The Metaverse and Web3: New Application Layer For The Internet
If we look beyond the overwhelming hype and discussion surrounding the emergence of Web3 and the metaverse, it’s clear that they’re creating a fresh application layer for the Internet. But what does this technological evolution have in store for companies and humans in general?
The Internet is the most important, groundbreaking disruption since Johannes Gutenberg created the printing press in the 1400s. It connected everyone with a computer and a modem, allowing people to interact from around the world like never before, releasing huge streams of information for countless available for anyone to access.
Within just a few decades, the Internet has transformed the way in which humans live, work, and interact. It has ushered in tremendous progress and societal changes, and revealed a wealth of challenges that only such immense transformation brings. Today, there is increasing need for: interoperability and standardization across systems and services; greater coherence surrounding market fragmentation; regulation for experiences and content without restricting progress; and seamless user interfaces.
It’s likely that intelligent cooperation between regulators and providers will be crucial to overcome challenges of the Web2 age while facilitating the growth of Web3 and the metaverse.
When stepping further into a space that merges the digital and the physical like never before, we need stronger integration, more modernized protocols and standards, as well as capabilities that empower users with greater control of their digital representations (including their identity, their owned assets, and who can access their data).
In the same way that we utilize standardized devices and protocols to enjoy digital Internet experiences, Web3 may help to ensure interoperability and consistency across the metaverse. Specifically, bringing separate metaverses together into one, unified platform. As with the Internet, the metaverse can include open commons and walled gardens which users will be able to explore through VR headsets, AR devices, mobile applications, and internet browsers.
However, leaders should try to delve deep beyond the hype surrounding the metaverse and Web3 to discover the underlying solutions as soon as possible. Unfortunately, if they leave too much time, the landscape may start to change beneath them and make it incredibly difficult to catch up.
As new disruptors native to Web3 and the metaverse arrive, the Internet’s future may be formed by grassroots innovations that challenge business models of the Web2 age directly. Web3 and the metaverse are positioned to encourage amazing advances and groundbreaking technological achievements. These may have the power to create new approaches to innovation, communication, community building, and prototyping, as well as bringing businesses myriad new opportunities.
Web3 and the metaverse may drive us all into exciting new worlds ready for leaders to explore, where they can discover fresh possibilities and goals. Companies should work together to lay the foundations of this bold new platform via Web3- and metaverse-centric initiatives.
How Our Digital Activities are Shaping the Metaverse
Countless people socialize via worldwide networks, changing the way they look with AR filters designed to read their expressions, rebuilding themselves as avatars, dressing them up in digital clothing, even taking part in huge events (e.g. concerts) within video-game environments. It has become commonplace for companies to conduct meetings remotely via video, but they can now do so virtually too, with help from AR and VR equipment. These devices allow them to perform training, share resources, and work together from anywhere in the world.
Gaming has become more mainstream than ever, with Gen Z naming playing video games as their favorite type of entertainment. Before non-fungible tokens (NFTs) exploded, a number of game worlds were already struggling to provide enough virtual real estate to satisfy users’ demands.
Multiple generations now are comfortable with using software, interacting via digital interfaces, and taking advantage of worldwide connectivity. We are continually immersed in digital worlds and, more and more, draw it out over the real world we actually inhabit. These uses and behaviors are invoking the metaverse and Web3.
Various technology, media, and telecom (TMT) organizations have both facilitated and responded to these key behaviors, putting a foundation in place for a metaverse that is genuinely interoperable. Telecommunications brands have brought advanced connectivity into the hands of more domestic and commercial users, setting the scene for greater immersion and collaboration.
Meanwhile, technology companies have created hyperscale platforms that allow for greater innovation and operations, as well as providing users with new hardware that amplifies and supports more complicated tasks. Businesses within the world of entertainment and media are using telecommunications and emerging technologies to push their content into new directions, providing a global audience with more interactive, more social experiences.
However, some of these capabilities need a little space to grow, could benefit from being restructured (to suit evolving users better and facilitate next-gen capabilities), and should have their scale-related side effects addressed. There is a real hunger to allow for far bigger shared, immersive experiences, to build an economy of digital products and ownership, and to provide users with more control over their digital identity.
