Metaverse: the good, the bad and the ugly

19 min readMar 16, 2022

When he presented his strategic vision for the future of Facebook (now Meta) Mark Zuckerberg threw a stone in the pond, or rather a tree in the forest. For those familiar with the Gartner hype cycle, Mark Zuckerberg may have pushed the Metaverse concept to the “peak of inflated expectations” phase. Since then, not a day goes by without discovering articles, a newsletter, an interview, Twitter threads, influencers posts, startups, conferences, Discord groups… throwing themselves at this topic like the next cake everyone wants a piece of.

The advent of a new story is never trivial, as Yuval Harari explains. The strength of Sapiens, our strength compared to other species, is our ability to collaborate on a very large scale: by the hundreds, by the thousands, by the millions and now by the billions. What makes this cooperation possible? Our ability to create and believe in intangible, fictitious entities, like countries or companies for example. As far as we know, Homo Sapiens seem to be the only species able to create a story about entities that cannot be seen, touched or felt.

Any group, regardless of its size, that believes in the same fiction shares the same rules and norms to overcome the same problems. Thus, when we collectively decide to change a story we relatively quickly transform behaviors. As we have done with slavery, monarchy, the place of women in society, capitalism, etc.

Actually, the birth of the first static version of the web, on Tuesday March 12, 1989, marks the beginning of a new story that transformed our relationship to time and space. Since then, social interactions, whatever their nature, are constantly increasing in number and frequency. No other species is capable of “connecting” 7.5 billion people.

The Internet IS this story.

And the first lines of a new chapter are being written through the concept of Metaverse for good, for bad and for ugly.

There is no consensus about what the Metaverse is

What the etymology tells us

The term “Metaverse” is a contraction of the Greek prefix meta and the Latin universum.

Let’s start with Meta. It means: among other things, change, going beyond.

Universum is itself composed of uni (“one”) and versum (“to turn”). Universum, or “united towards” represents both “all together” and “towards a common goal”.

Thus, the Metaverse could be defined as a common direction towards which we will move together, the characteristic of which would be that it transforms.

Simply put, it would be a matter of moving towards something that transforms.

What could be more difficult than defining something that transforms, a complex hyperobject in constant evolution, the result of an organic and chaotic process?

Why don’t we start by saying what the Metaverse is not?

What the Metaverse is not

Metaverse is not a revolution.

Actually, the history of technology shows that there is never a breakthrough. The perception of a technological revolution implies the convergence of many underlying and prior technological changes.

If for many the iPhone embodies the beginnings of the mobile Internet, this is because they did not perceive that all the necessary technological bricks were becoming mature enough. The iPhone arrived 10 years after the first BlackBerry, 8 years after the emergence of the Wireless Application Protocol (behind the first mobile sites), almost 20 years after the deployment of 2G and 34 years after the first cell phone call…

The Metaverse is not virtual reality. Just as the mobile Internet is not just an application.

The Metaverse is not a virtual mode either. Just as Facebook is not the Internet today.

The Metaverse is not a video game. Video Games like Fortnite offer a non-persistent experience and limit the number of participants (1 million simultaneous users of Fortnite are in over 100,000 separate simulations).

Finally, the Metaverse is also not a collection of technology tools like Unreal, Unity, WebXR or WebGPU.

The Metaverse is a new experience whose potential is just beginning to be explored. It could be something incredibly positive, destructive, or something in between. As was nuclear power in its time. After about 40 years of work and the discovery of the large amount of energy that fission could produce, the first application was not a power plant but a bomb.

We are building the invisible part of the Metaverse.

Each layer has some good, some bad and some ugly.

THE GOOD

The current “techlash” is an opportunity

If technologies are the “what”, humans are the “how”.

The Metaverse, in the right hands, could become a tool for a more equitable society. It could act as a mirror of humanity and shed light on dark areas, allowing us to correct the ills of our society through a feedback loop. Utopia you say? Yet, this is what we are currently experiencing through the problematic of the ethics of AI systems used by the web 2.0 giants.

The “techlash” continues to define the state of the technological world in 2021. Government leaders, who have traditionally been the gatekeepers of society’s protection from the effects of new innovations, are increasingly infuriated by the inability of traditional policies to keep up with the unprecedented speed and scale of change. Alerted by former actors of the attention economy like Tristan Harris, platforms that control Web2.0 are increasingly pressured to transform the systems they intend to rely on to build the Metaverse; whether by organizations like the US Federal Trade Commission or the CNIL (see Google Analytics). Increasing consumer demands and employee activism require more aggressive self-regulation.

