In a future where the metaverse isn’t one platform defined by a single organization, but in fact, various platforms offering different metaverse experiences, blockchain serves a clear and compelling purpose.
Brian Jackson, Research Director at Info-Tech Research Group, views the metaverse as a technological convergence that enables social and economic activity in a digital world connected to the physical world. Some see blockchain as core to the metaverse vision, but for the technology giants generating hype for the metaverse, there’s no clear commitment to include it.
Source: Info-Tech Research Group
One month after Mark Zuckerberg announced he was renaming Facebook to Meta, the metaverse hype drove up the value of two other virtual worlds that had nothing to do with Facebook.
Decentraland’s MANA cryptocurrency and Sandox’s SAND cryptocurrency soared to all-time highs in November 2021. Decentraland’s market cap rose from about $2 billion before Zuckerberg’s showcase of legless avatars to a peak of $9.2 billion. Animoca Brands Sandbox saw its value climb 600% that same month. The interest from investors in these virtual world projects was clearly motivated by Zuckerberg’s pivot to focus on the metaverse. Microsoft also added to the hype by using its Ignite event to showcase its metaverse technologies.
But is blockchain an important part of the future metaverse landscape? The answer changes based on who you ask.
In a future where the metaverse isn’t one platform defined by a single organization but in fact, various platforms offering different metaverse experiences, blockchain serves a clear and compelling purpose. It delivers on the promise of portability across platforms and allows users to take their avatars and prized digital possessions with them as they meander through the metaverse. Cryptocurrency could provide money native to the metaverse, facilitating fast transactions between users without intermediaries.
Metaverse platforms are required to offer portability to some degree by Europe’s General Data Protection Regulation (GDPR). If platforms want to serve customers residing in the European Union, they will have to allow users to retrieve all of their personal data on the platform or request that it be transferred directly to another platform.
Blockchain could serve as the intermediary between platforms, tracking ownership of those unique digital assets associated with identities. It already plays this role in non-fungible token (NFT) markets today. For example, players of Axie Infinity may buy an NFT on the Axie Marketplace, build up its value by training it in the game, and then sell it on OpenSea.
What blockchain will provide this trans-metaverse ledger? How will all the platform players come to agree on the standards?
We don’t know yet. Some metaverse developers have created the Open Metaverse Interoperability Group. It’s in its early days, with five members on GitHub and a recently elected board of volunteers. Neither Meta nor Microsoft are involved in the group. While both Zuckerberg and Microsoft CEO Satya Nadella are on record saying they are committed to creating an interoperable metaverse, there are no details on exactly how that will be accomplished. Neither are speaking about blockchain in terms of supporting that interoperability.
These companies may be more interested in using the label of interoperability without truly achieving it, according to Jesse Alton, the co-chair of the Open Metaverse Interoperability Group.
“Real interoperability would happen at the data layer or file type, meaning that asset could be interoperable both on and off chain. It could use any platform,” he writes in a Twitter direct message from his @mrmetaverse profile. “Real interop requires collaboration and choosing to see ourselves as nodes in the Metaverse, rather than competing to be the origin of the Metaverse and the interoperable protocols.”
See More: General Ledger, Meet Distributed Ledger: Blockchain Is the New Compliance Tool
According to a recent Financial Times report, Meta is exploring the creation of a virtual currency, known internally as “Zuck bucks,” that wouldn’t be based on a blockchain. Instead, it would be a token controlled by the company, like virtual currencies seen on platforms like Roblox and Second Life. This follows an ill-fated attempt to launch Diem, a cryptocurrency that was staked to the value of the U.S. dollar. After attracting too much scrutiny from regulators, Diem was sold off to investors. Now, some former Facebook employees that initially developed the project are interested in raising money to resurrect the project. They’re billing it as “Libra without Facebook.”
While cryptocurrencies may be out at Meta, NFTs are in. Speaking at SXSW in March, Zuckerberg said NFTs are coming to Instagram “in the near term.” This could include both showcasing NFTs and minting new NFTs. He also opened the door to NFTs playing a role in the eventual metaverse, stating, “I would hope that, you know, the clothing that your avatar is wearing in the metaverse, you know, can be basically minted as an NFT, and you can take it between your different places.”
At Microsoft, blockchain is emerging as a focus in a couple of different business lines. Since November, Microsoft’s blockchain co-founder York Rhodes has been actively recruiting for a team of developers. Rhodes is looking for candidates “obsessed with Turing complete, scarce programmable objects that you can own & transfer & link to the real world through a social contract.” That implies that Microsoft is interested in blockchain as a solution for portability. But that solution might be more specific to Microsoft’s cloud supply chain solution than the metaverse.
Microsoft says they’re exploring NFTs and cryptocurrencies in its Xbox gaming division but has nothing to share. Gaming chief Phil Spencer said NFTs are in an experimental phase in gaming right now and that some of the projects feel exploitive.
Microsoft and Meta may be conceptually committed to an interoperable metaverse, but based on their activities, it’s not their priority. They’re not participating in any efforts with external groups to collaborate on interoperability.
“We would love for big players like Meta and Microsoft to get involved with our efforts,” says Alton of the Open Metaverse Interoperability Group. “We have other large orgs involved, but unfortunately, many of those who want to get involved are forced to leave our group due to their companies’ vision of owning the metaverse.”
Before we can remove our avatars from Meta’s Horizons platform, Meta wants to build a higher fidelity experience and create a business model that generates transactions. Microsoft will want to weave its metaverse solutions into its collaboration toolsets for enterprise workers to avoid competitor attempts to offer more immersive and fulfilling experiences.
Metaverse portability powered by blockchain is only an idea at this point. Profits remain the primary motivation for technology giants touting their metaverse visions.
Do you think blockchain will be a crucial pillar of the expanding metaverse? Tell us on LinkedIn, Twitter, or Facebook. We’d love to hear from you!
About Expert Contributors: The Expert Contributor program is designed to help kickstart meaningful conversations around the priorities and challenges most critical to C-level executives. The insights and perspectives will help CIOs tackle what’s most important to them. We are always looking for industry thinkers who can help set the narrative for our enterprise audience. To know more about this program, and submit your ideas, reach out to the Toolbox Editorial team at email@example.com.
Research Director, Info-Tech Research group
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