GiD Report#191 — What is the metaverse?

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GlobaliD

7 min readDec 21, 2021

Welcome to The GiD Report, a weekly newsletter that covers GlobaliD team and partner news, market perspectives, and industry analysis. Check out last week’s report here.

This week:

The metaverse is already here
What people are saying
Tweet of the week
The 6 web3 use cases people care about the most (small survey)
Stuff happens

1. The metaverse is already here

There’s a lot of buzzwords these days. Blockchain, NFT, DeFi, web3. But the metaverse, thanks to Facebook, is not only the buzziest but also the fuzziest of them all.

In a lot of ways, the metaverse has existed for some time. Games like Second Life, Eve Online, and World of Warcraft have been around for decades. More recently, kids (and adults) have been spending more and more time in the worlds of Roblox, Minecraft, and Fortnite.

Premier eSports title Counter-Strike Global Offensive (CSGO) is fully funded through in-game transaction fees from the trading of in-game items on the Steam marketplace, netting game developer Valve billions of dollars each year. (You can check out Valve’s original slide deck for how they came up with in-game skins here.)

You could say that all of that is already the metaverse. People living, playing, and working (yes, working) in a fully digital world with rich communities, cultural norms, and its own built-in economics.

The one thing you could argue is that all of this up to now has been built under the guise of web2.

For instance, the only difference from those CSGO skins versus what we know as NFTs today are the fact that they’re centrally managed (by Valve through Steam) rather than through a decentralized blockchain.

What happens then with the arrival of web3? What happens when items and inventories are interoperable? What happens when we have self-sovereign identity? What happens when characters can seamlessly move from one world to another?

What happens when that NFT you bought as a collectible is now a character or item you can use in a game?

What happens when the metaverse is more than just a game?

I’m not sure we have a clear sense as to what those answers are just yet. But what has gotten people excited is that they’re starting to see the building blocks — NFTs, DeFi, identity — and the possibilities for building a more open and interconnected digital universe.

We’ve seen the rise of Axie Infinity. (Here’s a fascinating tweetstorm on how the in-game economics are working out.) We’re seeing record land sales in metaverse games such as The Sandbox and Dcentraland — just as big numbers were thrown around during the early dotcom domain land grab days. Michael Jordan will probably sell you digital basketball sneakers tied to the Solana blockchain.

Facebook has gotten plenty of flack for their Meta rebrand. But Mark Zuckerberg deserves credit for actually making a big, bold bet — whether or not it pans out, committing $10 billion to the metaverse and web3.

There are early, early days. There’s going to be a lot of hype and noise. There will be a lot of losers and a couple big winners. And where we end up probably won’t be what we necessarily expected.

Anyway, here’s Wired on what the metaverse actually is:

Mentally replace the phrase “the metaverse” in a sentence with “cyberspace.” Ninety percent of the time, the meaning won’t substantially change.

Like I said, very fuzzy.

2. What people are saying

Axios:

Driving the news: Nike just acquired RTFKT, a developer of digital goods, including virtual sneakers and NFTs (non-fungible tokens). Meanwhile, Applebee’s is launching a new NFT every Monday this month, following White Castle’s move into crypto.

…

What they’re saying: Companies are speeding to the finish line because “there’s the first-mover advantage for the buzz … signaling to a very valuable audience that you’re a brand that gets it,” says Robert Davis, head of innovation at Ogilvy.

…

What to watch: Adoption is still low. Less than 20% of the U.S. population will have used virtual reality at least once per month this year, according to eMarketer.

Goldman Sachs via Coindesk:

Blockchain technology is central to the development of the metaverse and Web 3, Goldman Sachs said in a research report.
It is the only technology that can “uniquely identify any virtual object independent of a central authority,” and this ability to identify and track ownership will be crucial to the functioning of the metaverse, analysts led by Rod Hall wrote in a note published on Dec. 14.
For Web 3, blockchain allows for the “partial elimination of centralized control,” the note says. In the future, users will be able to log in without the need for a third party, such as Meta, Google or Apple, the note adds.

…

The Wall Street bank sees blockchain as the one of the most disruptive technology trends to appear since TCP/IP and HTML “ushered in the internet in the 1990s.”
“Investment implications are hard to predict at this juncture, but companies who are dependent on centralized control of user identity will likely find their business models challenged by the adoption of blockchain,” the report added.

Jeffries via Business Insider:

“The way to think about it is [that] all human activity that hasn’t moved online is about to move online in the next five to 10 years,” he said. “We can only imagine what it can be.”
Powell was speaking to CNBC’s “Worldwide Exchange” on Friday, after Jefferies released a research note saying the metaverse will be the biggest disruption to how people live ever seen.

…

“What did you want to own from 1989 to 2000? You wanted to own the Ciscos of the world. And I think the same is going to be true for the metaverse,” he said.
Powell recommended investors think about chipmakers such as Nvidia and AMD, saying that the push into virtual worlds will require a huge amount of computing power.

Relevant:

3. Tweet of the week

TZ (via /j):

4. The 6 web3 use cases that people care about the most

A poll of 50 people on web3 (via /toddjcollins and /treycarl):

1. Creator monetization

“Royal.io / the effect on the music industry”
“Building a global community of artists around a social token”
“Realizing that creator funding mechanisms suck and that NFTs solve that”

2. web3 as “the frontier”

“simply not knowing enough — everyone is still undergoing the discovery process, and that’s what drives me to learn more”
“If this is the remaking of the Internet, I want to be involved”

3. The openness and composability of blockchain

From a dev’s eyes: “Biggest thing was doing the CryptoZombies solidity tutorial and realizing all contracts and data are open for viewing and interacting with.”
“The moment I realized people could build apps & deploy them to Ethereum without any of the web2 infrastructure. As someone who has worked at a traditional cloud services provider, mind = blown.”

4. NFTs and ownership

“Buying an NFT and joining a gated discord… the potential for new social experiences”
“When I started looking at RFTKT and realized that NFTs were more than just art — they had real utility and were fundamental for an interoperable metaverse. Seeing that RTFKT sneakers could be worn on Snapchat through AR but also in Decentraland or in games opened my eyes.”
“Understanding NFTs as a way to reintroduce scarcity into the web”

5. Community

“Being an entrepreneur was lonely. To discover a community where I could contribute value in any way I want and get rewarded via emojis & crypto!”

6. Financial gain

“In 2017 I got some ETH and the private key as a Secret Santa gift at work, which at the time was worth 10 USD. In 2021, I used the private key to put it in my wallet and it was 306 USD of ETH.”
“When I made $2k off Ethereum in a couple weeks lolz”