This is why Twitter hired its biggest critics in 2020 to develop ethical AI. This is why Timnit Gebru (former Ms. Ethics Google) was “thanked” or why MIT researcher Joy Buolamwini’s remarkable work on algorithmic bias was highlighted in the Netflix “Coded Bias” paper.

Twenty years of experience to capitalize on to moderate Metaverse platforms

The social architecture of the Metaverse and the design choices are still ahead of us.

Researchers and designers of virtual worlds are increasingly interested in more proactive methods of virtual governance to address virtual groping once they occur of course, but also discourage such acts while encouraging more positive behavior.

These designers are not starting entirely from scratch. Multiplayer digital games — which have a long history of managing large and sometimes toxic communities — offer critical lessons for fostering responsible and successful virtual reality shared spaces.

Since 2003, for example, millions of people have gathered to work, play, and socialize in Second Life. Users can even create their own digital content and trade goods and services in the world’s currency, the Linden Dollar. Second Life is 650 million US dollars a year in transactions and a million people use it but above all 20 years of experience in the 2D Metaverse. On this subject, the video game sector is clearly ahead.

The most common forms of governance (warning, suspension or even ban) are currently based on users reporting. Given the size of virtual communities, these processes are often automated via algorithms, which have both advantages and disadvantages. They are reactive, rather than proactive. Moreover, automation leads to problems of false positives and negatives, or even algorithmic discrimination.

What about the self-governance practiced in the multiplayer game “League of Legends” for example that is a tribunal system? Due to lack of efficiency, this system was abandoned after a few years. However, it still exists under the name Overwatch in a game like “Dota 2” for example.

What about the Wikipedia moderation model ? Is it an ethical business model to ask voluntary members of the community to do difficult, time-consuming and laborious moderation work for free? “Wikipedia”, a non-profit organization, is not for everyone.

A multiplayer game like Everquest encouraged altruistic behavior by forcing players who died to return to the place where they died. In this way, players were implicitly but strongly encouraged to ask others for help in recovering lost items.

Couldn’t nudge, a concept theorized in the physical world, be integrated into the architecture of the Metaverse?

What if positive choices for the collective “paid off” more for the players? What if the Metaverse offered the possibility to monitor its “positive impact” score? What if the player was alerted when his score was below the average score to activate the social norm bias. Because if the underlying technologies have matured, so have the advances in the understanding of cognitive biases (which can be used to good effect)!

The Metaverse economy will benefit creators and “unbancarized” people

All the actors in the chain can also hope to get a piece of the pie and regain control provided that the Metaverse model is more decentralized than the social web is today.

For years, gamers have given video game giants like Sony, Nintendo, Microsoft, Ubisoft 175 billion dollars to play on a screen. They have seen the fruit of tens or even hundreds of hours of hard work to earn stars, pass a level, gain a power, and end up in the trash when the game is over.

But once again, video game players are ahead of the game.

In 2010, a nightclub in the Entropia Universe game was sold for $635,000. The virtual equivalent of Amsterdam was sold in Second Life for $50,000 in 2007. A 16-year-old won $3 million in prizes in the Fortnite World Cup.

Recently, Axie, which is at the forefront of this “GameFi” trend, has already generated over $2.5 billion in trading volume. About 35% of Axie Infinity traffic — and the biggest share of its 2.5 million daily active users — comes from the Philippines, where high proficiency in English, strong gaming culture and widespread smartphone usage have fueled its popularity. Axie has thus become the highest valued NFT collection to date.

Unlike the current buzz about “images” NFTs, gaming NFTs “act”, interact with other NFTs and can appreciate in value over time.

Imagine that you have earned KyratCoin by playing Far Cry 4 for a hundred hours. Because YOUR character, Ajay Ghale_xxx, is also an NFT, he is unique and impossible to duplicate. You own this character. Because you have played a hundred hours, your Ajay Ghale is better equipped, faster, better than those who have played only ten hours. Thus, you earn new KyratCoin faster the more you play. The value of your avatar is higher. You can sell your Ajay Ghale to another player if you want.If you’ve played well, your NFT is worth more than when you originally bought it. If you are not the only one in this case, then others have followed your example. As a result, KyratCoin has grown in value, and the Discord community has grown.

