We’ve already covered how virtual economies are exploding: the virtual goods market now exceeds $52 billion annually, up from $15 billion in 2012. This growth has largely been driven by massive gaming universes such as EVE Online and World of Warcraft.
Immersive VR worlds like Decentraland will create virtual economies much larger than ever before.
To enable the creation of mainstream digital goods and services, platforms must exist to facilitate the exploration and transaction of content. While many options are under development, nearly all suffer the same limiting factor: a centralized agent acting as an intermediary between all interactions.
The Problem With Centralized VR Worlds
A VR world controlled by a centralized entity (often a corporation) poses several issues:
- Control over rules — Artists, developers, and consumers are limited to transacting only items and services approved by the platform owner. This has spawned ‘virtual black markets’ in many digital worlds, reportedly worth over $6 billion.
- Control over transactions — Users are unable to capture the full value of their actions due to transaction costs. For example, Second Life levies a 5 percent fee on any exchange of items between users.
- Control over access — Centralized platform operators can ban access to any user, at any time, at their discretion.
- Control over in-world currency — For in-world currencies, users are at the mercy of a single entity determining monetary policy, with little insight into future actions that can impact their ownership value. For example, in early 2017, EVE Online announced that it was revising the game’s major currency system, deleting any player’s balance under 1,000 Aurum (roughly $10 to $13). There were literal in-game riots in response.
Due to these limitations, VR users will struggle to take full advantage of immersive virtual worlds. Decentraland aims to solve these issues by creating the first fully decentralized virtual world, where the users are the owners.
Through the use of an in-world cryptocurrency (MANA), users can buy land on a blockchain-based ledger, develop peer-to-peer applications, and trade digital assets without interference. This empowers publishers and consumers to socialize and transact without intermediaries.
The introduction of affordable hardware (Facebook will soon unveil a $200 Wireless Oculus VR Headset) is pushing VR toward mass adoption. Now is the time to choose what kind of world we will create for our digital lives. Do we want a gatekeeper dictating prices, levying taxes, censoring users, controlling content, and monetizing our data?
Without an alternative to centralized VR worlds, users will lose. That is why we are building Decentraland.
Join the Community
Note: This article has been amended. We’ve transitioned the token sale start date to August 17th to ensure complete compliance with recent regulatory announcements. Learn more in our announcement.