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The battle for cyberspace’s future has begun in the Metaverse.

A virtual world that blurs the lines between digital and physical space is called a metaverse. Additionally, the metaverse is defined as “a vast and interoperable network of 3D virtual worlds that can be experienced by an indefinite number of users in real-time and that retain information such as identity, history, entitlements, objects, communications, and payments.”

This concept was well captured in Neil Stephenson’s 1992 novel “Snow Crash,” where people conduct business and socialize in commercially owned digital worlds, and the book turned film “Ready Player One,” where an artificially intelligent person becomes sentient.

According to investor and writer Matthew Ball, the metaverse could be worth $30 trillion in the next decade. It is the construction and governance of this impending digital reality that will determine the future of society. Essentially, the battle for the future of the metaverse comes down to hardware.

Concepts of centralization versus decentralization

In terms of the metaverse, there are two main competing visions: private and public. In today’s privatized metaverse, companies such as Facebook and Google determine how people “socialize, learn, collaborate and play.” These activities are conducted via virtual reality (through headsets that portray a digital world) and augmented reality (by virtual objects projected over the real world).

Private metaverses are owned and controlled by Facebook, and consumers get value from them as consumers. With Libra (rebranded as Diem), Facebook attempted to play in the blockchain and cryptocurrency space. It appears that crypto enthusiasts are once again upset with Facebook for trying to steal and monopolize another Web 3.0 concept (the participatory web), as Facebook has announced that the metaverse will leverage non-fungible tokens (NFTs) to exchange digital assets.

In recent months, members of the crypto community have released a joint statement called “Declaration of the Interdependence of Cyberspace.” The declaration elaborates on ideas from John Perry Barlow’s famous declaration from 1996.

In the document, Facebook is warned that “cookies, copyrights, and capital may centralize control for a short while, but they won’t work in a world where power is distributed.” Crypto communities are committed to building the metaverse collectively.

Public metaverses are a collection of decentralized, open-source digital worlds that people can move between and that are built and owned by participants. Metaverses are based on open, interoperable, and decentralized technologies. It combines decentralized finance innovations (Defi) for payments with digital tokens holding real value (NFTs). In addition, the public metaverse is governed and owned by “decentralized autonomous organizations” (or DAOs) where distributed, objective-aligned communities collectively own, govern, and work in digital worlds.

A metaverse’s foundation is its hardware

To access and interact with the metaverse, physical devices are required. As well as offering a virtual reality headset through Oculus (which they acquired for $1.6 billion) and augmented reality (AR) glasses through Rayban, Facebook is exploring hardware interfaces to the metaverse. As with computation, networking, payment services, and interoperability standards, hardware is a key enabler of the metaverse.

Hardware, however, is difficult. Andrew “Bunnie” Huang, a well-known open hardware hacker, explains that supply chains are a critical element of hardware. Microchips are one of the biggest challenges for securing a reliable supply of hardware.

Microchips form the basis of computer hardware. These devices are highly specialized and labor intensive. There are only a few factories in the world, and they cost billions of dollars to build. Taiwan Semiconductor Manufacturing Co. (TSMC) is the world’s biggest and most advanced chip maker, manufacturing over half of the world’s made-to-order chips. It has a market cap of $550 billion. The power mobile devices, IoT hardware, refrigerators and cars, 5G telecommunication networks, and artificial intelligence.

As a result of lockdowns, shipping delays, and disruptions in supply chains, COVID-19 significantly disrupted supply chains in some industries, such as automotive, and increased consumption in others, such as consumer electronics. Consequently, nation-states are at risk of supply chain shortages in their technological advancement. Due to these disruptions, geopolitical tension has increased between country-states over microchip manufacturing due to the fragility of the microchip supply chain.

To provide the essential hardware for the open metaverse, so-called crypto-states are looking to compete with the microchip industry. As described by Balaji Srinivasan, network-states and “cloud cities” can simultaneously negotiate, fund, build, maintain, and reproduce without external resources. In a sense, blockchain-based DAOs are just this — capable of bootstrapping a digital economy, negotiating collectively, and crowdfunding territory in real life.

These crypto-cities and network-states are popping up everywhere, such as CityDAO purchasing Wyoming land, ConstitutionDAO aiming to buy and co-own a U.S. Constitution, and Kong Land looking to mass-produce open microchips.

Summary

Innovative ways of bridging the digital and the physical are being demonstrated by the rapid experimentation with blockchain-based DAOs as crypto-cities and states. In essence, the choice between open, decentralized, crypto metaverses and closed, extractive, corporate metaverses comes down to the hardware, and how people access digital worlds. A crypto-state like Kong Land has the community, manufacturing capabilities, and expertise to compete for an open metaverse.

In the future, crypto projects that work like states will compete with big corporations and nation-states as new political actors. In a world in which the distinction between physical and digital spaces continues to erode, the emerging battle for the future of the metaverse offers a valuable window into the risks and opportunities associated with cyber-civilization. The crypto community must continue to stress the importance of open technical architecture and participatory governance as it pursues the vision of “interdependence.”

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