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State of the Metaverse 2021

Ultima IV artwork from Origin

Apple customers spent $1.8 billion on digital items and services between Christmas and New Year’s leading into 2021. The digital economy is taking over quickly. Blockchains and NFTs will soon be at the center of the transformation. Due to a looming convergence of technologies, this trend is going to accelerate over the next decade. Welcome to the metaverse.

In this article, we’ll discuss what the metaverse is, why it’s important, some of the current trends, and what we might expect for metaverse development in 2021. “Metaverse” means many things, but the main ingredients are ubiquitous networking, cryptocurrencies and cryptonetworks like Bitcoin and Ethereum, eXtended Reality (XR) including VR and AR, and Non-Fungible Tokens (NFTs).

What is the Metaverse?

The metaverse, in a nutshell, is the digital world, where anything we can imagine can exist. Eventually, we’ll be connected to the metaverse all the time, extending our senses of sight, sound, and touch, blending digital items into the physical world, or popping into fully immersive 3D environments whenever we want. That family of technologies is known collectively as eXtended Reality (XR).

I believe that the metaverse will one day be a HUGE economy, representing up to 10x the total value of the entire current global economy. If you’re not sure what I’m talking about yet, I spoke about it with Andrew Steinwold on the Zima Red Podcast:

Today, we’re seeing shadowy glimpses of what the metaverse may soon become. To understand what will be, we should first take a look at where it came from.

In 1985, Richard Garriott coined the term “avatar” to describe a player’s character in a video game.

“Ultima IV was the first game I wanted the player to respond to what I called ‘moral dilemmas and ethical challenges’ as they personally would [and not like an alter ego]. While doing my research on virtues and ethics…to look for ethical parables or moral philosophy I came across the concept of the word ‘avatar’ in a lot of Hindu texts. In that case, the avatar was the physical manifestation of a god when it came down to earth. That’s perfect, because really I’m trying to test your spirit within my fictional realm.” — Richard Garriott

In his 1992 book, “Snowcrash”, Neal Stephenson imagined an internet-like virtual reality world he called “the metaverse” where users would interact with digital forms of themselves called “avatars”.

From Snowcrash, the term “avatar” spread across popular fiction franchises, including Earnest Cline’s “Ready Player One”, which was turned into a popular movie.

In “Ready Player One”, a centralized metaverse called the Oasis hosted avatars which could be customized in a variety of ways. Players could purchase items and outfits to use in-game. Those items had real value, and losing them was a big deal.

A lot of video game players can relate. We work hard for those in-game rewards, only to discover that at any time, those items can be taken away from us, or their value could be destroyed by some centralized power who controls all of the items, and each item’s capabilities.

In the years before Bitcoin exploded as the world’s first viable cryptocurrency, Vitalik Buterin was an avid World of Warcraft player.

“Blizzard removed the damage component from my beloved warlock’s Siphon Life spell. I cried myself to sleep, and on that day I realized what horrors centralized services can bring.” ~ Vitalik Buterin

That led Vitalik to propose the idea for Ethereum — a decentralized cryptonetwork like the one that backs the Bitcoin cryptocurrency, but a cryptonetwork that could execute arbitrary, Turing-complete programs, called smart contracts. Those smart contracts can do many things. One of those things is to represent a unique digital item, called a Non-Fungible Token (NFT).

Why the Metaverse Needs Cryptocurrencies, NFTs, and Open Standards

Digital items are already more than a $10 billion market, and Fortnite alone has sold more than $1 billion. But currently, Fortnite’s digital items only work in Fortnite, and if Epic Games ever decided to shut Fortnite down, those items would be rendered worthless overnight. A multi-billion dollar market would vanish into the ether.

On August 13th, Epic Games, the maker of Fortnite sued Apple over the 30% fee for in-game purchases. Facebook announced in December 2020 that it will support Epic Games in the lawsuit because they also had issues trying to release products with in-app purchases on the Apple app store.

A Non-Fungible Token (NFT) is a digital item that can be created (minted), sold or purchased on an open market, and owned and controlled by any individual user, without the permission or support of any centralized company.

In order for digital items to have real, lasting value, they must exist independent of an entity who might decide at any moment to remove or disable the item. It is that property of NFTs that make them able to command hundreds of thousands of dollars. For example, a collaboration between Trevor Jones and DC Comic artist José Delbo sold for 302.5 ETH, which was $111k at the time. Now that ETH is worth more than $220k.

