“The metaverse can be a key component of all physical experiences.”
The Metaverse will change how we live, work, and play in the future. While all the technologies are still not in place for a whole metaverse experience, Metaverse has moved well beyond being just a tech hype. Tech giants like Facebook and Microsoft are making big bets on Metaverse, and several gaming platforms like Roblox, Horizon, and Fortnite offer certain metaverse features. With these trends in technology developments, we would probably be able to get the full metaverse experience within the next decade.
Metaverse is the next generation of the Internet that is immersive and decentralized. It allows users to create multiple, persistent virtual worlds or spaces and interact with others.
The immersive nature of the Metaverse is a revolutionary shift from the present Internet. Metaverse will be using augmented reality (AR) and virtual reality (VR) as their primary user interface to deliver this immersive experience. The use of AR and VR in the Metaverse is so widely discussed that people even believe the Metaverse is just adding a 3D layer on top of the existing Internet.
However, decentralization is the most notable differentiator of Metaverse from today’s Internet. While AR and VR will be the primary user interfaces of the Metaverse, without decentralization, it will be just another 3D video gaming platform.
The other notable feature in the Metaverse is persistence. The virtual worlds created in the Metaverse would continue to exist even when the person who created them is unavailable or disconnected. Also, digital or virtual assets will be exchanged between users in virtual worlds. While the value of such virtual products is still questionable, digital fine arts, cars, clothes, and even virtual land plots would likely be exchanged for real cash in these virtual worlds in the Metaverse. This is even more evident from the recent news that a virtual land plot in Decentraland has been sold at $2.4 million.
For the virtual spaces and digital assets to persist in the Metaverse, they must be stored in a database. This database must also support secure transactions of virtual assets. Since the Metaverse is decentralized, no single organization should be able to claim ownership of the Metaverse. Therefore, using the traditional centralized databases to store the data in the Metaverse is also impossible. This is the problem that blockchain helps to solve.
Blockchain is a distributed data storage system that uses the concept of blocks to store data. Each block contains a timestamp, some data, and a cryptographic hash of the previous block, forming a chain. New data is added to the blockchain by creating new blocks.
Blockchain as a distributed database
The data in a blockchain is stored in multiple computers connected in a peer-to-peer architecture. Each computer, also called a node, stores a copy of the entire blockchain encrypted with public-key cryptography. The nodes communicate via a predefined protocol for discovering new nodes and data replication. There is no central storage or a control point in a blockchain, so it does not have a single point of failure.
Security of data stored in blockchain
A blockchain is secure by design. Each block in a blockchain contains the hash of the previous block. Therefore, modifying any block in a blockchain without invalidating all subsequent blocks is impossible. Due to this design, blockchain data can be stored in a peer-to-peer network without a central governing authority.
Secure transactions with blockchain
At the time of this writing, the prominent application of blockchain is cryptocurrencies. Since cryptocurrencies are not centrally regulated, they have a problem that the traditional currencies do not have – double-spending.
Traditional currencies, also known as fiat currencies, do not allow double-spending due to their physical nature. Even credit card transactions happening via the Internet are authorized by a central party such as a bank, preventing double-spending.
Cryptocurrencies, like Bitcoin, solve the double-spending problem by using blockchain to record all transactions – therefore eliminating the central authority. Each bitcoin has a history of its previous owners and the transactions encoded as cryptographic hashes. When a particular coin is transferred to another user, the new transaction data is appended to that coin. Any transaction in Bitcoin is publicly announced to all nodes in the peer-to-peer network. Once most nodes accept a particular transaction, all subsequent attempts of double-spending of the same coins are ignored.
Metaverse consists of virtual worlds where users interact and exchange digital assets. Since there is no centralized platform in the Metaverse, centralized databases do not fit into the metaverse architecture, and Blockchains fit in instead due to their decentralized design. The successful blockchain application in cryptocurrencies further strengthens its applicability in the Metaverse.
Managing crypto assets with non-fungible tokens (NFT)
Digital assets in the Metaverse are similar to cryptocurrencies. However, there is a subtle difference. A digital asset should be non-fungible. This is different from the traditional currencies or cryptocurrencies, which are fungible.
A traditional currency, such as USD, or a cryptocurrency, such as Bitcoin, is considered fungible as one USD is equivalent to another USD. Similarly, one Bitcoin is exactly equal to another Bitcoin. But digital assets in the Metaverse are not like that. A digital asset like a virtual land plot should be unique and not replaceable by another land plot – therefore, non-fungible.
NFTs implement this in blockchains. NFTs are uniquely identifiable tokens stored in a blockchain. An NFT can be linked to a digital asset such as a photo or a virtual land plot. An NFT also includes a unique ID that is used to manage its ownership. At any given time, only one user can claim the ownership of an NFT. A user can transfer an NFT to another user, equivalent to selling a digital asset.
Managing digital identity with NFTs
In the Metaverse, a user can freely move between multiple virtual spaces. For example, a user may attend a virtual music concert today and visit a virtual art gallery tomorrow. Also, users may need to claim ownership of their digital assets in each virtual world.
Due to their uniqueness and resistance to faking, NFTs can be used to manage user identity in the Metaverse. However, many questions remain to be addressed regarding identity in the Metaverse. The two blockchains must interact via a predefined protocol to allow a user to switch between two virtual worlds, and such protocols may still not be mature. Nevertheless, NFTs will form the foundation for identity in the Metaverse.
Decentralized Autonomous Organizations (DAO) with smart contracts
Smart contracts are the blockchain version of traditional contracts used in business transactions. A conventional contract defines terms that two or more parties agree to follow. A violation of either party’s terms must be settled via a centralized authoritative organization.
On the other hand, a smart contract is a self-executing software program stored in a blockchain. The contract terms are encoded as executable code in the smart contract, and it is executed when a specific predefined event occurs.
In a decentralized environment such as the Metaverse, it’s hard to establish trust between individuals as their real identity is invisible. So, it’s impossible to form traditional organizations with top-down hierarchies in the Metaverse as the person at the top with more control can deliberately jeopardize the entire organization. Therefore, the organizations in the Metaverse must be decentralized and autonomous.
A DAO managed by smart contracts can maintain a flat structure where everyone gets equal voting rights for organizational decisions. NFTs in blockchain can implement the identity of users, voting, and admission of new users in these organizations. Legal frameworks may not yet exist for such DAOs. Still, there is a massive potential for companies involved in venture capitals, social media, and digital fine art to operate in the Metaverse as DAOs.
Conclusion
Metaverse will make all of us digitally alive. While AR/VR will be an essential part of the Metaverse, blockchain-based decentralized software will be a fundamental building block of the Metaverse. NFTs and smart contracts may be just the elementary applications that exploit blockchain. With further developments in blockchain and related technologies, we would be able to get an entire metaverse experience that is decentralized and immersive.
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