Digital

Which Way for the Web with Web3 and the Metaverse?

Web with Web3

A new era of the internet is just getting started. While younger competitors are keen to get a foot in the door, a generation of IT companies created in the 2000s currently dominate the industry and are searching for the next trend.

A smartphone- and platform-driven cycle has continued to be the preeminent paradigm for the creation of new goods over the past 15 years. The metaverse and web3 are two ideas that surfaced in 2021 as opposing visions for the future of technology.

The first gained popularity after Facebook changed its name to Meta, whilst the second came as a result of the acceptance of cryptocurrencies, non-fungible tokens (NFTs), and calls for the decentralization of the internet.

Each proposal has received enough funding that, despite now seeming antiquated, they are likely to continue to be significant organizational ideas. It’s important to note that both ideas are essentially rebranded versions of currently available, unpopular technologies.

For example, the metaverse development company is based on virtual reality (VR) headsets, which were first offered to customers for use in gaming in the mid-1990s but failed to catch on. The main focus of Web3 is the use of digital tokens as the foundation for online communities, gaming, and software development, all of which rely on the 2009-launched cryptocurrency and blockchain technologies.

But why did anticipation for them soar at the conclusion of 2021? Rich investors have made significant financial bets on goods they intend to sell through spreading awareness of these ideas. In addition to having its own money, digital tokens, and shares in fresh web3 businesses, Meta also has a new line of VR/AR hardware and web3 boosters.

The problem is that both ideas aim to accelerate current tendencies toward the commercialization of internet communities. In every image of the future, advertising and consumer goods are pervasive in digital settings, and every facet of our online existence is prepared to be packaged for businesses.

Neither actually seeks to deliver a major change away from venture capital-driven product creation or to meaningfully disperse power. We must increase public investment in open-source digital tools if we are to successfully reverse this underlying trend toward commercialization. This essay will review significant advancements in the metaverse and web3 and demonstrate how we might steer the web toward a different future using open-source and commons-based digital technologies.

1. Meta’s Moment

The timing of Meta’s entry into the metaverse couldn’t have been more fortunate for the business. The business disclosed Facebook’s first-ever decline in daily users shortly after rebranding, with 500,000 daily users lost in just the final three months of 2021. Despite years of user declines in the North American market, this was the first time Facebook’s global user base fell below 3 billion.

Executives at Meta are concerned that the social media platform may be about to experience a sharp decrease in users and ultimately become the new MySpace. Facebook has failed to compete with new rivals that are more frequently used by younger audiences, in contrast to other large digital firms that still provide very popular services.

With Google’s statement that it will expand its privacy initiative to Android phones, Meta will also have it tough in Europe. Although Google has positioned this as an ad-friendly move, Meta’s advertising revenue may still be in jeopardy. Additionally, Meta is concerned about how a battle over the General Data Protection Regulation (GDPR), which threatens a fourth of its global income, may impact its operations in Europe. The share price of Meta fell more than 45% from its peak in September 2021 as a result of these blips in early 2022.

In light of this, venture capitalist Matthew Ball introduces the concept of the metaverse, which he predicts “will be a place in which proper empires are invested in and built, and where these richly capitalized businesses can fully own a customer, control APIs/data, unit economics, etc.” “You can think of the metaverse as an embodied internet, where instead of just viewing content, you are in it,” said Facebook founder Mark Zuckerberg. For Meta, which has hitherto relied nearly entirely on advertising revenue, the metaverse brings up new revenue streams. Fortunately for Meta, Goldman Sachs predicted that by 2025, the VR/AR sector as a whole might be worth USD 80 billion.

As a result, Meta’s entry into the hardware sector represents the first significant change. How many people the metaverse can persuade to use VR technology will be a key factor in its success. Meta’s VR headsets accounted for an estimated 75% of the market in the first quarter of 2021.

Over the Christmas holiday in 2021, Meta’s Oculus VR software overtook TikTok and other significant social media platforms as the most downloaded app from the Apple software Store. Additionally, according to data from the online gaming service Steam, 67% of all VR hardware utilized on the site is represented by Meta’s headsets. Because it doesn’t require a computer and is the most affordable VR headset on the market, Meta Quest 2 saw a sharp increase in sales.

Despite this expansion, Meta still lost money in 2021 on its VR/AR goods because they only brought in USD 2.27 billion in revenue while spending USD 10.2 billion on operations and research. In the coming ten years, Zuckerberg anticipates that a product from his hardware line will overtake smartphones as the primary means of communication.

In order to make this goal a reality, Meta has nearly 10,000 people working on it, but it could also fail. To advance its AR/VR technologies, the corporation has also been purchasing a number of businesses close to the metaverse. It’s yet too early to say for sure if this period will be remembered as the start of Meta’s demise or as a successful transition into the following wave of technological advancements.

2. Virtual World Political Economy

More than just a new hardware line is being attempted to be brought together by the metaverse. It aspires to be a concept that unifies the gaming and online community worlds. Gaming generates an estimated USD 150 billion annually, although its user base is relatively small in comparison to that of social media. This has been altered by free-to-play games, which lower the barrier to entry for new players and make it more necessary for developers to come up with innovative in-app purchase monetization schemes, which today account for 43% of mobile gaming revenue.

The distinction between gaming and social media is eroding as a result of the growing popularity of gaming platforms like Fortnite and Roblox. Many young individuals sign up for games to interact with their pals in virtual environments. The metaverse is an effort to increase the revenue prospects for platform owners from player interactions and further monetize these areas.