Essentially, Web3 metaverse may enhance the Internet by introducing these capabilities to it. This layer will extend into the digital Internet and allow data and content to be drawn from, and exist within, the real world. Amazingly, all of this is being built on lessons learned from four decades’ worth of digital interactions and connectivity.
Moving Through the Metaverse Seamlessly
The metaverse promises fluid interoperability and portability of three key elements: data, identity, and digital assets. How will this work?
Let’s say a shopper purchases an exclusive piece of virtual clothing for their avatar from a particular service. They will be able to go to a second service, which will recognize the buyer’s ownership of the virtual clothing and render it appropriately. A similar use case for enterprises could involve inviting metaverse users from a partner ecosystem into an immersive, shared collaboration. That may mean conducting a review of a prototype car’s 3D assembly or examining a factory’s digital twin for performance improvements.
For this capability, new approaches to arranging asset identity, ownership, and storage will be required. Digital identity is typically fragmented over services, involving several logins. Additionally, custom avatars and virtual accessories (two key digital assets) are made to function in the service that is providing them, instead of being usable elsewhere. At the time of writing, only the service providing an asset knows that you are the owner, so they are the only ones able to render and load it. This focus on a user’s identity, data, and asset ownership inside a service is generally known as ‘centralization’.
Web3 may enable blockchain registries that keep a user’s identity connected to those digital products that they own (an ability already offered by NFTs). Rather than having user identities scattered throughout services, they could be a persistent component in the blockchain internet: this is physically decentralized across multiple devices that mirror and manage the blockchain while being centralized logically as a registry. As a result, any service could read a user’s ‘state’, and that of the assets they own, allowing data, 3D items, identity, and avatars to be portable from service to service.
A different challenge to be considered is 3D products’ interoperability. Numerous 3D modeling solutions utilize various formats with different ways to specify items, materials, and behavior. One item that functions in one is unlikely to do so in another. There have been some marketplaces in game worlds selling virtual products successfully, but with little interoperability — if any at all — between them.
Enabling digital items to be interoperable will be essential for retail within the metaverse. A user who purchases a pair of virtual shoes bearing a well-known brand name would probably want to wear them many times across diverse virtual experiences. But that may necessitate solutions offering peer-to-peer storage that is trustworthy and secure. While identity and ownership records may be secured on a blockchain, common databases are often used for virtual items themselves.
Facilitating interoperability and portability within the metaverse is likely to demand a lot of hard work and collaboration between service providers. Technical challenges include finding ways to decrease energy requirements and boosting blockchain-transaction rates. It could be more difficult to shift business models that are built on users’ data, but putting the time in may add significant value — to users, to their data, to their content, and to their virtual goods.
Why? Because they would be reliably persistent and transferable from platform to platform. Some major companies have achieved success and might not yet see obvious incentives to share control of user data, identity, and other key assets. These considerations pull at the close connection between centralized and decentralized solutions.
Web3 Metaverse – Decentralization and Rebalancing Power
In the age of Web2, two-sided marketplaces and hyperscale platforms with huge user bases, built on user data and user identity, have been critical. But Web3 protocols have been specially devised to challenge this structure.
These successful companies may feel frustrated by the effort of keeping user identity and data secured and managed properly. They also need to contend with consumers and third parties that have found ways to take advantage of their services, as well as dealing with regulating bodies worried about market dominance and protecting customers.
Many technology execs will be concerned about security and data, particularly with regulations likely to be far more disruptive in the near future. Leaders looking to help guide the massive shift to the metaverse and Web3 will have to do away with certain Web2 methods and practices, and learn to love decentralization instead.
With regards to the metaverse, decentralization refers to the concept that users should have control over their data, their identity, their digital assets, and anything related, with these being movable across experiences and services. In the Web3 era, user avatars and assets will be portable across multiple services, and users will be able to specify particular properties for particular services.
A user’s avatar for personal activities, such as gaming and shopping, might be significantly different from their work avatar. It’s just like wearing different outfits for going to the office and relaxing at a bar later on. Users may utilize smart contracts that specify the way in which third parties can or cannot interact with their data. In this sense, companies will still be able to own metaverse experiences and maintain control of them, yet negotiation would be required for access to users.
