Does The Metaverse Need Blockchains?


Web3 is what we call the blockchain-powered internet, and it has welcomed radical change. From the rebranding of major companies, to entirely new sub-economies. Tied in with all of this is the idea of the “metaverse,” a term that everyone seems to use, but no one can quite define.

In marketing parlance “metaverse” has come to mean one of two broad categories. It is either an alternate reality (virtual-reality-style, or accessed like a computer game using a screen), or literally any digital experience that connects people to each other in some way that embodies community.

As cryptocurrencies and non-fungible tokens (NFTs) took off in 2020/21, entire worlds were built around them. Decentraland
MANA
, Sandbox, and Upland to name a few. Each in which you could use that world’s own cryptocurrency to buy items or experiences, own digital land, or just gamble. Each its own example of the metaverse.

In most metaverse experiences when you buy an item (like sunglasses for the character you are experiencing the metaverse as) you receive that item as an NFT. Owning this is separate from the game, and the items you buy are tied specifically to your wallet (the account on the blockchain you used to buy the NFT). If you are unfamiliar with NFTs, think of them as digital-only collectables.

So, money, items, land and experiences are all on the blockchain. But do they need to be?


In October of 2000, Cartoon Network launched Cartoon Orbit. A website where users (primarily children) could collect limited edition and numbered digital collectables, and display them on canvases to show to their friends.1

In November of 2004, the game phenomenon know as World of Warcraft came out, popularizing a digital fantasy world complete with its own social structures and eventually over 10 million users.2

Today nearly 3 billion users are active on Facebook every month. 3

Each of these shows the viability of digital collectibles, virtual worlds, and online communities, but none of the three require blockchain technology to work.


The promise of weaving the blockchain into the metaverse is that it would allow for decentralization.

Items bought in one place could move with you into another experience, or be sold on a third party marketplace. What you own would be yours, and not trapped inside of the walled garden created by a specific company or brand. But is that what consumers want?

Amazon
AMZN
has a slice of almost every good for sale, and has become ubiquitous with online shopping in the United States. The ease of going to a single website and not having to worry about the details is why users return. Instead of scouring the web for which detergent to buy, you get top rated items in one place, that website has all your info and you are one click away from purchasing.

Web3 is still in the phase of a small town that has yet to get its first grocery store. People go to the butcher for meat, and buy vegetables from the local farmer. It’s an experience that works fine for enthusiastic early adopters, or those that really care where their ingredients are sourced, but mass market wants to get their food and go. Maybe even pre-cooked.

As we see major metaverses come to market, such as the one being developed by Meta (previously Facebook ), what will becomes apparent is that users care little for the technology behind the experiences they partake in. What matters is the value that is derived out of them. If a major tech player created a virtual or social experience that was self-contained in terms of purchases or transactions, it wouldn’t matter if it was powered by a blockchain, a database, or a Google
GOOG
spreadsheet.

Blockchains offer a tremendous opportunity for technical advancement, such as redefining money, facilitating regulation, powering digital art and more, but blockchains are truly a separate concept from the metaverse. While they can live and be used together, it is doubtful either’s success is truly dependent on the other’s.



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