If the metaverse had a soundtrack, it should include "Such a lonely day". The song would provide an empathic ambiance for the 38 users exploring the virtual realms of Decentraland on October 7. One of the most hyped metaverse platforms with a market valuation of over $1B has been struggling to attract early adopters, which casts doubts on the whole "next internet" concept. Competing Sandbox is doing a bit better, with a few hundred on board daily.
Still, hardly a solid number for a brand named among industry leaders. Especially when compared to statistics of active users in multiplayer online games, such as DOTA 2 (over 7M monthly). With most of other metaverse platforms not having even made it to Dappradar's radar (pun intended), it's reasonable to ask: will the metaverse survive? This question, however, should be preceded by a more fundamental one.
"What the fuck is the metaverse?"
Most people familiar with the word have rather a vague idea about what it actually means. Those in the tech field also have trouble explaining the core assumptions behind the metaverse. It's perfectly understandable, considering that even executives engaged in the game are in serious disagreement over its fundamentals, such as virtual reality (VR), crypto, and metaverse interdependencies, technology requirements, centralization and decentralization issues, or growth scenarios.
In the Google search engine, "what is the metaverse?" is the number one question related to the topic, far ahead of any investment-related inquiries. On Reddit, its variant – tinged with a bit of profanity for emphasis – has spawned over 1.2 thousand comments since February 2022. One can almost sense frustration with the disparity between the opacity of the phenomenon and the publicity it achieves. For "regular folks," even cryptocurrencies are easier to grasp: buy cheap, sell high, and make money.
A simple (or, perhaps, simplified) definition has it that the metaverse is an immersive, online space spanning the digital and the real world and allowing people to interact and transact with one another. The experience is enabled by VR, augmented reality, NFTs, and cryptocurrencies, but, many argue, neither is an indispensable component of the environment.
The name itself derives from "Snow Crash," the 1992 dystopian novel by Neil Stephenson. The author envisioned a digital space populated by avatars acting as proxies for humans who opted out of the physical world.
Graphics in the metaverse – why is it so bad?
If we're headed there – hopefully not – we still have a way to go. Metaverse platforms vary with regard to features and quality, with many offering truly underwhelming user experience. One notable example is Horizon Worlds, Meta's invention accessible via the Oculus Quest VR headset.
Launched in August this year, it was slammed for its rudimentary graphics evoking memories of video games from the late 90s. The mockery was so widespread that it prompted Mark Zuckerberg to announce forthcoming visual updates and post an allegedly refined avatar of himself as a hint of a planned aesthetic upgrade. To some, the new design comes off as a bit cartoonish, but feel free to judge it yourself (it's the one on the right, in case you have trouble guessing).
The problem with poor-quality graphics is not limited to Horizon Worlds. There is a reason why metaverses' "mise en scènes" bring to mind Minecraft rather than "Matrix," and it's probably not about employing low-paid designers.
Real-time rendering requires a lot of processing power. Many users don't have access to superfast broadband or can't afford powerful graphic cards. Thus, going heavy on fidelity would simply lock out a big chunk of the userbase.
Another reason for rendering limitations is the – hypothetical, at least – unlimitedness of metaverses which are much more open-world than, say, MMO games. Giving users freedom to do pretty much what they want, virtual worlds cannot display pre-rendered graphics for any possible action, so they need to compromise on quality.
If it sounds like a stalemate, it probably is one. So, what's the way out of it?
The future of the metaverse: haptic technology
Currently, metaverses are mainly based on the visual experience, and with their pixelated aesthetics driving adoption is a hell of a challenge. Things might change, however, as soon as the sensory experience includes realistic touch sensation and becomes genuinely immersive.
Such evolution is already taking place. It is driven by the development of haptic gloves and even whole-body suits fitted with tens of haptic points for stimulating different body parts. Deploying this type of gear for interaction in the metaverse would bring us closer to the construct resembling Star Trek's Holodeck – and further away from the "Second Life"-like experience.
The vision might be thrilling, but it's also chilling. A full-body haptic suit developed by Teslasuit, a Belarus-based startup, is capable of administering both pleasure and pain. Last year, at the SingularityU Summit, Jeremy Orr, the CEO of VirtuReal and one of the few owners of the fancy piece of clothing, went on stage to play dodgeball with a virtual opponent.
Whenever he failed to evade the hit, Orr winced in pain. He wasn't acting. The wires embedded in Teslasuit delivered a pulse of electrical current to the targeted part of his body. It was more of an irritation than electrocution, but suits like these are fine-tuned to simulate a whole spectrum of sensations: from a warm hug to a bullet to the chest.
