For now, the so-called metaverse consists of myriad disparate ecosystems owned and operated by large technology companies and communities. A single unified, open environment may never emerge. That’s why interoperability is the key to unlocking value, writes our Head of Communications, Rebecca Hackworth.
In the simplest terms, the metaverse is the internet in 3-D; it’s powered by digital assets and transactions that can be accessed through a virtual reality environment. It provides users with an immersive, connected way to simulate the physical world and create new imaginary worlds. Potentially, the metaverse could transform how we work, learn and interact, and bridge physical and cultural differences. Moreover, it has fundamental implications for how we own, move and sell digital content in the future.
According to Bloomberg Intelligence, the metaverse is big business, predicted to become an $80 billion industry by 2024. Large tech companies are securing dominant positions by bringing to market new abilities to create content, utilising virtual, augmented and mixed reality, and connecting the customer experience across multiple channels.
These enterprises are developing metaverse empires that transcend their current platforms and user base. Meta, formally Facebook, views its metaverse as the next generation of its social media, communications and e-commerce platform. Electronic Arts and Roblox are using immersive gaming and self-service abilities so that consumers can create and monetise new types of content. Salesforce and other SaaS providers are examining how their metaverses can capture new efficiencies and harness 360-degree customer experiences to deepen loyalty.
In these new worlds, digital assets and blockchain technology will play an outsized role. Singular digital identities could be twinned with real-world identities. NFTs, digital certificates that represent unique music, video, art, collectables, or tied to physical goods and services, could become new commodities owned and traded by individuals. Today, NFTs have been mainly associated with digital artwork, but their use has broader applications for enterprises. They could protect and digitise financial instruments, provide controls to patients to manage their health records, and convert intellectual property to monetise digital and non-tangible assets in new ways.
This decentralised model, also called Web 3.0, enables people to be compensated for creating value and transacting with these digital assets. Payments, essential for digital commerce in this new world, would be seamless, based on blockchain technology using commercial stablecoins, cryptocurrencies or central bank digital currencies (CBDCs).
Balancing verified credentials and the need for privacy
The key to bringing this vision to life is verifiable credentials, digital identities and transactions that can be cryptographically checked and assured. Gilbert Verdian, Quant CEO and Founder says, “verifiable credentials ensure that the NFT you buy– whether it’s a digital artwork or a financial instrument like a bond–is authentic and the seller is legitimate. This works to prevent fraud and builds confidence in these new platforms. Zero-knowledge proof, using cryptography to balance verification and protect individual privacy, will also help build the metaverse in a scalable manner.”
There’s another catch besides balancing individual privacy and verification proving a challenge. Today’s nascent metaverses are ring-fenced, walled gardens. Less a metaverse than part of a multiverse: an extensive collection of different platforms, each tied to its own distributed ledger technology with no way to transact or operate between them. This begs an obvious question: how can we transition from a multiverse to a true metaverse? The answer, in short, is interoperability.
Gilbert adds, “the benefits of interoperability are massive — a quantum leap that mirrors the real world where people can move themselves, goods and money freely between ecosystems without changing identity. Anyone in a Web 3.0 enabled, fully interoperable metaverse could take their digital identities, NFTs, and currencies across platforms, easily and smoothly.”
Interoperability allows individuals to be unconstrained and have a more unified experience in the metaverse, just like in the real world. While this scenario is highly desirable, bringing it into reality is not easy. None of the big players has developed their platforms with interoperability in mind. There is no framework of common standards, so it is difficult for developers to produce apps and content that run across multiple ecosystems.
But some of us are actively working on these challenges. Overledger’s Tokenise API creates digital assets designed for interoperability that can transact across different DLTs. Like an email sent between Gmail and Outlook, an interoperable NFT could move from one big tech metaverse to another. Likewise, an interoperable stablecoin could be used for payments across platforms between disparate geographies.
It may be years before we see the metaverse as ubiquitous as the internet. And for now, there is little financial incentive or international standards that compel large companies to create an open platform. However, in the interim, where we have mini empires, we can utilise interoperable digital assets and payments to help individuals have a more portable and seamless experience.