Facebook, Microsoft and others look towards the $1 trillion dollar ‘metaverse’ opportunity — but that contradicts the base philosophy behind Web 3.0
- The future of the web is
Web 3.0– with Microsoft, Apple, all interested in shaping it.
- According to crypto investment firm Grayscale, the industry is a $1 trillion opportunity.
- However, the philosophy behind Web 3.0 is for developers to take back control of their content from these tech giants.
Today’s Web 3.0 promises to be more reliable, decentralised — with control in the user’s hands — enables socialising for work and play through the metaverse, and makes it cheaper as well as easier to make payments. At Facebook’s developer conference this year, founder Mark Zuckerberg laid out his vision for Web 3.0 and the metaverse. He even changed the name of his company to ‘Meta’ to signal a new age of development. “I believe the metaverse is the next chapter for the internet,” he said in October.
The OGs — Web 1.0 and 2.0
To start with, let us differentiate between the ‘internet’ and the ‘worldwide web’. The Internet is the physical infrastructure of cables, satellites, Internet Service Provider (ISP) networks and routers, through which all data traffic passes. The web is one of the types of data traffic that flows across the Internet. It’s the highway you travel when browsing the internet, making a video call, surfing social media or sending data from your computer to the cloud.
The first iteration of the web, Web 1.0, is thirty years old. Think company home pages, curated website directories, static web pages and flash banner ads. Very few people were creating content and a large part of the population was only reading what they had to say. You have moved well past that stage, and are at the transition between Web 2.0 and Web 3.0.
As compared to Web 1.0, Web 2.0 brought in a lot more interactivity between people – think comments, blogs, wikis, social media, government websites for citizen services, streaming video, and so on. Although these services are accessible to everyone including those with small smartphone screens, they’re mostly hosted on centralised platforms.
This Achilles Heel left Web 2.0 susceptible to cyber-attacks, user data breaches, server outages and government censoring as seen with Facebook, Twitter, Amazon and the big tech giants of today.
The shift to Web 3.0
The pandemic of 2020 accelerated every building block of Web 3.0. Starting from making it viable for large groups of people to hangout together online for long time periods — a social and workplace requirement — to the resulting large virtual economies of scale, aspects of Web 3.0 led many companies to accelerate their digital transformation plans.
AdvertisementHowever, the hunger for schooling and working from any physical location, also led to popularity of decentralised digital communities and virtual worlds that mesh with the real world, especially those which were previously unheard of from the blockchain space.
Looking forward to Web 3.0 has begun a scramble for both, identifying and defining the future of the web. During the era of Web 1.0, Netscape connected users to the online world. During 2.0, Facebook sparked a revolution by connecting people to online communities. Now, during the nascent stages of Web 3.0, platforms like Decentraland are creating community owned virtual worlds.
The birth of the creator economy — why developers favour Web 3.0 and tech giants are trying to keep up
This year, Microsoft, Meta — Facebook’s new name, which many have speculated is Zuckerberg’s comical attempt to shed the bad press associated with the social network — and Apple have all announced their interest in the metaverse.
Rather than get disrupted by other players, these tech giants are attempting to disrupt themselves with the shift in how users spend their free time. Millennials and the generations that have come after, spend less time watching TV, preferring social media and video games instead. With convergence of social lives and gaming, the revenue of virtual gaming worlds is expected to grow to $400 billion in 2025, according to Ark Invest’s estimates.
AdvertisementMoreover, game developers are seeing a trend where players are moving away from paying to buy a game — also called premium games — towards free games that are monetised over the course of play. Games like Fortnite and PlayerUnknown’s Battlegrounds (PUBG) are two of the most popular games in the online universe today. While the games themselves are free, players spend money on in-game items to improve gameplay and ‘bragging rights’ — enhancing their social status within the virtual world.
