An in-depth look at the evolution of shared virtual spaces and how cryptocurrency can enable freer, more open metaverse experiences
Just as Jules Verne imagined the moon landings more than a century before Apollo 11 made its historic touchdown and HG Wells foresaw the atomic bomb decades ahead of its real-world creation, technological progress often turns science fiction into science fact. The number of online virtual worlds launched over the last decade suggests we are closer than ever to another once-far-fetched idea escaping the pages of literature to become a reality. The so-called “metaverse” may soon be upon us, and with it will arrive new forms of social interaction, economic possibilities, online experiences and creative avenues.
In this OKX Insights article, we explore the origins of the metaverse and examine those platforms already hinting toward the future of online interaction. We consider the metaverse’s defining characteristics, whether the internet’s current architecture is positioned to deliver them, as well as just why the concept has entered popular culture in such a big way in recent years.
We then turn our attention to those metaverse-like virtual worlds that leverage blockchain technology to enable irrefutable ownership of digital items, land and even identities. We examine how cryptocurrencies might lay the foundation for more accessible, interoperable virtual economies in these shared online spaces.
Ultimately, we consider whether those metaverse-like worlds that offer more decentralized forms of resource allocation will make the increasingly likely future metaverse an enjoyable place to inhabit.
What is the metaverse?
The metaverse is one of those buzzwords that has caught popular attention in recent years. From Epic Games to Facebook, several tech giants have brought the concept into the mainstream with their own metaverse ambitions. Although the popular video game Fortnite and Facebook’s VR platform, Horizon, certainly display some tendencies widely understood to be consistent with a future metaverse, they fall short in terms of their interoperability with other aspiring virtual words.
As such, many of today’s platforms exist largely as walled gardens seeking to trap inhabitants, their digital possessions and their data in pursuit of profits rather than their users’ best interests.
Venture investor Matthew Ball, a prolific writer on the subject, described the core attributes of the metaverse in one of several articles dedicated to the evolution of shared virtual spaces. For Ball, the metaverse should be a living, continuous, consistent experience shared by an unlimited number of users. Additionally, the metaverse should have its own economy, with opportunities for all users to contribute their creativity. It should also offer a large degree of interoperability between alternate virtual worlds.
Ball also describes what the metaverse is not, and why those existing virtual worlds do not quite live up to his vision of a shared, global virtual commons. He states in his essay “The Metaverse: What It Is, Where to Find it, Who Will Build It, and Fortnite”:
“What’s important is to recognize that the Metaverse isn’t a game, a piece of hardware, or an online experience. This is like saying […] ‘World of Warcraft,’ the iPhone, or Google is the Internet. They are digital worlds, devices, services, websites, etc. The Internet is a wide set of protocols, technology, tubes and languages, plus access devices and content and communication experiences atop them. [The] metaverse will be too.”
While mainstream interest is growing in the metaverse — as evident by features on popular television shows like 60 Minutes — the term’s origins predate much of the innovation required to make it a future reality. Long before social media giant Facebook acquired virtual reality hardware manufacturer Oculus and before video games like Fortnite evolved to become about more than just gameplay, science fiction authors imagined the future of digital social interaction.
Most attribute the actual term “metaverse” to the American author Neal Stephenson, coined in his 1992 novel Snow Crash. Stephenson’s metaverse is an all-encompassing, continuous virtual world where inhabitants escape the monotony of daily existence through social interactions between avatars of their choosing. However, metaverse-like visions extend further into science fiction history. The plot of William Gibson’s 1984 novel Neuromancer, for example, revolves around a similar shared virtual space.
Perhaps the best-known metaverse from popular culture is found in the film Ready Player One by Ernest Cline. Cline’s OASIS — as the virtual world is called — was brought to life on the big screen in 2018, when Steven Spielberg released the eponymous film adaptation. In the opening sequence, the movie’s protagonist, Wade Watts, describes OASIS as such:
“It’s a place where the limits of reality are your own imagination. You can do anything, go anywhere. Like the vacation planet. Surf a 50-foot monster wave in Hawaii. You can ski down the Pyramids. You can climb Mount Everest with Batman.”
Ready, Player One?