Just imagine the prospects it holds for users immersed for life in the future metaverse. Especially if their avatars get hacked by malicious actors.
How much money is there in the metaverse?
Many may be tempted by the vision of moving to a fantasyland, but for now, the biggest incentive is money. The hype around the metaverse is directly linked to earning opportunities it seems to promise with land investments, NFT trading, marketing products and services, etc. The news about global brands making forays into the metaverse, celebrities buying virtual real estate, and their fans paying hundreds of thousands of dollars to be their neighbors spread like a virus, adding to the gold rush.
With the economy moving online and a growing number of people worldwide wanting to make money by tapping on the screen rather than working nine-to-five, it's pretty understandable. And the metaverse looks like "the next big thing" after domain names, cryptocurrencies, and NFTs – markets that still are big but far less lucrative for latecomers than early adopters.
This impression is backed by more than wishful thinking and hype. There are numbers provided by authoritative sources, such as Accenture, JP Morgan, or McKinsey. According to the latter's recent report, the metaverse has the "potential to generate up to $5 trillion in value by 2030" and is "too big for companies to ignore."
Even if there's a healthy dose of clairvoyance in such calculations, their PR effect and actual market influence are hard to neglect. By the institute's estimates, only this year, over $120 billion has been invested in metaverse projects – more than double the last year's $57 billion.
Allegedly, 95 percent of business leaders expect the evolving virtual space will have a positive impact on their industry within five to 10 years. The sectors that are to benefit the most include consumer packaged goods, retail, financial services, technology, manufacturing, and healthcare.
If McKinsey's got it right, over 80 percent of commerce might be influenced by consumers' activity in the metaverse.
Asian governments push for the metaverse development
While money is crucial, the evolution of the metaverse might hang on politics, too. "The next internet" has already been embraced by some governments, especially in Asia. The latest example is a metaverse project for Sharjah, the third-most populous city in the United Arab Emirates (UAE).
The initiative is backed by the Sharjah Commerce and Tourism Development Authority (SCTDA), a governmental institution. UAE has long expressed ambitions to become a web3 hub on a global scale, and it's consistent in pursuing this goal.
On an even larger scale, similar developments have been taking place in South Korea. In September, the authorities of Changwon declared plans to recreate the city's industrial complex in the metaverse, in a project supervised by a state institution.
Earlier the same month, Seongnam announced the "Metaverse Special City Seongnam" project scheduled to launch in late spring next year. The idea is to develop a digital twin metropolis with NFT-based citizenship for its residents. A related project has been underway in Seoul since last year.
Japan is following suit. According to a recent prime minister Fumio Kishida's statement, the country will expand investments in NFTs and the metaverse.
Chinese metaverse to be worth $8 trillion
China might be even further ahead of the game in the region. In February this year, Morgan Stanley made a prediction in a note to the clients that the value of the Chinese metaverse, aka Chinaverse, will reach $8 trillion (don't ask how it sits with McKinsey's forecast). It's bold but not impossible, considering that the number of metaverse-related trademark applications grew from less than 1,000 in 2020 to more than 16,000 in the first three quarters of 2022.
Chinese companies like Alibaba, Baidu, and Tencent invest heavily in virtual realms. But it's the state that's controlling the process. In October 2021, the China Institute of Contemporary International Relations (CICIR), a leading think-tank affiliated with China's Ministry of State Security (MSS) and overseen by the Central Committee of the Chinese Communist Party (CCP), published an analysis titled "The Metaverse and National Security." Interestingly, the document was released only days after Facebook rebranded to Meta.
CICIR's report, considered to be the first CCP's statement on the metaverse, acknowledges the phenomenon's importance and stresses the impact it will have on… political and cultural security as well as social structure.
Soon after, a state-backed China Computer Industry Association established Metaverse Industry Committee to coordinate the metaverse development. A few months later, Luo Jun, MIC's secretary general, said, "We are going to embrace the fourth generation of the internet, which will be the era of the metaverse."
Chinaverse: government-backed and highly regulated
The governmental support for the virtual space has been clear from the beginning and was reemphasized during the World Metaverse Conference, an event held in Beijing this August, that brought together industry leaders and government officials. The metaverse projects have been incentivized by local authorities as well. In July, Shanghai vowed to establish a $1.5 billion fund for metaverse development. Other cities and provinces, such as Wuhan, Hangzhou, Shandong, and Guangzhou, are also venturing into the virtual space.