The difference between the items in Fortnite and an NFT is simple: True ownership. Digital property rights. The buyer of that NFT never has to worry that some company in the cloud is going to stop their service or freeze their account. The metaverse must be an open ecosystem, not an ecosystem dominated by the whims of any single company.

The metaverse consists of many parts, but here are the basic foundations:

  • The internet — a decentralized network of computers which is not owned by any single entity or government, and does not require the central permission of any such entity to use.
  • Open standards for media, including text, images, audio, video, 3D items, 3D scenes and geometry, vectors, sequences, and procedures to generate and combine any of these things. Pixar’s USD and NVIDIA’s MDL are great steps towards interoperability for 3D applications.
  • Open programming language standards for any of the above. Such standards include HTML, JavaScript, WebAssembly, WebXR, WebGPU Shader Language, etc.
  • eXtended Reality (XR) hardware such as smart glasses, haptics, and omni treadmills.
  • Decentralized ledgers and smart contract platforms (e.g., Blockchains) for transparent, permissionless, and censorship-resistant transactions. Examples include Bitcoin, Ethereum, Flow, and Theta, Binance Smart Chain (BSC), and many others. These form important foundations for the ownership economy that will support the metaverse and make it a viable public good.

You can’t have a truly open economy if there is a central actor controlling the assets, user capabilities, and bank accounts. Only open, interoperable specifications and decentralized, permissionless, Turing-complete smart contract platforms will support the ownership economy needed for the metaverse to thrive.

In Ready Player One, an evil corporation called IOI was attempting to solve a treasure hunt to gain total control of the Oasis. IOI was motivated to extract maximum profits at any cost, including the legal imprisonment and enslavement of large swaths of humanity to work off debts.

That’s a bit extreme, but if any single company has too much control of the metaverse, they might decide to follow Apple’s lead and extort huge cuts from all transactions in the metaverse, strangling economic efficiency, and stifling innovation and the discovery of new and beneficial business models.

A decentralized economy is more fair, more efficient, and more long-term sustainable than trusting any single company with the keys to the metaverse. In the cryptoverse, everybody gets their own keys to their own kingdoms.

The Multiverse

Currently, there isn’t one universally interoperable metaverse like the Oasis from Ready Player One. Instead, we have a bunch of different platforms competing for users. The first MMO and open world games, such as World of Warcraft and Second Life began to lay the foundations of the modern 3D multiverse around 2003–2004, but as Vitalik discovered, their economies rely 100% on a single centralized company you must trust to respect the needs of the users, and you can’t take your items and money from one game world to another.

Decentraland is a 3D space where you can build virtual worlds, play games, explore museums packed with NFT art, attend live concerts, etc. It works in a standard web browser if you have the MetaMask extension installed to give you access to the cryptocurrency and NFT features. You can buy and sell properties, create and sell virtual art for the art galleries, or build worlds. Several companies have invested in land in Decentraland, and some of them may be willing to pay skilled builders to develop it.

Decentraland has even got into the conference space, and has proven that there are interesting opportunities to create unique and creative booth experiences for vendors.

3D scene designers may one day be able to earn a good living designing vendor experiences for metaverse-hosted conferences.

There are a variety of playable mini games in Decentraland, and some of them reward you with NFTs that you may be able to sell on OpenSea.

Similar platforms like Somnium Space and The Sandbox have also emerged. As far as I’m aware though, you can’t take your Decentraland wearables into The Sandbox.

The Multiverse Needs an Omniverse

The internet is a bit like that today. Lots of different apps and spaces, and relatively little information shared between them, but crypto and decentralized computing are beginning to break down some of those walls.

For example, you can take what you own with you from one app to another. You can make a cryptocurrency swap on Uniswap, for example, and then see the balances reflected in Zerion. Likewise, you can sell your Decentraland wearables on OpenSea.

The same is not true of most of the 3D world assets, or the environments themselves. For example, I can’t explore the Decentraland world in The Sandbox, or open a game made in Unity with an Unreal Engine app.

If we want our worlds to be truly open and explorable across different platforms, devices, and engines, we need the data to be open and accessible, and we need just-in-time services and data subscriptions to deliver assets when and where we need them. NVIDIA’s Omniverse combines open file formats like Pixar’s Universal Scene Description with network services that you can connect with the software tools you use to create media for VR.

The result is that world creators can collaborate across a variety of apps, in realtime, all editing and viewing the same assets. It’s basically like collaborating in Google Docs for 3D worlds.