The evermore digital society in which we live has already seen the emergence of several metaverse-like online experiences. The first of note was the virtual world Second Life by Linden Lab. Lacking any gameplay objective, the platform continues to provide an online space for social interaction and an outlet for users’ creativity. Within a decade of its 2003 launch, Second Life hosted over 1 million monthly users, each controlling one or more customizable avatars.
Much like the OASIS in Ready Player One — where the objective was to find secrets left by the platform’s creator — other proto-metaverses began with more prominent gameplay elements. World of Warcraft has various quests through which users develop their avatars, and Fortnite has different game modes with clear objectives.
Yet, the purpose of a visit to one of these virtual worlds is not to necessarily progress through a series of challenges or to top a leaderboard. They have evolved into much more than that. Fortnite regularly plays host to concerts and film festivals, Roblox was the scene of a Gucci fashion exhibition, and enough remote couples get married in Second Life to warrant in-world wedding-planner services.
In telephone correspondence with OKX Insights, Sébastien Borget, the co-founder of Ethereum-based virtual game-world startup The Sandbox, elaborated:
“Those games really started as true games, but they quickly turned into places where people can hang around, can socialize, can play together, and all sorts of activities. That is, I think, the premise of the metaverse.”
Borget went on to explain The Sandbox’s evolution in this regard:
“If anything, we’re turning into an entertainment platform where we have musical artists streaming — for example, DeadMau5, which we signed and announced. We’ll have gaming and Hollywood-type TV series with ‘The Walking Dead’ that we’ve also announced. We’ll have media, education and culture. We just announced yesterday that the South China Morning Post has one of the larger plots of land and is building historical experiences.”
Creating an important distinction between early metaverse-like virtual worlds and multiplayer online games like Call of Duty: Modern Warfare is the fact that users enter these virtual spaces as themselves — or a representation of how they would choose to look, were they not limited by the constraints of the human form. They are not playing as the Incredible Hulk, Lara Croft or Mario, but rather as the way they see themselves — making the experience more personal and, ultimately, more feasible.
In one of his many articles dedicated to the evolution of the metaverse, Ball explained:
“It’s both boring and odd to play a game with all your friends and all be Spider-Man; if we’re all the same, we’re no one. There’s a reason why Fortnite, Roblox, and others are so focused on personalized emotes, aesthetics, and the preservation of individuality and/or agency.”
Why the sudden hype?
Although the concept of the metaverse is hardly new, interest in it has intensified lately. The term frequently appears in the headlines of the world’s largest media publications — with the New York Times, Forbes and the Washington Post running stories dedicated to online virtual worlds in just the last month alone.
In the decades both leading up to and since the metaverse entered popular culture, the technological requirements to deliver shared online virtual experiences started to drop into place. The internet itself, the falling cost of computer hardware, the increasing sophistication of computer-generated imagery, advances in fiber optic communication, and the proliferation of mobile and wireless technology all narrowed the gap between science fiction and reality.
Such technological advances enabled new experiences for internet users. From its inception as a means for academic and militaristic institutions to share data, the internet has evolved into an indispensable facet of modern life. Commerce, communication, entertainment, employment and education have increasingly moved online.
For Ball, the reasoning for the sudden rise in metaverse interest is multifaceted. He told OKX Insights:
“The recent ramp-up in interest stems from the fact that the underlying pieces are now coming together in a way that makes it feel very ‘real’ and inevitable, rather than fantastical and far out — and for everyday consumers and businesses, rather than just technologists and AAA gamers.
We can think of the ramp-up in a few broad categories: technology, economy, creativity and behaviors. Improvements in each area tend to drive one another. For example, ‘metaverse experiences’ can be enhanced through better/new technology, which drives more engagement, and more spending, which attracts more developers and greater R&D, etc. It’s clear that over the past few years, these have collectively passed a sort of minimum viable product threshold.”
Ball went on to comment that, as recently as 2015, the dominant online experiences were largely single-player games like Candy Crush or communication via platforms like Facebook Messenger. Meanwhile, the virtual economy was limited to downloadable content and buying extra lives via payment rails like PayPal and Venmo. Commenting on the contrast today, he added:
“An average of 300 million people now engage in high concurrent user battle royales each day. Over 100 million engage in immersive user-generated content creation platforms each day. There is now a $60 billion economy of virtual goods. Tens of billions in crypto transactions are processed daily using virtually native payment rails. Spending time in virtual worlds, investing in virtual assets, and creating purely virtual experiences have not just been destigmatized, they’ve become aspirational.”