Some gamers currently consider that gaming NFTs is just a new way for gaming companies to earn more money. However, just take a look on Reddit and you’ll find people more or less officially selling characters they’ve raised in a game like World of Warcraft for example… Black market has existed for years. Axie’s NFTs are an interesting illustration to follow. Under the guise of the principle of scholarship, actors finance scholarships of sorts. They own NFTs which they “rent” to guilds they own. In a way, the players borrow the NFT and pay back this loan by giving up a part of the cryptocurrencies earned by playing the game.

Eventually, online and ephemeral experiences have also served to extract behavioral data, the same data used by tech giants to identify patterns and sell us products and services, the same data that made them become the biggest market capitalization in the space of a few decades…

THE BAD

Open source Metaverse could already be an utopia

After interest in these open source metaverses waned, the tech industry spent a decade obsessing over capturing our attention through free, addictive services from which it “indirectly” derives immense value. This is the internet that the metaverse has inherited.

In the early 90’s, when Neil Stephenson wrote his book “Snow Crash”, the Web was still a mess, each piece being connected only by the “magic” of servers. Novice developers build rudimentary Web sites using HTML and HTTP. Then, web browsers like Mosaic and Netscape were born to solve the problem of sorting and aggregating information.

The Metaverse, as described by Stephenson, is a three-dimensional digital street with virtual real estate, where users’ avatars can stroll, party and do business. The architecture and interoperability between all the players in this 3D cyberspace is managed by a company called Global Multimedia Protocol Group.

In the early 2000s, a flurry of open source Metaverse projects emerged to solve the problem of assembling virtual worlds. Unfortunately none of these projects ever took off.

By the mid-2000s, it became clear that the value was no longer in building individual websites but in creating information sorters, channels, aggregators and publishers — open enough to adapt to user-generated content, but closed enough to reap huge profits. Thus was born web2.0. For nearly 30 years, cyberspace has been in the hands of fewer and fewer technology giants. Promising new players emerge, compete with each other, are bought out and end up becoming real black holes called GAFA.

Is a story where giants like Microsoft, Facebook, Epic Games, Apple, Niantic, Nvidia, etc. decide to collaborate to build the metaverse under open source standards from which no one in particular would make billions really credible?

Why would they partner to create a metaverse when they have already spent decades and billions building their own?

If Big Tech’s growth goes on, there will be multiple Metaverse. Each will be interoperable within a proprietary and controlled ecosystem of a tech giant, in the same way that Apple is. Users like the homogeneity of Apple’s proprietary operating system, the ubiquity of iMessage. And Apple, presumably, likes the 30% commission it can charge developers who sell iOS apps through its App Store.

Who wants a metaverse built in the manner of Web 2.0?

New open source metaverse projects are trying to fight the inevitable to redistribute ownership of the Metaverse.

Play-to-earn may kill the core gameplay loop

Once again, the video game industry is ahead of the curve. Games have always been at the forefront of the notion of digital ownership.

The gaming platform Steam can be credited with standardizing the concept for games, and maybe for other media like movies.

Collecting items of randomized rarity and distribution is one of the main “loops” in many games. Usually the player kills a monster and then gets a better weapon, which allows him to kill a tougher monster, which allows him to get an even better weapon, etc. Moreover, collecting “skins” (i.e. different outfits/permutations of the game character) is one of the most common types of microtransactions in games.

NFTs are designed to dynamically adapt to various rare items with permanent, trackable, and open value. But the way NFTs are currently being discussed in games is in great danger of falling into the trap of killing the core gameplay loop by giving in to the sirens of quick financial gain.

This mechanism has already been tested to some extent. Developers of games with a “loot loop” have long had a problem with players being labeled as “farmers,” who acquire and accumulate game currency and items and sell them to players for real money, against the game’s terms of service. The solution was to set up “auction houses” where players could use real money to buy items from each other.

Unfortunately, this solution had an undesirable side effect. As noted by Jamie Madigan, a well-known game psychologist, our brains are designed to pay special attention to unexpected and beneficial rewards. While much of the joy in some games comes from an unexpected or random reward, easily acquiring a known reward via real money degrades the perception of the reward and thus some of the enjoyment of the game. This raises the question of the sustainability of the success of blockchain games like Axie Infinity.