The trouble is, Chinaverse is more about fostering "patriotic values" and censoring "obscenity" as well as politically sensitive content than exploring new ways of interaction. "Traditional Chinese internet businesses developed first and were then regulated. Industries like the metaverse will be regulated as they are built," said Du Zhengping, head of the metaverse industry committee at China Mobile Communications Association, quoted by Reuters.
So far, documents issued by the central government haven't addressed the metaverse directly. According to Nina Xiang, a Chinese technology expert, "the central government is still taking a wait-and-see approach" with the metaverse, studying it and measuring the pros and cons. "Beijing will embrace the metaverse as long as it serves the country's goals of economic development and social stability while incorporating strict measures to curtail any potential harm such as fraud and "excessive capital expansion," - she writes in her book "Parallel Metaverses: How the US, China and the Rest of the World Are Shaping Different Virtual Worlds."
Murphy's report. "Freedom lovers" may find metaverse user-unfriendly
With all the money and power involved, metaverse feels more like a creeping civilizational shift than simply a new web paradigm. It is noteworthy that state-backed metaverse initiatives are launched in countries traditionally less familiar – to put it mildly – with the concept of individuality or human rights. But even commercially developed metaverse platforms may prove disappointing for "freedom lovers."
Earlier in October, a veteran financial services lawyer James A. Murphy released an analysis of terms of service agreements employed by various metaverse platforms. The study finds that only 42 of 82 covered projects "make it clear that users acquire ownership rights to the assets that they buy or build in the metaverse." Many omit this point, while some reserve the right to revoke users' access to all of their in-world assets in case of violation of the rules.
Check out this telling excerpt from the terms of service agreement for Animal Jam, a virtual platform for kids which invites users to "purchase" assets for gaming experience enhancement: "The virtual items that you purchase, create, or acquire in Animal Jam – including memberships, avatar accessories, den items and in-game currency – are not property owned by you. As a result, you do not have the right to modify, share, transfer or sell this stuff."
And here's a sample of Decentraland's terms of service provisions: "You agree that the DAO [Decentralized Autonomous Organization], in its sole discretion and for any or no reason, may terminate these Terms and suspend your Account(s) for the Tools. You agree that any suspension of your access to the Site or the Tools may be without prior notice, and that the DAO and/or the Foundation (and its officers and employees) will not be liable to you or to any third party for any such suspension."
Sounds kind of authori… that is arbitrary, doesn't it?
To top it off, Murphy's report brings to attention that few metaverses are truly decentralized, and few offer freedom of speech, with 64 employing explicit content moderation policies. Oh, and nearly all take the liberty of changing terms of service at any time.
Metaverse: a new playground for surveillance capitalism and autocratic governments?
The question of whether the metaverse will succeed or not should be paired with an equally vital one: do we want it to succeed? One thing to consider is the current quality of the projects and another – where the entire industry is headed. With Meta begging employees to spend time in its flagship VR app and other platforms struggling to retain users, the whole metaverse galaxy seems like a grand failure.
On the other hand, with corporations, investment funds, and governments pouring billions of dollars into metaverse-related projects, the concept seems too big to fail.
It should come as evident that the metaverse offers enormous data harvesting and surveillance opportunities. For business, it means even more efficient commodification of personal data, for governments – more stringent control of human-to-human interaction in the virtual and, by extension, physical environments (for example, the Chinese Social Credit System might easily span both "planes of reality"). In an ecosystem of all-things-digitized, everything can be monitored, quantified, and used for further reprocessing to the extent depending only on the privacy safeguards adopted by specific platforms.
Web3-based, decentralized metaverse projects might offer users more self-custody with regard to handling personal data. However, recent experience (vide: Murphy's report) shows that individual liberties are limited in the virtual space.
Will the metaverse succeed, and do we want it to?
For users, the metaverse might eventually mean a deep dive into the virtual Matrix-like reality with all of its – both tempting and ominous – implications. As mentioned before, the space with its enabling technologies offers an almost unlimited spectrum of experiences on the pleasure-to-pain scale.
As Sam Hamilton, a creative director at Decentraland, put it: "Eventually we're going to have bodysuits or head implants or wherever the technology takes us, to a fully immersive experience. We certainly aren't there yet but we are making the building blocks of the future."
There are a few questions we should ask ourselves before we get there. One of them is: do we consciously want it? Another: if we're headed for the metaverse, who and what is going to stay outside of it?