Why the metaverse will go far beyond Meta
NOTE: The opinion piece was first published in Nikkei Asia on Dec 7
Users will have more choice in Web 3.0 than they do on the internet today
By John Mitchell
John Mitchell is co-founder and CEO of Episode Six, a Texas-based fintech company with extensive operations in Asia.
Mark Zuckerberg did not invent the metaverse. He does not own it, either. But his decision to rename Facebook as Meta in October is likely to be remembered as the moment when this vision for a more immersive digital life went mainstream.
Naturally enough in the light of Facebook’s real-world problems, Zuckerberg’s pivot to the virtual world has opened some eyes. Nina Xiang sounded the alarm in the article “Metaverse nightmare will strip-mine our fragile human reality” published online on Nov. 18, sketching a dystopian metaverse in which Big Tech preys on humanity, making an impassioned case that governments and users should take action to prevent “a small group of unaccountable, elite tech companies” from condemning the rest of us to life in the Matrix.
Xiang will not be the only one to highlight the risk. Governments will certainly move to regulate activity including financial services in the metaverse, just as they do the real world. And, as they spend more time in virtual worlds, users should expect to be protected by tech companies.
But metaverse users will actually have more choice in what is being called Web 3.0 than they do on the internet that we know today. For sure, some of them will choose to shop and be entertained on Meta’s metaverse platforms, which will no doubt be easy to access from Meta’s empire of social media properties.
But plenty of users, especially younger ones, are already starting to inhabit a different, more decentralized kind of metaverse. It is unlikely that internet users in the future will be very interested in platforms that confine them and their digital possessions within a so-called walled garden. They will want a metaverse that is decentralized in terms of control but hyper-connected in terms of underlying infrastructure, enabling the easy transfer of value between platforms.
If you want to see the shape of things to come, look at the world of blockchain-based games. In Alien Worlds, players compete using non-fungible tokens (NFTs), earn an in-game currency called Trilium and travel on Alien World Missions in which they control competing Decentralized Autonomous Organizations, known as Planet DAOs.
It sounds far-fetched, but as many as 3.6 million people are already playing, earning, spending and trading in Alien Worlds alone. Conventional online games like Roblox boast many more active players. Roblox has around 225 million average monthly players but these are walled gardens that allow money in, but do not allow digital assets to be moved in or out.
Crucially, the currency and assets that a player holds in blockchain-based games like Alien Worlds, Decentraland, and Axie Infinity are portable beyond the boundaries of the game itself.
The emergence of this patchwork of different but interoperable platforms, rather than the giant monoliths that Xiang fears, suggests that control over economic value will shift back toward users. The use of governance tokens to power blockchain platforms could also help to decentralize control in the metaverse, addressing another of her concerns.
Thanks to NFTs, the spaceship a player owns in Star Atlas and the Small Love Potions in-game currency they have accumulated in Axie are as transferable as the car in their garage or the dollars in their pocket.
The value embedded in a digital asset can be converted into real money via cryptocurrency exchanges and then spent in real stores. Conversely, money earned from a real-world job can be converted into crypto on an exchange and brought into a game to purchase virtual land or spaceships.
Value, then, is being set free from the systems in which it was generated. And what is possible in the metaverse will surely influence expectations of what is possible back in real life.
Having become accustomed to a plethora of units of value, and their extreme portability, today’s gamers are not going to welcome a centralized institution locking their value inside any particular system, or having to use different payments infrastructure to interact with different units of value. It would seem absurd.
And if we extended the principle of extreme portability from blockchain-based games to conventional finance, the world would look very different. You would be able to take your loyalty card reward points from one chain of stores and use them at another, or convert them into cash.
You would be able to bring your crypto holdings into a wallet provided by your bank or, one day, hold your cash directly as central bank digital currency. And you would be able to spend dollars from that wallet to buy a nice apartment in Decentraland and rent it out for Ether.
Of course, regulators and brand owners will have a lot to say about this. But the revolution in value units has already begun, and will accelerate as people and value-creation migrate to the metaverse.
Axie Infinity alone has 2.23 million average monthly players, according to ActivePlayer.io, up from just over 600,000 at the beginning of the year, while research firm IDC forecasts that, by 2030, 60% of global consumers will have made a transaction using a unit of value other than a fiat currency.
That points to an urgent need for financial institutions to upgrade existing payments infrastructure to meet changing consumer expectations and regulatory requirements. There is a lot at stake here, too: $250 billion worth of payments revenue could move to non-financial institutions by 2030 if banks cannot keep up, according to IDC’s estimates.
You may not want to play Alien Worlds, but the game’s success is a sign that we can expect a decentralized metaverse with many distinct but transferable units of value, and that this paradigm will soon influence real world finance too. If you are at a financial institution, that gives you a Trilium reasons to get ready for a future with more units of value.