Speaking to OKX Insights, Jesse Alton, the founder of the Open Metaverse Interoperability Group, added that the coronavirus pandemic played an important role in bringing the metaverse to mainstream attention:
“I also think the pandemic helped a lot with helping non-believers gain a stronger understanding of what a social universe would look like with the rapid adoption of video conferencing and remote work in 2020. Couple that with recent films like Ready Player One and hit games like Fortnite, and more of the passionate gamer audience is beginning to set their sites on what’s next for gaming — living in the game itself.”
Interoperability or walled gardens?
Illustrating the clear demand for metaverse-like online experiences are the numbers of users already regularly interacting with existing virtual worlds. Ball cites the example of Fortnite’s 2019 “Marshmello concert,” which saw around 11 million users enjoy the electronic music producer’s performance from within the game.
However, such demand also demonstrates current technological shortcomings. Ball goes on to explain that the concert was actually delivered over more than 100,000 “slightly out of sync” instances, with player counts capped at 100 for each — a far cry from the millions of simultaneous users inhabiting science fiction’s virtual worlds.
Given these capacity issues, many prominent thinkers on the subject believe multiple platforms will form the metaverse of the more immediate future — in much the same way that the internet evolved. Ball explained to OKX Insights:
“Today, there are billions of different websites spanning different registrars, hosting companies, domains, etc. Some are public, others partly gated via identity systems or paywalls, with some fully limited to internal networks. But they are all built on common standards and protocols, which means they can be accessed from any device, browser or operating system, and built using any device, browser, operating system.
The internet was created via public research institutes, decentralized technologist collectives, and government R&D programs. If the internet were established by for-profit companies, such as AT&T or IBM, it would be predicated upon tolls, and controls, and license fees.”
Speaking to VentureBeat, Tim Sweeney, the CEO of Epic Games, highlighted the need for open standards across those platforms that lead the development of metaverse-like experiences:
“What we’re trying to move to is a future model — and this might take a decade or more — where we adopt standards and protocols for the means of describing 3D data and player interaction. And any engine is capable of interacting through these protocols. Just like any web browser is capable of browsing any web page. […] I hope that in a decade from now, players can play Minecraft, Roblox and Fortnite clients and be in the same world with the same social connections.”
Currently, many existing technology companies resist such interoperability, fearing that it will erode their significance and ultimately hurt profits. Such is apparent by the resistance Epic Games encountered when pressuring Sony to allow the cross-platform interoperability that enabled Fortnite to become a favorite among those gamers seeking more open social experiences online.
Leaked documents from Sony in 2018, cited by the Verge, highlight the level of opposition. Gio Corsi, Sony’s former senior director of developer relations, rejected direct appeals from Epic to support cross-platform play, reasoning that “cross-platform play is not a slam dunk no matter the size of the title.” He added that “not a single one [company] can explain how cross-console play improves the PlayStation business.” Sony has since changed its stance and now claims to wholly support players enjoying a more accessible experience on different devices, demonstrating the ability of users to influence even the biggest corporation’s decisions.
Alton believes such resistance to interoperability is to be expected from tech giants, but users will ultimately reject platforms that continue to segregate their content. He told OKX Insights:
“The big-box companies must sustain their greed. They will draw lines in the sand and stake ownership. They’ll tout the ability to ‘take your inventory to any Epic Games game,’ and ‘take your interoperable content across EA Games,’ and ‘now you can take your avatar to any Apple Metaverse experience,’ etc. You may be able to float your character around those experiences, but only within their walls. […] One day, users will start to prefer the simplicity of open-access, not needing to shed their skin every time they want to do something in VR.”
Groups like OMI and even companies like Epic Games are committed to encouraging greater interoperability between those aspiring to lead metaverse development. OMI’s stated goal is to “bridge virtual worlds by exploring interoperable identity, social graphs, inventory, and more.” Meanwhile, Epic Games made its Unreal Engine 4 and all future updates free to use for game developers, encouraging the industry to converge on a set of shared standards. In a 2015 blog post, Sweeney described the rationale behind the move:
“The state of Unreal is strong, and we’ve realized that as we take away barriers, more people are able to fulfill their creative visions and shape the future of the medium we love. That’s why we’re taking away the last barrier to entry, and going free.”