There are some fascinating factors to consider here. While businesses might sacrifice direct control of user data and identity, they will still be able to distribute tokens to motivate users, exchange micropayments for making contributions to their service, and provide them with a stake in the company’s success. Similarly, users may be incentivized to share data and allow advertising.
Enterprise and consumer businesses alike may introduce rules that dictate behavior and appearance inside group experiences, a kind of virtual geofencing. Consumers may start to trust digital systems overall, with peer-to-peer storage, decentralized identifiers (DID), and compliant third-party data trusts.
Disrupting Web3 and the Metaverse
Various well-known service providers and platforms continue to tweak their strategies to suit the metaverse, but some disruptors are gathering vast capital to craft a new generation of Web3-based experiences for metaverse users.
These emerging companies will leverage Web3 protocols to construct robust networks made up of owners and users, all of whom are motivated to embrace shared outcomes. Disruptors are handing out tokens, accumulating funds and building memberships via NFTs, and creating immersive virtual environments that provide products, entertainment, and more. Many are built on Ethereum, allowing for service-to-service interoperability and portability.
Often, decentralized autonomous organizations (DAOS) are metaverse and Web3 disruptors: they utilize blockchains, smart contracts, and token-based incentives to determine a network’s growth. In this sense, blockchain-based companies can work towards shared goals as semi-automated groups, being social networks and computers. But DAO leadership may be spread between shareholders, primarily those with the biggest horde of tokens on the network.
Again, this pulls at the nuances in the discussion of decentralization against centralization. In some networks, those holding the most tokens can have a bigger impact on a network’s direction, business models, and services than anyone else. Even today, expanding Web3 businesses are becoming dominant gateways and marketplaces.
While Web3 might not decentralize capital and power fundamentally, it still spreads it into smaller groups more evenly. The new generation of the Internet may be shaped by the rise of minor disruptors able to capitalize on change faster than others. Much of Web3’s foundations are already present and working, which is why the boom and bust cycles of cryptocurrencies and NFTs are enabled. This allows for scaling of new commercial applications, innovation, and testing in extreme market dynamics. The next growth curve will be supported by lessons learned in both design and implementation.
Major Risks to Consider
So many metaverse and Web3 elements are emerging already, allowing for exciting opportunities and innovations, as well as demonstrating the uncertainties and risks of this disruptive shift.
Some successful blockchain implementations are progressing nicely, evolving from concepts to deployments fluidly. However, as some Web3 solutions are incredibly technical in nature, we have to consider vulnerabilities arising from rushed implementations, asset inflation from both potential scammers and investors, as well as a lot of noise surrounding the market. Fragmentation is apparent between cryptocurrency wallet and identity providers, and, in cryptocurrency markets, there is increasing demand for liquidity guarantees and general stability.
Additionally, coherent payment rails are necessary across fiat and crypto currencies, as well as careful regulation that supports innovation in a viable framework. Furthermore, adoption may be slowed by high-energy consumption from proof-of-work blockchains, all the while increasing environmental effects and operational costs. Energy use may be addressed by the pending transition to proof-of-stake blockchains that are more efficient, as well as a boost in green energy to power these protocols.
Establishing interoperability and portability for assets, user-focused identity, and embracing decentralization and centralization hybrid models may all take years to scale. Alternatively, they may just empower different disruptors and early adopters setting up a competitive new flank. Disruptors may drive more change in the short term as leading names strive to keep their platforms reinforced. As a result of this posture, leaders may find it easier to protect their current company but they may still drop behind if they don’t make the leap as soon as possible. Essentially, they might have to work together to achieve the interoperability that is vital to the metaverse’s future.
Without doubt, the metaverse’s early progress has been affected by an overwhelming level of hype and criticism, vague definitions, and a repetitive insistence on AR and VR as a prerequisite. As with the Internet, the metaverse interface must be device agnostic. For instance, with significant mobile-device use cases, AR has progressed significantly without AR glasses being widely adopted.
