A guide to the Metaverse, our emerging new reality
“Metaverse” — a buzzword used by tech geeks? A prophecy by futurists? A world domination plan by social media companies?
“Metaverse” — a buzzword used by tech geeks? A prophecy by futurists? A world domination plan by social media companies?
The term “Metaverse” is being thrown around a lot in vague association with other new terms. What do all these terms mean, and how are they related, if at all?
Figure 1: The “Metaverse” and related new terms
Defining the Metaverse vs. Web 3.0 vs. NFTs vs. Blockchain vs. DAOs vs. Crypto vs…
All of these new terms — including the term “Metaverse” — share one thing in common. They are all words we are using to make sense of an increasingly seamless, immersive experience of daily life across physical and digital realms.
Our lives today already traverse physical and digital realms. We deposit paper checks using mobile apps. We conduct Zoom meetings from physical offices. We meet up with friends to play video games at a time we agreed on over WhatsApp. We order burgers on Uber Eats to be delivered by drivers to our physical home addresses.
Today, a convergence of existing and new technologies is further blending our physical and digital worlds at an accelerated pace.
“The “Metaverse” refers to an emerging reality where our “physical” and “digital” experiences are becoming one and inseparable.”
Cue in the “Metaverse.” The Metaverse is not just a virtual world. The Metaverse is not separate from our physical world. The “Metaverse” refers to an emerging reality where our “physical” and “digital” experiences are becoming one and inseparable. This level of intertwinement is more aptly referred to as seamless immersion.
Our lives and stakes are changing. This may sound scary, but Millennials, Gen X, and Boomers have already gone through a similarly life-changing experience — with the Internet. In the Metaverse age, our physical and digital realms are blending further in how we make sense of our identity and interact with our daily surroundings.
Figure 2: A comparison of the consumer — Pre-internet v. Internet v. Metaverse
1. Who am I?
Keywords: Avatars; Holograms; NFTs; Blockchain technology
Before the internet, the concept of “I” was limited to the physical self. With the internet, we started developing personal identities online (e.g., “social media influencer”). Today, our physical and digital identities are merging. We are seeing the rise of photorealistic avatars — three-dimensional digital versions of our physical selves that appear on two-dimensional screens — and holograms — three-dimensional digital projections that appear in our physical world. Younger generations will likely be quicker than older generations to embrace this immersive sense of self. 1 in 3 Gen Z today believe their online identity is their most authentic self, compared to 1 in 5 Millennials and 1 in 10 Gen X.
Identity fraud has always been and will continue to be an issue. How do you ensure that someone doesn’t pretend to be you and access your life? We will need new tools to protect against identity fraud associated with merged physical and digital identities. Non-fungible-tokens (NFTs) and blockchain technology can help. Blockchain technology is a digital record-keeping system where once recorded, data can be close to immutable (e.g., cannot be modified or deleted). Examples of blockchain technology include Bitcoin and Ethereum. NFTs are non-interchangeable units of data stored on a blockchain. Each NFT has a unique identification code that is practically immutable and can have only one owner at a time. We can use NFTs to mark and prove that your hologram is yours alone. We can also use NFTs to mark digital assets like virtual clothes so that your avatar self can express your identity (see my previous article on NFT use cases here).
“Today, our physical and digital identities are merging.”
2. Where am I and what is my world made of?
Keywords: Metaverse; Web 3.0; interoperability; 5G; edge computing; 3D reconstruction; spatial data; artificial intelligence; machine learning; blockchain technology; semiconductors; Graphics Processing Units
The terms “Web 3.0” and “Metaverse” are sometimes used interchangeably today, but Web 3.0 is not the Metaverse. Web 3.0 refers to a potential next version of the internet [1]. Some perceive Web 3.0 as the internet built on open-source software, runs on a trustless network, and is permissionless for all users and suppliers to partake in. Web 3.0 is associated with shifting data control and ownership from the hands of technology companies into the hands of individual users. The Metaverse can exist with or without Web 3.0 — our lives can become a seamless integration of physical and digital experiences while technology companies continue to own our digital data. As technology companies and startups race to create their versions of the Metaverse, there will likely be many immersive worlds that we can live, work, and play in. Interoperability refers to the ability to freely take our digital and physical selves, things we own, and experiences across these worlds.
