The Metaverase: A New Internet for the Masses

by Jul 12, 2022Articles

Articles

The pandemic has changed everything.

We stopped commuting… we stopped using cash… we fled cities and jobs.

Society has changed for good and we are not going back.

Even this far into the pandemic, offices are running at just a third of their capacity before Covid (B.C.)

Instead, we spend a lot of our spare time online: zooming, trading, setting up businesses, consuming all sorts of videos, films and stories.

It’s as though a new system has booted up online.

And as it happens, cryptocurrencies are right at the heart of it.

Right now, there are crypto companies that are looking to reinvent a great deal of what we do online: from socialising and dating, to money, gaming, media, property and much else besides.

Some people are calling this system the “Metaverse”.

What is it exactly?

The Metaverse is the basically the next major evolution of the internet.

It’s a global, online world that runs on cryptocurrencies.

This internet is going to be very different to the one we know today.

Instead of powerhouse companies such as Google and Amazon controlling everything, this will be an online system run by the internet users (that’s you and me).

And instead of accessing the internet through your phone or your laptop, this will be a fully immersive experience: using virtual reality glasses and headsets to plug us directly into virtual 3D spaces where we will spend an increasing amount of time.

At the moment, it’s a bit of a dream.

It will take years for the necessary developments in Virtual Reality and Computing to fully realise the Metaverse.

But it seems to be scaling fast.

How is this internet different?

In fact, JP Morgan recently predicted that the Metaverse would soon evolve into a $1 trillion market.

(You can see their report in PDF format by clicking on the link below).

And companies such as Facebook (now Meta) and Apple are scrambling to get involved: they see a system that will attract a great deal of our attention in years to come.

This will be a system where you transact directly person to person (without the need for a company or business to broker the communication).

Instead of exchanging data over the internet: emails, pictures, videos, profiles, payments…

This new internet will be about exchanging value….money, currencies, stocks, futures, rent, art, collectibles.

It started with Bitcoin…which inspired the likes of Ethereum…

And soon we may have a whole economy running without the need for a central authority.

The key idea here is ownership

Take Ethereum.

The native token on Ethereum is called ETH. You can use ETH to transact with anyone else on the platform.

ETH is like the native currency. And by owning this token, you own a piece of the overall network.

This token gives you rights: the ability to make payments, or vote or simply to own a piece of a fast developing network.

It gives you the ability to own objects, which can include art, photos, code, music, text, game objects, credentials, governance rights, access passes, and whatever else people are building on the Ethereum platform.

Basically, a token can stand for anything that has “value” in this system.

Take Bitcoin, as another example.

It’s a way to buy a stake in what is effectively the internet’s answer to gold: a constant store of value on which a whole financial system is evolving.

You can buy Bitcoin and it has value that you can exchange.

And one Bitcoin is as good as the next: in other words, it’s a “fungible” token.

Then you have items that have unique value: so called “non-fungible tokens”.

A good example is the series of digital pictures that were posted over the course of two years by one of the most popular artists in the Metaverse: Beeple.

Here’s some of his work.

People seem to like it.

Beeple registered these images on a blockchain, the technology that underless cryptocurrencies.

He built a truly massive following over 5,000 days by posting a new image every day.

And then he sold the lot as a NFT for $69 million.

Which is crazy, I know.

The point is that his work was non-fungible: it was a unique piece of work and it had huge value (at the time).

And there were trillions of pounds worth of assets like this which could be register online.

As Professor Scott Galloway explains it, Bitcoin became a trillion-dollar asset class because it created something authentic and scarce that you could own.

“A dollar bill is worth $1 because only the U.S. Treasury can make it (authenticity) and we trust Uncle Sam to mint a limited number (scarcity).

Bitcoin’s “proof-of-work” system likewise ensures scarcity (there will only ever be 21 million bitcoins produced) and authenticity (all are tracked on an immutable public ledger).”

Since then many NFTs have collapsed in price.

As you can see, sales of NFTs have taken a huge dive during the last few months.

But in our view, there is a model here of ownership that will profoundly change the way we interact online.

This goes far beyond Bitcoin, Ethereum and the bubble in NFTs.

Because essentially…tokens can represent anything that someone would want to own online.

Chris Dixon, of venture capital fund Andressen Horowitz, says he is most excited about:

Finance: the decentralised finance industry has gone from zero to $100 billion in the space of two years.

Digital Art: this is a new trillion dollar industry: “people like collecting digital art for the same reason people like physical art, fashion, baseball cards – a mix of aesthetics, patronage, status, collecting, and socializing.”

Virtual assets: “gamers spend about $40B/year on virtual goods. But users don’t really own those objects, the company does. And the objects cannot interoperate and compose across games.”

Identity: “The way Google and Facebook handle personal information has failed. Your sensitive personal information has been hacked many times. Handling passwords is a mess. Long privacy policies and terms of service get changed on a whim.”

That’s why Facebook renamed itself as Meta.

Mark Zuckerberg wants to build this thing before we all live in it.

And other tech companies are following suit.

The Key Takeaway

What we have here is a story about how developers have used the great financial crisis and the huge stimulus that followed…to develop a system that serves their interests.

The pace of adoption is outrageous.

In the last web era, we learned how quickly these networks can scale.

Facebook went from a million to a billion users overnight. Then we saw the likes of Airbnb, Uber, Tiktok.

The Metaverse, despite its growing pains, has the potential to grow even faster.

Recently, historian Niall Ferguson did an excellent talk about several new forms of money that are emerging: Bitcoin, digital currencies being launched by countries and cities.

“The center of power in our society might be shifting”, says Ferguson.

Those that had a monopoly on the supply of money are losing their grip.

And central banks and financial institutions could soon be competing with a much larger and much more decentralised system of money and exchange.

Ferguson summaries what is happening quite nicely:

“Bitcoin is an exit from the Fed.

DeFi is an exit from Wall Street.

Social media is an exit from mass media.

Remote work is an exit from 9-5.

The “Creator Economy” is an exit from employment”.

In those terms, maybe the Metaverse is an exit from the real world: a full immersive leap into the virtual realm.

It’ll certainly create some great opportunities.

In The Vanguard, we will track how this system evolves.

We want to show you how you can profit… by cutting through the hype and the jargon…and by finding projects that could actually reshape our society over the next decade.

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