It has indeed quickly generated enthusiasm around the concept of “playing to win”. Players can potentially earn real money by selling either resources or tokenized characters earned in a blockchain game environment. So what is the main driver for players? Do they care enough about the core of the game itself rather than the potential market value of NFTs or the potential to earn money while playing?

More fundamentally, if real gains are the goal, is this really a game or simply a gamified micro-economy, where “farming” as described above is not an illicit activity, but rather the basic mechanism of the game?

Thus blockchain games face several gameplay problems that fall under the psychology of games. Not solving them will probably prevent them from a massive adoption.

Games can be seen as the training wheels of the metaverse: the ways we communicate, navigate, and think about virtual spaces are all based on mechanisms and systems coming from games. Early adopters of a “metaverse” will be gamers who have honed these skills and feel comfortable in virtual environments.

Yet many brands and marketers who haven’t really done the work to understand games are trying to quickly seize an opportunity that probably won’t materialize for a long time.

Metaverse could be like web2.0… but even worse

A recent experiment at the University of California at Berkeley already shows that synthetic human faces have become so convincing that they fool even experienced observers…

When you ask people to name main technologies of the metaverse, they usually name virtual reality headsets, blockchain or even 5G. But the underlying technology that will shape our experience is AI. Indeed, the metaverse will probably be filled with artificial agents controlled by AI that look and act like humans.

They have access to data about our personal interests and beliefs, habits and personality, while monitoring our emotional state by reading our facial expressions and vocal inflections. Actually, they will even have more information than in a web2.0 world to engage us in “conversational manipulation,” targeting us on behalf of paid advertisers without us realizing they are not real.

Since these AI agents will look like anyone in the metaverse, our natural skepticism about advertising won’t protect us.

And the UGLY

The Metaconomy (economy of the Metaverse) could be a trojan horse to implement a deeper surveillance system

When we make payments using bank accounts and credit cards, we make a deal: convenience in exchange for the fact that our transactions will be visible to the companies involved. Every transaction leaves a trail.

In China, the authorities have invented a concept of “controllable anonymity” for the digital yuan. If participants in transactions are anonymous to each other, the central bank can “un-anonymize”. Helping people who don’t have bank accounts “sounds like a very nice idea, but what if the end result is a system of monitored bank accounts? You can get very good privacy for digital payments, says Ari Juels, a cryptographer at Cornell University who has studied digital currency models for central banks. But it’s not clear how much privacy governments will allow and how much privacy compromises efficiency and security.

And unfortunately we don’t live in an altruistic world.

Investors and bankers deeply disagree about how cryptocurrencies will eventually take hold, but their extreme volatility makes them an increasingly important investment. While bitcoin, ethereum and other digital currencies are gaining acceptance on Wall Street, an ever-increasing number of new, untested currencies are endlessly emerging. Some of which are so dubious they are literally called “crap currencies”. With technical failures and sudden price swings, there’s no guarantee that these tokens can be converted to cash. And in the crypto-currency world, it’s also considered a rite of passage to be scammed at some point.

Ingenious players created a bank in EVE Online in 2009: the E-Bank. They created an account system similar to what already existed in real-world central banks. They made loans, paid interest, had a CEO, a board of directors and were extremely well organized. Then the CEO stole 200 billion ISK (EVE’s currency) and exchanged it for over 6,000 Australian dollars.

This may suit wealthy investors who can handle the risk, but could leave market players vulnerable, especially in developing countries.

Government-backed currencies still dominate the world today. If private digital currencies begin to compete with national currencies, it could make some of them more volatile. Almost 200 years ago, something quite similar happened in the United States. In 1830, 90 percent of the U.S. money supply consisted of privately held bank bills. When Facebook declared that we could buy Libra (a project that collapsed) using local currencies, the fear of the price volatility that private currencies caused in the United States in the 1830s resurfaced. At the time, the unpopularity of the system influenced the government’s decision, a few decades later, to replace it with a national banking system. Out of this chaos came the dollar and its domination. The value of a currency is stable as long as its issuer is credible. The political instability in Venezuela in recent years has contributed to the loss of value of its currency against the dollar. By analogy, if a large company were to issue its own cryptocurrency today but its business model declines, or if people begin to doubt the future viability of the company, then this would certainly impact people’s desire to hold this cryptocurrency.