Payments and property — Crypto’s interception with the metaverse
Taking a less proprietary approach to the metaverse are several emerging blockchain-based virtual worlds. Platforms like Decentraland, The Sandbox and Cryptovoxels and GameFi titles like Axie Infinity are less restrictive than their centralized counterparts. The premise behind these metaverse-inspired digital spaces and blockchain games is that ownership of emerging virtual worlds and their contents should remain in the hands of the users. To achieve this, in-world assets are represented by nonfungible tokens, enabling the emergence of more sophisticated economies that extend beyond isolated digital spaces.
The Sandbox’s co-founder Borget elaborated to OKX Insights:
“The decentralized Metaverse is actually making sense in the plurality of all those virtual worlds that are being built and enabling users a different set of experiences. What I do believe is something we should be working on — and we are starting to work on at Sandbox — is the idea that you own a single avatar and that avatar: your identity as an NFT. You can use it in multiple decentralized virtual worlds, bringing it to, let’s say, Sandbox, Cryptovoxel, Decentraland and so on.”
At the heart of this model is the idea of virtual land ownership. Users can buy plots of land with the platforms’ native currencies — for example, MANA in Decentraland and SAND in The Sandbox — to build their own experiences, games and other attractions. Although much younger than many of the centralized metaverse-like worlds mentioned and populated by far fewer inhabitants than Roblox’s more than 30 million daily users, many saw the value of staking a claim on a piece of virtual real estate. Each of the 90,601 plots in Decentraland already has an owner, meaning future acquisitions must be made on the secondary market.
Borget told OKX Insights how the notion of land ownership encourages the development of in-world economies:
“Once you buy virtual land, it’s like buying land in a country — a new nation — that’s taking shape. You’re an owner of the success of that nation. Do you contribute like landowners actually contribute to the economy by hiring creators, hiring architects, hiring artists to build the contents of the world and they are working to bring more users into this world as well, all together, building the value?”
With demand for land outstripping supply, a rental market has emerged in several decentralized virtual spaces. Metaverse Property is one of the first virtual real estate companies to offer services similar to its real-world counterparts. Meanwhile, legendary video game industry giant Atari leased land from the decentralized autonomous organization-governed Decentral Games to create the Atari Casino in Decentraland.
Other brands also see the value of having a presence in emerging virtual worlds. In June 2021, the iconic United Kingdom auction house Sotheby’s opened a replica of its London headquarters in Decentraland. The Sandbox has also attracted notable brands like The Walking Dead, South China Morning Post and crypto-native companies, such as the horse-racing NFT game Zed Run and sporting fan token platform Socios. Borget noted the significance of such brands choosing to build in decentralized virtual worlds in favor of more centralized alternatives.
Brands offering their own experiences in metaverse-like worlds open up additional economic possibilities. In early 2021, Decentral Games started employing real Decentraland users as greeters at its flagship virtual gaming establishment, Tominoya Casino. CoinDesk reported that users were earning as much as $500 in crypto for a month of four-hour shifts. Hinting toward similar opportunities in emerging virtual worlds is Axie Infinity. Although admittedly more of a video game than a metaverse-like experience, Axie Infinity’s play-to-earn dynamics — which CNBC reports can generate around $50 per day — provide new economic opportunities for users and is an example of a GameFi title crossing into mainstream adoption.
In a recent documentary focused on Axie Infinity’s adoption among Filipinos financially impacted by the Covid-19 pandemic, a mother of two commented:
“What matters is having money so we can eat, avoid debts and get through every day. It [Axie Infinity] sustained our daily needs, paid our bills, and debts.”
Borget is optimistic that such opportunities will increase as these open virtual world economies continue to develop:
“I do think that what we are doing is already making an impact on many people’s lives. […] People are able to pay back the debt on the house, people are able to make a new living from the time they spend creating content or playing games in the Metaverse, and our effort now is on scaling to offer the opportunity to more people.”
Traditional and game-specific payment methods have typically limited the growth of these economies. While in-game currencies are nothing new — Linden Dollars in Second Life, for example — they exist strictly within the walled garden of a particular space. A more developed economy across multiple virtual spaces requires either a common currency or at least the ability for funds to leave each virtual world.