And, that’s where the idea of play-to-earn (P2E) emerges, which is enabled by Web 3.0’s open crypto metaverse networks. P2E means that players can monetise the time and effort they spend in building digital assets within a metaverse. Players can own their creations as non-fungible tokens (NFT). These NFTs can then either be traded within the game or sold to other players in exchange for token than can be exchanged for fiat money, like the US dollar or the rupee.
The two most powerful platforms driving that change right now are Decentraland and Axie Infinity. Even games like MIR4, which have been criticised for their tokenomics and game-play in general, have thousands of users because of the earning potential — however small.
AdvertisementBy contrast, a Web 2.0 based closed corporate metaverse doesn’t support the P2E model. For example, players may slowly collect digital assets in Fortnite or Grand Theft Auto, and use them for playing, but they cannot sell them in-game to earn money.
According to Bloomberg Intelligence, the market opportunity for the metaverse can reach $800 billion by 2024.
Currently, Web 3.0 virtual worlds are estimated to have gained 50,000 users which leaves plenty of room for growth – crypto users globally are estimated at 220 million. Chasing that growth was $1.8 billion of funds raised in 2021 Q3 alone, towards the segments of Web 3.0-NFT-blockchain gaming, out of a total of $8.2 billion raised by all crypto in the same quarter.
A shift to P2E is a leap of faith and challenging, because keeping digital assets locked into the game can be good commercially for the company, while allowing conversion of in-game wealth into real money in player pockets leaves the game open to reduction of value in the future. For this reason, the Web 3.0 P2E trailblazers tend to be relatively new companies who started with little to lose.
Examples of Web 3.0’s value are already emerging
Even as efforts are ongoing to bring benefits of the metaverse to virtual education and office, this year saw it shining in other areas that could bring an experience home to a person.
In a high-value opportunity, Sotheby’s is present on Decentraland now as a virtual art gallery where digital NFT art can be showcased by owners, and auctioned to bidders.
Audiences can attend large-format events safely with virtual music venues, such as the concert that rapper Snoop Dogg recently threw in his mansion recreated on The Sandbox metaverse.
Employees can collaborate and hang out together at their digital office, like the metaverse HQ setup by crypto exchange Binance.
Advertisers such as Coke and Dell have metaverse advertising campaigns too, fostering brand awareness of game players for a price, using digital billboards and other methods involving NFTs.
Casinos have gone virtual too, such as the Atari Casino on Decentraland where players can win in-game currency (MANA) and sell it on crypto exchanges for cash.
The ‘metaverse’ is about more than just gaming
Going beyond virtual presence and experiences, being at the crossroads of Web 3.0, crypto and metaverse allows for much wider applications.
You could have a digital counterpart to an Aadhaar, birth certificate or driving license, but present it virtually while having full control over who gets to see your data and when. It could also be used for credit scoring.
If you were wary of cloud storage due to privacy, how about a solution like Filecoin whose data storage infrastructure is decentralised for an extra layer of safety? While using this data in your virtual meetings virtually accessing this storage in your virtual office, services like Livepeer allow for decentralised video transcoding for your virtual office.
Web 3.0 metaverse users can collectively decide on the rules of their virtual space, with the help of frameworks, staking value, voting and auditing. In a community of like-minded users then, there would be no de-platforming or cancellation from centralised corporations.
Sovereign virtual goods
The Web 3.0 metaverse could allow for NFTs to ‘travel’ between virtual worlds, for display at virtual museums or for sale. It could even be used for physically redeemable NFTs, such as purchasing a digital work of art for use virtually while you have the physical art piece secured in your locker.
DeFi allows a metaverse’s economy to expand beyond simple payment transactions in a digital currency. For instance, lending platforms allow for loans upon virtual land, and decentralised exchanges (DEX) allow players to trade one in-game item for another or for currency instead.
While those described above have already cropped up, there may be other killer applications for Web 3.0 that are just a gleam in the eye of a developer who is about to take the metaverse world by storm.
The metaverse may change the way you earn money, shop or even chill with friends in the future
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