The goal is to establish functional virtual economies where digital things may be generated and traded much like in the real world, as opposed to restricting transactions to only those items offered by developers to gamers. It would be possible to buy and sell items such as skins, avatars, weapons, and clothing. The proprietors of the platforms might make money from this by taxing every transactions made in the market and by charging visitors to this world for season passes.

Then, previously free gaming environments and online communities that only required the game purchase might develop into dynamic ecosystems where users act as producers, service providers, and entrepreneurs. Users may produce things and hold assets that other gamers could trade with one another. NFTs enable a brand-new digital ownership system where players experience a tangible sense of ownership over the items that can be transferred, possibly even across platforms.

Although much of this was already feasible without NFTs, they have played a crucial role in the development of these new economies. Additionally, this enables creators to reintegrate the black market for some video games into a system of regulation and taxation. Some gamers earn a job by upgrading their characters’ equipment and stats, which are then sold to customers in exchange for their login information.

Thus, the metaverse holds the potential to expand marketplaces for digital commodities. This is one of the factors that led to Microsoft’s record-breaking acquisition of Activision Blizzard for USD 68.7 billion. The goal is to keep producing entertainment platforms with realistic virtual environments.

Current examples that game developers and social network firms could imitate and grow upon include Roblox, Minecraft, and Fortnite. To make their games more immersive, other games like Call of Duty, World of Warcraft, and GTA might also be expanded and given more social networking features.

Platform owners can act as a kind of macroeconomic policy regulator, dictating the rules of the game and establishing the fiscal framework for the in-game economy, if the community is sizable enough. In these situations, the motive would be to encourage as many people to participate in trading as feasible by establishing costs at an optimum level.

3. The Metaverse of Daily Life

Since Facebook announced its shift towards the metaverse, a number of businesses have thought about how they may capitalize on this new development. Given the buzz, it’s important to take into account how much Meta has invested in the idea. Mark Zuckerberg revealed that Meta employees will now be referred to as “Metamates” and that over 10,000 of them would be working directly on creating the metaverse as part of a new set of corporate values.

Although Zuckerberg’s utopia is unlikely to materialize, aspects of the metaverse may penetrate a variety of different industries in addition to online communities. According to trademark applications made by Walmart, the business intends to launch its own line of NFTs and cryptocurrencies.

This indicates that Walmart is considering selling a variety of virtual goods to customers who might use them to adorn their virtual houses, including clothing, appliances, and other home-related items. Samsung intends to construct a “smart” screen that would allow customers to show off their NFTs and a branded marketplace where they could exchange digital items. Adidas and other manufacturers of athletic and fitness apparel have started to provide virtual shoe lines, with the latter selling them exclusively through the Metaverse NFT pool.

However, despite the fact that other businesses contend for a piece of the metaverse, it would be challenging for rivals to unseat Meta from its dominant position. Similar to social media, there would be a propensity toward natural monopolies because larger, more populous digital worlds will probably expand more quickly and benefit from network effects.

Zuckerberg refers to the metaverse as a collaborative endeavor, but if Meta’s actions in the social media sphere are any indication, it will probably consist of several walled gardens as opposed to the totally open and interoperable system that has been promised.

Given how terrible its social networking platform is and how much it has invested in this new line of products, there is simply too much at stake for Meta to be willing to concede ground in this new market. Bloomberg Intelligence predicts that by 2024, the worldwide metaverse income opportunity in online gaming, electronics, social networking, and live entertainment could be close to USD 800 billion. It’s unclear how much of this will actually happen in the 2020s.

4. Implement blockchain technology

Web3 is promoted as the internet’s future, much like the metaverse. It is based on a wide range of brand-new apps created on the blockchain, the openly accessible distributed ledgers that power cryptocurrency networks like Ethereum. They enable financial transactions without the involvement of a bank or other financial body by providing a method of storing transaction data in an irreversible manner that can be confirmed by all participants.

Many supporters of web3 view the project in fundamentally different terms from Zuckerberg’s metaverse ideas. Web3 proponents say that there needs to be a fundamental change in how these goods are created and managed, notwithstanding Zuckerberg’s vision of the metaverse as the next generation of digital products. In comparison to web3, which promises a more fundamental change in how apps function (as explained in the following section), the metaverse might be thought of as an actualized version of Facebook.

Despite this, the two concepts have a lot of areas in common. Both involve new payment methods that are embedded into apps, digital tokens, and NFTs. Both envision new communities being made feasible by a variety of digital technologies that will let people interact with one another in ways that were previously impractical thanks to earlier iterations of the internet, whether through corporeal presence or novel forms of governance.

The distinction is that while web3 development services are more concentrated upon apps and online communities, the metaverse is more focused on hardware and virtual reality. Insofar as there is a need to monetize virtual worlds, NFTs and digital tokens are crucial for the metaverse, but one could see them also operating through conventional payment systems employing credit cards and fiat currencies.

5. Web 3’s Promise

Web3’s core concept is that new applications can be created with a decentralized ownership structure thanks to the possession of digital tokens by various stakeholders, which give them authority over the community.

It aims to blend the advantages of web1’s decentralized architecture with web2’s commercialization. It is occasionally promoted using the emancipatory rhetoric of decentralization and freedom, but there is already a lot of evidence to show that investors’ desire to profit from the buzz of a new idea comes first.

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