Interoperability issues limit the extent to which fiat currencies can support such economic activity. Imagine trying to buy some NFT artwork in an identical version of Decentraland that required users to transact using legacy payment rails. You might discover that the artist does not have the means to accept your payment if you are a PayPal user if they have only Venmo. Alternatively, they might live in a nation not supported by PayPal, or Venmo.
With these considerations in mind, it only makes sense for decentralized, border-agnostic currencies to form the basis of decentralized virtual world economies. Therefore, regardless of the eventual success or failure of The Sandbox or Decentraland, cryptocurrencies may very well be a crucial component of inclusive future metaverse-like worlds.
However, not everyone believes that the land ownership models established by decentralized virtual worlds are conducive to a positive user experience. In addition to the often exclusionary cost to transact on Ethereum, OMI’s Alton expressed other concerns to OKX Insights:
“Ecosystems leveraging blockchain technology are artificially forcing inflation and scarcity as if to drive urgency and panic. Properties on Cryptovoxels don’t really sell for less than $2,000 these days.”
When questioning project communities over the risk of future centralization or a shift in focus away from the open-source ethos and toward greater profitability, Alton recalls being met with dismissiveness. He added:
“Humans are humans, and they are motivated by varying core tenets. Creating new economies and new cultures without considering future negative consequences is reckless and juvenile. It’s not agile. When these patterns result in humans getting excluded and hurt, they’ll point fingers elsewhere, rather than looking inward at the systems they’ve designed.”
Some would-be users of such crypto-native platforms express similar sentiments. One Redditor stated that they were initially excited by the concept of a decentralized metaverse but felt excluded by land prices. Referring specifically to Decentraland, they concluded that greed and speculation might have already “ruined the project.”
Indeed, looking at the Decentraland map, one might expect to see more user-built experiences across the virtual space. After all, every single plot has long since been bought up. While there are genuinely entertaining experiences to be had in Decentraland, one can’t help but feel that the creativity of its potential inhabitants has been stifled by those snapping up land quickly to flip it for a profit. With largely empty plots, there is less incentive for users to explore the landscape, and without large user bases, there is little to encourage creatives to develop the virtual world.
Yet, in the absence of some omnipotent entity allocating plots based on whatever reasoning they see fit, it is difficult to imagine how else to allocate scarce resources. Fortunately, as users are free to inhabit whichever virtual spaces they choose, they will ultimately decide whether to spend time in the hyper-capitalistic, blockchain-based virtual worlds, the more dictatorial offerings from existing tech companies like Facebook — or perhaps a different model entirely — will evolve.
Toppling Big Tech’s oligarchy for an open, free metaverse
Alton believes that Big Tech’s centralized incumbents will continue to enjoy their more developed network effects and, in the short term, will likely onboard users faster than smaller platforms that care more about user experience over profits. However, he also told OKX Insights that a lack of interoperability will eventually grate on users, causing them to explore alternate, open virtual spaces:
“They [Facebook] already have a massive user base or loyal users, and have a world-class marketing team who can easily shape and twist expectations of their audience to see things their way just long enough to make the other firms crumble. But, in the long run, they will lose.”
Alton believes that there will come a “tipping point” as users increasingly demand Big Tech companies remove the walls around their online spaces and embrace the interoperability offered by independent firms, commenting:
“You can have all the money in the world and still fail if you stop exploring and obsessively exploit.”
Like the Protocol Wars between the 1970s and 1990s, the battle for the metaverse will pit proponents of open, interoperable standards against the still-largely walled gardens favored by corporations. Fortunately, those championing the open internet triumphed against the might of IBM and others, meaning developers today have the freedom to create alternative platforms, and users are free to choose where to spend their time in the future metaverse. This time around, however, those fighting under the banner of decentralization have up their sleeves the wild card of the truly unstoppable, permissionless networks ushered in by Bitcoin.
Just how the battle for the open metaverse will unfold is ultimately unclear. However, blockchain, cryptocurrency and NFT technology will surely play a significant role on the side of those resisting corporate control over future online virtual spaces.
Not a part of the OKX community yet? Sign up to get started.
OKX Insights presents market analyses, in-depth features and curated news from crypto professionals.