So some countries, including China and Sweden, are testing versions of this state-owned cryptocurrency idea. The Bahamas has already launched a central bank digital currency, or CBDC, which they call the Sand Dollar. Nevertheless, there are still many details to be worked out.

Who oversees the digital currency?

How is it connected to private banks and payment services?

Which people will want to use it?

Another problem is that digital payments have a hard time staying private.

The Metaconomy is still quite useless and inaccessible to a large number of people

The NFT market volume is said to exceed $700 million, and OpenSea is headed for a $100 billion valuation in record time. Ethereum blockchain-based marketplaces seem to be emerging as a strategic infrastructure that will support metaverse economies, but for now, NFTs are missing something crucial: utility and connected economies.

Digital assets are bought and sold. Thus, it is a speculative market with little real use. To create functional economies in the metaverse, owners should be able to do something concrete with their goods. For example, if I buy a recently minted painting, I would want to be able to furnish my virtual home with it. Right now, all I can do is admire my purchase on OpenSea or another site and give the URL to everyone.

This problem will remain for a number of years while the industry agrees (or not) on standards and interoperability. Tim Sweeney, CEO of Epic Games, estimates that we will have to wait at least another 5 to 10 years. This delay could kill the emergence of the metaconomy.

Moreover, the promise of blockchain-based exchanges and the proliferation of different altcoins that power them should mean that transferring the value of goods and services across different metaverse will be easy. But we are still very far from that.

Different virtual worlds are being created, with their own proprietary token-based economies. There is no real connected exchange of value or assets to other worlds. My plot of land in Decentraland may be completely worthless if I want to trade it for a Land in The Sandbox for example. Similarly, the mechanics of buying, selling, and trading through existing platforms require a certain level of understanding of cryptocurrencies and the use of Metamask, for example. Altcoins need to be converted to Etherum or Bitcoin for example, and then back to altcoin of another metaverse in order to be traded — each time incurring fees.

We are still in the early stages of a functional exchange market, as accessible as fiat, but one that excludes a large number of people who want to participate in the metaverse but do not understand how metanomics works.

Metaverse could be one version of the future of the Internet within… at least ten years

If the Metaverse were an iceberg, the visible part would be a new type of experience. While the invisible part would be: social interactions, new business models, devices, communication networks, new individual behaviors, new communities, new uses, killer apps, brands, gaming, physical and virtual hardware… Therefore, the metaverse concept is a combination of several technologies such as augmented reality, the Internet of Things, 5G, artificial intelligence, space technologies, blockchain… All of them being at the service of immersion in what some people qualify as the future of the Internet. Many of these technologies have been slow to mature, but they are approaching the minimum level of performance to make it a success.

For example, most virtual reality headsets still need to be connected to a PC or game console to achieve the processing power and communication speed needed for smooth and immersive experiences. With ever-faster processors and high-speed wireless communications on the horizon, better visual resolution and wireless experiences should emerge in the next few years.

Instead of looking at the news, you could be right in the middle of the news. Instead of learning the history of ancient Egypt or Greece from books, you could immerse yourself in it virtually, travel through the universe and interact directly with the avatars of the people of the time. Instead of watching a basketball game on TV statically, you could turn your head 360 degrees as if you were there. Instead of attending a virtual conference located on the other side of the world in a passive way, you could then go and meet the other participants and exchange with them on the subjects you are passionate about.

Today, augmented reality remains a niche market regarding the small number of use cases. The blockchain has enabled the launch of cryptocurrencies such as bitcoin in the last few years. It would allow virtual goods and identities to be purchased and transferred seamlessly between various platforms making up the Metaverse. New blockchain applications, such as NFT fever, are increasing the adoption of the technology and could launch a new kind of creator economy…

While some brands are already rushing to grab the pie, widespread adoption will not happen for several years. Indeed, the necessary technologies still have a way to go to optimize their functionality, usability and cost. One semiconductor company has stated that a truly immersive metaverse would require 1,000 times the computational efficiency of today’s state-of-the-art processors.

“When a tree falls, you hear it; when the forest grows, not a sound.”

What if the Metaverse was just a tree when the web3 grows without a sound ?

*** SOURCES ***