In the Metaverse age of human existence, we will still be held by gravity onto planet Earth. But what we see and experience will be more than just what we can see with our bare eyes. Information technology brought us a world where we interact with digital experiences via the internet using primarily two-dimensional computer and mobile screens. Today further technological advancements are underway to make our digital experiences three-dimensional and seamlessly integrated with our physical world. This shift from two-dimensional to three-dimensional experiences marks a fundamental difference between incrementally enhancing life in the Internet age and transforming our experience of life into the Metaverse age. Some of these advancements include: reducing latency, the time it takes to transmit data (5G technology, edge computing); creating three-dimensional digital representations of existing and imagined places (3D reconstruction, spatial data); creating digital environments that can react to our actions in real-time (artificial intelligence, machine learning); recording data so that once a digital place or thing is created it can’t be deleted or changed easily (blockchain technology); and enhancing capabilities of underlying material products (semiconductors, Graphics Processing Units).
While all of these technological advancements are necessary to create the Metaverse, blockchain technology can help establish the rule of law. We need to be able to mark digital identity and ownership immutably so that your neighbors surrounding your digital home cannot just move your digital fences and then claim that they own you (the avatar) and your digital assets.
“The Metaverse can exist with or without Web 3.0 — our lives can become a seamless integration of physical and digital experiences while technology companies continue to own our digital data.”
3. How do I interact with my world?
Keywords: Augmented Reality; Virtual Reality; Mixed Reality; Extended Reality; Haptics; wearables
To access our physical world, we rely on our five senses — Sight, Sound, Smell, Taste, and Touch. To access the internet today, we use devices such as computers and smartphones to see and hear sounds. To access the Metaverse, we will use emerging devices like Augmented Reality glasses and haptics wearables to simulate all five senses. Augmented Reality (AR) refers to experiences where our physical world is enhanced with digital overlays. Virtual Reality (VR) refers to three-dimensional, completely digital experiences. Mixed Reality (MR) refers to an immersion of physical and digital realms, where digital experiences may be superimposed into our physical world, and physical experiences may be superimposed into our digital world. Extended Reality (XR) is an umbrella term for AR, VR, and MR. AR wearables (e.g., headsets and glasses) enable us to see and hear digital and physical dimensions simultaneously — think Pokémon Go. VR wearables enable us to see and hear a digital dimension as though it was here in our physical world. Haptics wearables enable us to simulate touch, smell, and taste from digital experiences.
“To access the Metaverse, we will use emerging technological devices like Augmented Reality glasses and haptics wearables to simulate all five senses.”
4. How is my world governed?
Keywords: decentralization; centralization; DAOs; dApps; blockchain technology; Bitcoin
There is an ongoing, heated struggle to define who holds decision-making power in the Metaverse — the few or the many. Centralization refers to command and control, hierarchical organizational structures in which a minority group holds decision-making power. Decentralization refers to organizational structures where decision-making is distributed across many groups or individuals; there is no top-to-bottom hierarchy. Centralization and decentralization represent two ends of a spectrum. Historically, we have lived in more centralized structures at every level — think governments, schools, corporations, etc. Today, many are fighting for a more decentralized way of life in the Metaverse. Decentralized Autonomous Organizations (DAOs), Decentralized Applications (dApps), and decentralized blockchain networks represent a couple of ways in which the fight for a more decentralized way of life is manifesting. DAOs are member-owned organizations without CEOs. Instead, DAOs have rules that are built-in and enforced by code stored on blockchain technology. Each member gets to vote on decisions related to the DAO. dApps are applications that run on a blockchain network. dApps are open-source and their data and records are public and immutable, preventing any one company from exercising censorship or owning data from dApp users. Bitcoin is a decentralized blockchain network and digital currency that prides itself on not having any centralized authority (the Bitcoin Reddit Community describes Bitcoin as “resistant to wild inflation and corrupt banks. With Bitcoin, you can be your own bank.”)
“There is an ongoing, heated struggle to define who holds decision-making power in the Metaverse — the few or the many.”
Today’s internet is technically decentralized — no one individual or entity “owns” or can shut off the internet, and practically anyone can access and contribute to the internet. However, in practice, today’s online world is dominated by technology companies that own centralized platforms (e.g., social media platforms). Today’s internet demonstrates that building decentralized infrastructure does not guarantee a decentralized way of operating — it is possible to build centralized platforms on top of the decentralized infrastructure. Who owns and operates the most popular platforms and applications of the Metaverse will be the key determining factor in settling the ongoing centralization vs. decentralization struggle. Those who are better able to establish user-friendly, fun, and convenient applications will likely win.
“Today’s internet demonstrates that building decentralized infrastructure does not guarantee a decentralized way of operating — it is possible to build centralized platforms on top of the decentralized infrastructure.”
