Metaverse: Combining VR and blockchain

“Virtual worlds are going to be one of the first killer apps for blockchains and perhaps the deepest users of them.”

Fred Ehrsam, Co-Founder, Coinbase

There are currently two extremely hyped up technologies that are expected to change everything from education to international governance. One is VR and the other is blockchain, or distributed ledger technology. Following the rapid price increase of major cryptocurrencies, thousands of blockchain projects have been launched, aiming to disrupt current business models by inventing entirely new ways of transacting money, goods, and data. However, most blockchain projects face issues regarding scaling, security, and pace of adoption. And while it won’t completely solve those issues, VR can play a major role in easing the pressure, eventually accelerating the development and implementation of cryptocurrencies.

Three factors make a marriage between blockchains and VR attractive:

1. VR is a convenient testing ground for experimentation

Environments in VR are completely changeable, down to the setting, physics, and social parameters. This allows blockchain developers to experiment in ways that would be impossible in the physical world. Perhaps the biggest advantage for experimentation is that VR users won’t have any expectations about how the world should work. In multiple gaming universes, we’ve seen the introduction of completely new currencies. World of Warcraft alone has more than 70 accepted digital currencies. Adoption is rapid in these worlds given there was no preexisting alternative. In VR, blockchain developers don’t need to build around a historical system. They can start from scratch, leveraging their findings, data, and user behavior in the physical world.

2. Social interaction regardless of location or background

As with blockchains, VR platforms don’t take note of geography or status. A user is a user. This can have radical results for business, leisure, and cultural exchange. For example, while the internet has given rise to telecommuting and global workforces, every traditional company is still limited by the laws and regulations of their jurisdiction. These factors can shift management, hiring, and workflow decisions. A decentralized organization on a decentralized VR platform could give rise to the first truly borderless companies, taking full advantage of a global workforce.

3. VR can help outline the direction of blockchain development

VR will unlock new ways for users to socialize and transact goods and services. This could provide insight to developers looking to build innovative blockchain technologies. Virtual reality is not just a platform for gaming and content consumption; it’s a way to create transformative experiences. While VR worlds are in their early stages, they will likely evolve far beyond simply replicating traditional physical experiences. With complete ability to recreate natural laws and conditions, VR developers can allow users to adopt new behaviors impossible outside virtual reality.

Obviously, such tempting options could not be missed. Combination of VR and blockchain helps to create a metaverse, a virtual space for people to create, experience, and monetize VR content and applications. As more companies, including Second Life developer Linden Lab, work to build the large-scale virtual worlds, blockchains may be the best way to authenticate ownership of virtual property, or even establish and preserve someone’s identity.

Metaverse is a collective virtual shared space, including the sum of all virtual worlds, augmented reality, and the internet. The term was first used in Neal Stephenson’s sci-fi novel Snow Crash, where humans, as avatars, interact with each other and software agents, in a 3D space that uses the metaphor of the real world. These days it seems like the dream of the metaverse becomes more alive by the day. From live-streaming in Facebook Spaces to breakout raves in TheWaveVR to make-your-own-TV-show functionality in Flipside, the visibility of social interaction in the virtual space is at an all-time high. If executed successfully, this initiative could be one of the more important developments in VR to date! But why does VR world need blockchain?

The idea is pretty simple: if people start living in VR, its rules and systems will be just as important as the real world’s. To illustrate why, imagine if everyone lived in World of Warcraft or the virtual world that Facebook is building. People’s social lives, assets, and jobs will be tied up in this world. And that means that the central company running the world could take it all away on a whim should it suit them. So it’s pretty clear that one company can’t control the metaverse — otherwise it could take away everything you own, change who you are, or even delete you. Blockchains are an answer to many of these issues. If your assets are on a blockchain, no single operator of a world can take them from you. If your identity lives on the blockchain, you can’t be deleted.

When people think about the metaverse, they usually think about an immersive visual and sensory experience. However, the visually immersive part is the most superfluous. The most important part — what makes these worlds traversable and connected — is the shared data layer between them. And that data layer will be blockchain-based. When you think about it, blockchains are really a shared version of reality everyone agrees on. So whether it’s a fully immersive VR experience, AR, or even Bitcoin or Ethereum in the physical world as a shared ledger for our real world, we’ll increasingly trust blockchains as our basis for reality. The lines between these virtual worlds and the real world will blur quickly. If someone builds a P2P lending app on top of a blockchain so that people can lend money from the US to Brazil, that exact same app is immediately available in every virtual world because it all runs on the same blockchain.

Blockchains are essentially decentralized networks that are both publicly verifiable and unchangeable. When a transaction is registered on a blockchain, it is registered across all computers in the network and cannot be altered. Adepts of blockchain technology believe it is more secure, more democratic and more efficient than other ways of storing data. Blockchain allows for the possibility of a legitimately democratic system and free market. In a typical network, the majority of the computers operating on the network have to agree on any change made to the blockchain. This means that the possibility of hacking the system is exceedingly difficult. In fact, blockchain may become the way we verify the legitimacy of almost any virtual asset, including currencies, identity, and the authenticity and ownership of virtual property.

Blockchains may be the best way to authenticate ownership of virtual property, or even establish and preserve someone’s identity. People often consider blockchain networks as facilitating trustless consensus. This doesn’t mean that people don’t trust each other; it means the need to trust each other is basically done away with because of the inner reliability of the system. Everyone and no one owns it simultaneously. This becomes especially important in crafting a persistent world that can’t be censored.

Philip Rosedale, the founder of Second Life and a new VR world called High Fidelity, posted an essay indicating his own enthusiasm for the way that blockchains may be useful in VR. High Fidelity is now launching a new cryptocurrency, called HFC, on a public blockchain that will be used, among other things, to verify the authenticity and ownership of virtual goods. “If there was no concept of intellectual property in virtual worlds, there would be little motivation to create things, since your creations would immediately be re-used and re-distributed by others without agreement,” says Rosedale. Content creators won’t be incentivized to create digital property if they cannot protect and profit from their work. And considering that buying and selling virtual property is already profitable for many virtual world users, it does seem like an aspect of virtual life many will want to protect.

Of course, an open virtual world invites converging ideas and behaviors and creativity. Users can work on casinos, portals, museums, VR theaters, work districts, and more — none of this is being checked by the creators! AR/AR and 3D platforms, such as Cappacity Ecosystem, will help to choose fitting content and expand virtual worlds to unimaginable scales. The solution will provide content makers with easy and scalable tools for content generation in order to engage new artists and stimulate content exchange.

In conclusion, we may expect virtual worlds to be one of the first killer apps for blockchains and perhaps the deepest users of them.