Handling Complications and Threats
Leaders may run into numerous challenges related to trust, cybersecurity, management of digital rights, and brand reputation. New implementations throughout partner ecosystems and networks may be necessary with the metaverse and Web3. This may expand the data risk and vulnerability surface area for companies that are worried about such disruptions. Malicious actors could discover more innovative methods for attacking businesses, thanks to the additional layers of complexity involved.
It will be possible to compromise layered blockchain and bridges, while cryptocurrency custody may be shattered too. NFT transactions may be affected by validity compromisation, and users’ personal details may be gathered from transactional data. Immersive, virtual interactions between users are likely to generate a lot more user-centric data, opening up new security issues and risks.
As a result, businesses may be required to improve their security strategies, measures, and technologies spanning the digital and physical realms. At the same time, they would need to change identity management, data protection, consent and content management, compliance, and threat detection. However, there are plenty of lessons, use cases, and experiments to learn from, offering insights into addressing these challenges effectively.
Unclear Jurisdictions and Surprising Results
A number of the aforementioned challenges indicate the way in which the Internet will be regulated in years to come. The number of new cryptocurrencies and token-based economies is growing more quickly than regulators can manage.
Instabilities, weaknesses, and unexpected outcomes could be introduced by scaling decentralized identity. The storage, transportation, gathering, and sovereignty of data may take on new scales and forms. Unknown compliance and tax implications of decentralized companies, with anonymous members possibly based all over the world, must be considered too.
Metaverse experiences may encounter substantial challenges with the amount of data gathering enabled by cutting-edge interface hardware, while also dealing with new types of content and speech. Immersive entertainment and social media may adopt more influential positions, possibly exacerbating existing challenges. Unexpected innovations and side effects related to scale may introduce more discontinuities to society too.
It’s crucial to think about the way in which Web3 and the metaverse may make current societal issues worse and bring about others. If Web3 and the metaverse usher in major changes, the creators will be responsible for their effect on everything from human rights and self-determination to the results of industrialization.
Preparing for the Future
Navigating such monumental changes can be tough when there is so much hype and critique surrounding Web3 and the metaverse. Web3’s foundations have been laid, and its value and potential problems will be discovered gradually. Various metaverse behaviors and capabilities have been established, motivating the biggest digital platform and lifestyle companies to funnel huge amounts of capital into its future success.
Leaders must take a long, hard look at their companies and their customers to identify opportunities: where can Web3 protocols deliver unique experiences, improve efficiency, and address regulatory matters?
Some leaders might be able to expand their brands, create lines of digital products, and provide users with enterprise solutions via metaverse experiences. Others might be required to flesh out their capacity for computing and storage, their networks, and their workforces to meet next-generation requirements.
When data is created in increasingly large quantities via metaverse interactions, companies might benefit from creating new solutions to act on data successfully while following compliance and regulatory guidelines as they evolve. Furthermore, organizations may utilize smart contracts and cryptocurrencies for more efficient management of finances — virtually automating their capital and making their funds programmable.
On top of this, companies could also struggle with securing and managing user identity, handling vast amounts of complex data, and finding a way to generate value from it. While this might appear threatening, a lot of leading organizations could be freed up if they shake off more traditional methods and team up with partner ecosystems to organize data management with a more agile approach instead. To do that, leaders would have to align more on interoperability and standardization that support whole communities and markets beyond what today’s leaders achieve.
Still, leaders must think carefully about adoption rates and growth, particularly with regards to immersive experiences. While some things are likely to evolve at a fast pace, others will take longer. Business leaders need to determine how their capabilities and focus allow them to build in the short-term, prepare for the mid-term, and plan for further into the future. Exploring how metaverse and Web3 solutions can work with today’s challenges can inspire the construction of new, exciting business models.
As we’ve made clear, there is a lot to consider and wrestle with in this new era. Regulation will bring new changes. Use cases will affect everything from software to networks. Entertainment and media will take on new forms, find new approaches. Cybersecurity will evolve as new threats emerge.
Essentially, this huge shift responds to the requirements of organizations, users, and technology to lay the foundations for the future. But it’s vital that these immense changes be considered and addressed with care: there are societal matters to contemplate alongside the obvious business objectives and technological advancements.