5. What do I need and want / how do I get it?
Keywords: Cryptocurrency; Digital currency; Bitcoin; Ethereum; Decentralized Finance; Decentralized Exchanges; centralized cryptocurrency exchanges; cryptocurrency wallets; digital real estate; virtual fashion; NFT art; NFT marketplace
What we need and want as humans fundamentally remains the same across both physical and digital realms — people, things, and experiences. To access what we need and want, we work for, save, and invest money. To make money, we will work — likely using AR and haptics wearables, collaborating with holograms of our colleagues projected into digital boardrooms that we see as an overlay in our homes.
In the physical world, we use fiat money (e.g., USD, Euro) that is tied to geopolitical, physical boundaries, even when we transact online. Today we are seeing the rise of digital currencies — money that exists only in digital form and thus is not tied to any physical border. Cryptocurrency is one type of digital currency that typically runs on blockchain technology, which makes counterfeiting extremely difficult. Bitcoin and Ethereum are examples of cryptocurrencies. In the Metaverse, we will likely increasingly use digital currencies. Decentralized Finance refers to a growing financial services sector that leverages blockchain technology to enable anyone access to saving, lending, borrowing, investing, and exchanging cryptocurrencies without relying on any intermediaries like banks. Any two individuals can directly make transactions with each other. Decentralized Exchanges (DEX) are peer-to-peer platforms that enable cryptocurrency transactions. Examples of DEX include dYdX and Uniswap. There are also many centralized cryptocurrency exchanges, such as Coinbase, Binance, and VirgoCX. Crypto Wallets like MetaMask are apps that help store, spend, and receive cryptocurrencies.
Figure 3: A day in our lives: Pre-internet age v. Internet age v. Metaverse age
Early commercial trends in the Metaverse
There is an explosion of companies that are investing in creating and delivering what we need and want. Entertainment, gaming, and retail industries have been early industry movers in using NFTs and blockchain technology to give rise to new sectors such as digital real estate, virtual fashion for avatars, and NFT art (e.g., CryptoPunks). To facilitate Metaverse commerce, new marketplaces are emerging, including NFT marketplaces like OpenSea, which facilitates buying and selling digital assets such as NFT art. We are also seeing a convergence of industries. For example, Gucci (high fashion industry) and Roblox (gaming industry) partnered in 2021 to create both digital and physical items and experiences that merge high fashion, gaming, and multimedia delivered in Roblox’s digital spaces and in Florence, in the physical world.
“What we need and want as humans fundamentally remains the same across both physical and digital realms — people, things, and experiences.”
New industries will emerge in the Metaverse. Some estimate that the Metaverse will represent an ~$800 billion market by 2024. Since the 1980s, the internet has ushered in a new set of industries that would have been seemingly science fiction only a handful of decades ago, and yet — today, the concepts of e-commerce and digital supply chains feel normal to us. Similarly, we are seeing the emergence of new opportunities and risks that may have seemed like science fiction so far in our generation but will quickly become normalized for future generations and likely for our own as well.
Figure 4: Early movers in the Metaverse
There will be many versions of the Metaverse before the dust settles
Our lives have been increasingly becoming a blend of physical and digital experiences for two reasons. First, technological advancements have increasingly enabled digital experiences. Second, we have chosen to adopt such technological advancements because they bring us convenience — from opting for Amazon subscribe and save deliveries to conducting Zoom calls with colleagues.
The Metaverse — our newly emerging immersive reality — is still forming today. Many players — from technology companies to individuals — are racing to shape exactly how our daily lives will be seamlessly immersive. There will be many versions of the Metaverse in the foreseeable future. There is a lot at stake. The new norms and structures that remain when the dust settles will determine who is better and worse positioned to benefit from the Metaverse.
Endnotes:
[1] Web 1.0 was the first iteration of the internet in the 1990s. Users of Web 1.0 primarily interacted with the internet by reading static text. Web 2.0 is the current version of the internet that we are familiar with. Users of Web 2.0 today can not only read information but also add content online and interact with other users. Web 3.0 is a future state vision for the internet that has yet to materialize.
This article was prepared by Jaymin Kim in her personal capacity. The views and opinions expressed in this article are those of the author and do not necessarily represent the views and opinions of Marsh McLennan.
About the Author: Jaymin Kim is a Director at Marsh McLennan and drives global commercial strategy with a focus on cyber, technology, and digital. In her role, Jaymin explores longer-term commercial opportunities in the areas of risk, strategy, and people.