and earn in-game currency. Players can also create games and own land in the Axie Metaverse.

These metaverses are decentralized and reward their users with cryptocurrency that can be exchanged for real money. They are also largely user-created, and the work of hundreds of thousands of creators, developers, and users.

The Builders of Virtual Worlds

For the metaverse to become a reality, several hardware and software developments must come together. The software for the metaverse consists of programs like game engines that allow developers and coders to create digital worlds.

Currently, the two biggest game engines are Unreal Engine and Unity Engine. These platforms provide creation tools for game development and can be used to create software and architecture for the metaverse. Accordingly, they have been called the metaverse equivalent of Android & iOS.

When it comes to hardware developments like AR and VR headsets, tech giants like Meta, Microsoft, and Apple are battling for the top position.

In 2021 alone, Meta pumped 10 billion into the research and development of AR/VR devices and the metaverse. Mark Zuckerberg also outlined his plans outright for the metaverse in an hour-long video that previewed some of the technologies the company is working on related to software and AR/VR headsets.

Currently one of Meta’s most advanced metaverse products is the Oculus Quest 2 VR Headset, which has over 200 titles to choose from. The popular game Grand Theft Auto San Andreas is in development for Quest 2.

Microsoft and Apple are also making moves towards the metaverse, although they are less outspoken about their intentions than Meta.

Earlier in the year, Microsoft acquired Activation Blizzard for a whopping $68.7 billion. The gaming giant is behind Call of Duty, World of Warcraft, and Candy Crush.

Apple has been dappling in augmented and virtual reality for decades and has an army of independent app developers behind them. Furthermore, since young adults in America share 70% of Apple’s market, some speculate the metaverse could slowly develop on top of Apple products.

But the company has always been secretive about releasing products to the public before they are ready, so more remains to be seen.

Who’s Investing in the Metaverse?

Besides the builders of the metaverse, the past year has seen a rush of brands, companies, celebrities, sports leagues, international banking institutions, and even countries investing in the metaverse.

Below are some of the areas people are invested in the metaverse and the big brands, companies, and names involved:

  • Fashion: Gucci, Dolce & Gabbana, Nike, Crocs.
  • Music: Snoop Dogg, Timbaland, Steve Aoki, Paris Hilton, Eminem, Meek Mills.
  • Celebrities & Athletes: Jimmy Fallon, Serena Williams, Michael Jordan, Lebron James, Steph Curry, Shaquille O’Neal.
  • Corporations: Walmart, McDonald’s, CVS, Monster Energy.
  • Financial Institutions: JP Morgan Chase, the New York Stock Exchange, HSBC.
  • Sports Leagues: the NBA, NFL, Manchester United, Australian Open, NASCAR, the UFC

Each week, so many new NFT and metaverse projects are launched, trademarks are filed, and investments are made in the metaverse and Web3 that it’s difficult to keep up with the NFT news. Even the country of South Korea pledged nearly $200 million towards investing in projects that support the growth of NFTs and the metaverse within the country.

Only time will tell what the metaverse becomes, but it’s already a huge industry, and it’s growing by the day.

Why Should You Care About the Metaverse?

If all this doesn’t sound great to you, you might be wondering, well, who cares? I’ll just stay out of the metaverse and carry on as usual — right?

Right. But think about how difficult it is now to live without the internet. Sure, it can be done, but opportunities are missed by doing so. And some of those opportunities could be work-related.

Recently, we’ve seen thousands of new job openings related to NFTs, cryptocurrency, Web3, and the metaverse, and as more businesses and brands realize the importance of having a presence in the metaverse, we expect they’ll be even more.

Meta alone plans to spend billions in the next decade to build out their version of the metaverse. That means they’ll need coders, builders, developers, creators, writers, and artists to help them do it. And that’s just one company.

Lastly, the pandemic showed people who work in offices that they can work from home efficiently and productively, and it turns out, many people prefer it. It’s unlikely remote work will ever disappear, and if the metaverse can increase work-station speeds and deliver on its promise of helping us feel a human connection with the avatars we’re interacting with, it could play a huge role in the future of work.

Also, if it helps more creators and users to be rewarded fairly for their time and work, the metaverse could be an improvement for many people.

What is the Future of the Metaverse?

If you learned anything from this article, it’s that no one can say for sure what the future of the metaverse holds. For that, you would need a crystal ball.

What we do know is that there have already been a lot of important movers and shakers in the metaverse space so far, and there will be many more. There will be visionaries, coders, creators, developers, investors, storytellers, and curious, regular people who put their fingerprint on the metaverse in the months and years to come.

And we also know that no matter what your opinion of the metaverse is or if you even have one, the fact it’s approaching in some manner is difficult to deny.

It’s also true that with the metaverse’s current decentralized infrastructure many people will have a voice and a chance to participate in its unfolding — not just one mega-corporation.

And if the metaverse is not for you — like the mobile phone, the home computer, or the television — you can simply turn it off.