Omniverse uses Pixar’s USD as the native file format, but it takes it one step further, by offering the assets as live cloud-enabled services that many apps can connect to simultaneously. Pixar’s USD technology is open source, which means that any developer can download the tools and adopt these technologies and integrate them in their apps and games. I would urge all of the people working on metaverse-related projects to converge around sharable, open technologies and assets.

But data sharing isn’t the end of it. The substrate of the metaverse is shared data, shared computation, and shared bandwidth, and when they all come together, it can extend the range of what we can accomplish together as a species.

Now what we need is a decentralized omniverse that acts as a public good that anybody can use, contribute to, host nodes for, and build on.

The Cryptocurrency Connection

Distributed computing software like Folding@Home has existed since the year 2000. Peer to peer file sharing has existed since the 1990s. We could have built a common operating system for file sharing and decentralized computation decades ago. But there was a key component missing: How do we reward users to contribute to the public services?

Lots of people will donate their CPU time to help fight cancer and COVID-19, but one of the main problems with P2P file sharing services is freeloading. Lots of people will connect, consume the shared resources, and then split before they’ve contributed enough to make up the cost of what they took.

We needed incentives. Cryptocurrencies are programmable money, and with them, we can create self-sustaining protocols: File sharing services where people are paid to share their space and bandwidth, or compute-sharing services where people are paid to share their pricey gaming GPU when they’re not playing. Similarly, we can pool our money together to provide liquidity so that users can swap from one digital currency to another efficiently. Liquidity providers get paid for adding liquidity to the market.

Since I started writing this article, I’ve earned 3.7617 TFUEL (about $0.13) on the Theta network in exchange for sharing bandwidth and compute. The Theta Edge Compute beta automatically donates resources to Folding@Home, too. I get to do my good deed and get paid.

Cryptocurrencies allow us to rally around a shared metaverse and pay for the services required to support it without a single company owning all the resources. Instead of everybody paying AWS, anybody can run service nodes in their homes and recover some of the costs of the hardware required to interact with the metaverse.

AI and the Metaverse

One of the most important and overlooked aspects of the metaverse will be AI. There are so many use-cases.

Here are a few examples:

  • AI can be used to create, audit, and secure smart contracts, making them safer and easier to create and use. We have an immediate need for this, and the technology we need to do it exists.
  • Intelligent AI beings can wander the metaverse and interact with us and each other. Today, AI can generate photorealistic images and 3D models of human faces, generate text for conversation, convert that text to human-sounding speech, and animate 3D characters to make it look like they are speaking.
  • AI can assist us in the creation of metaverse assets, artwork, and content.
  • AI can improve the software and processes we use to build all of these things. In a few more years, AI will improve AI and lead to an explosion of intelligence and technology.

Eventually, AI may be able to generate complete virtual worlds in realtime as we explore. The lines may continue to blur between Graphic rendering technology and AI technology. AI could one day take some input, like “a lush jungle environment with a stream flowing from a waterfall” and turn it into a fully immersive 3D environment we can explore and interact with.

AI can even generate the description, today, due to enhanced creative and language skills. In case you’re skeptical about the conversational capabilities of AI, watch this video of me chatting with OpenAI’s GPT-3. GPT-3’s avatar is a virtual actor, animated by AI via Synthesia:

Hardware

The current state of the art in XR hardware is still Microsoft Hololens 2.

Thankfully, XR software has improved and become more ubiquitous. For example, if you have an Android device, some Google searches will turn up 3D items you can view in your living room by looking through the device camera.

Next Steps

If you want to learn how to contribute to the metaverse, we offer a crypto mentorship track at DevAnywhere.io. Mention when you apply that you want to learn how to build the metaverse. We’ll pair you with an experienced mentor and give you the opportunity to contribute to the standards and protocols that support the metaverse.

Eric Elliott is a tech product and platform advisor, author of “Composing Software”, cofounder of EricElliottJS.com and DevAnywhere.io, and dev team mentor. He has contributed to software experiences for Adobe Systems, Zumba Fitness, The Wall Street Journal, ESPN, BBC, and top recording artists including Usher, Frank Ocean, Metallica, and many more.

He enjoys a remote lifestyle with the most beautiful woman in the world.

Our goal is to build a world that democratizes opportunity, where people control their own privacy and property, and all people participate in processes that are transparent, trustworthy and inclusive. Join us. #crypto #blockchain #bitcoin #technology

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