An understanding of the Metaverse and Web3.

The Complexity

Some of my recent articles have elaborated on the complexities and uncertainties in the coming years, especially those created by technology. Accordingly, I speak on how you must prepare to tackle these changes effectively. But forecasting change and planning to deal with them can only fall flat, making us seem foolish. The most effective preparation, for now, is to be aware of the complexities. The article here aims to explain the Metaverse and Web3.

In one of my training sessions, an employee asked for examples of plausible future uncertainties. Which domains would technology impact, what happens to us, and what is the way out? One of the widespread ambiguities of the future hinges on the internet – Web3 and the Metaverse and how we would interact with each other or even with other objects through Augmented Reality (AR) and Virtual Reality (VR).

Web3 vs. Web 3.0

This brings us to the topic of ‘Web3’. Do note that web3 differs from ‘Web 3.0’. In ideology, technology, and scope. Web3 is built on blockchain. Web 3.0, on the other hand, is the progression of the internet from Web 2.0. Web 1.0 was roughly between 1991 to 2004 with websites and their static pages. You could visit websites and only consume the information they provided. Web 2.0 elevated to platforms that made the engagement highly immersive with social media, wiki pages, forums, blogs, etc. Big Tech – Google, Facebook (now rechristened as Meta), Microsoft, and Apple dominate the Web 2.0.

Web 3.0 introduces you to a world where not just two people are distinct entities, but their relationships come alive by becoming an actual entity. It will emerge into a world where not only people but also machines talk to each other. The machine will then guide us with the intelligence it gathers. For example, if I am an author based in Mumbai, Web 3.0, apart from offering information about Mumbai and me, will also establish the validity and intelligence of all authors or authors around Mumbai and how we connect in the form of an interlinked tree.

The Underlying Philosophy for Web3

The scope of this article is limited to web3, which does not necessarily need an elevation into Web 3.0. Platforms on Web 2.0 can create interoperable applications for web3 to stay relevant. Web3 has gained a tremendous recall among the blockchain community with the rise of cryptocurrencies, especially in Decentralized Finance (DeFi) and Decentralized Autonomous Organizations (DAO). I shall come to these two terms later in the article.

The power of Web 2.0 resides within big tech. We have the big brother who monitors, suggests what we must do, and controls all our data. Web3 is a philosophy that breaks the structures of the surveillance economy by distributing power to creators and not the platforms.

Blockchain offers the technology required to decentralize the power of Web 2.0 exercised by big tech. It, therefore, metamorphosizes into something much bigger than cryptocurrencies. If DeFi with cryptocurrencies challenges the conventional norms of finance authored by centralized banks, web3, with its host of offerings, promises to soften the iron hand of big tech. To understand this better, we need to look into the components that promise that world to us.

NFTs: Non-Fungible Tokens

Any art created by a user can be plagiarized or replicated. Replication by its rightful owner is legal as the creator might want her creation to be used and be accessible to all. Plagiarism by a third party, however, is not. Piracy and plagiarism are real-world problems, and in the physical world, we are not sure if the replication and distribution of a product or art are through the creator. Consider a chemical formula of a drug manufactured and sold by a fake pharmaceutical company.

Non-Fungible Tokens (NFT), something which is not fungible or replicated, answer the real-world problems of piracy and plagiarism. Here, the owner can record their creation on the blockchain and distribute or sell its rights on the platform. An imitator cannot stake their claim to a property created or owned by someone else. There are teething problems reported on some NFTs sold by fake creators. The issue, however, has a solution on the blockchain and will be resolved in no time if we compare it to the real-world scenario.

Many confuse NFT with being another form of cryptocurrency. Cryptocurrency replaces currency of the real world (Fiat currencies and legal tenders) on the blockchain (Bitcoin, Ethereum, Polkadot, and the likes). NFTs, on the other hand, replace the assets you own and buy in the physical world. The assets on the blockchain are created, sold, and controlled without the intervention of any third party.

Decentralized Finance (DeFi) and Decentralized Exchanges (DeX)

If you have a virtual currency and a virtual asset, you need an ecosystem like the banks to buy and sell them. Except for the real world, banks have the absolute power to regulate trade, dictate policies, and simultaneously be responsible for the transactions. Decentralized Finance and Decentralized exchanges are those ecosystems on the blockchain. They do not exercise any power over the users and are mere trading platforms for you to buy and sell cryptos and NFTs.

Metaverse

We have spoken about currencies, art, and assets in a static form. The dynamics and quirks of the universe nevertheless bring everything to life. It would help if you had a playground that encapsulates the soul of the physical universe. Metaverse is, therefore, the equivalent of our physical universe on the blockchain. All you need to do is put on your AR-VR goggles to replicate your entire life of work, relationships, education, entertainment, travel, investments, fitness, and every possible thing you can and cannot imagine. The possibilities are endless.

It’s an ecosystem that answers to living a life independent of the depleting physical resources except for the necessities of food, clothing, shelter, and a high-speed internet connection. However, the irony is big tech jumped onto the platform years ago to create the Metaverse and eventually control it. It would now be clear why Facebook has rechristened to Meta and continues to invest top dollar in it. Apart from Meta, the remaining brigade of Apple, Microsoft, and Google have made significant acquisitions into gaming companies, developers, chipmakers, etc.

Apart from big tech, celebrities, and global brands have acquired virtual real estate through virtual real estate brokers (Decentraland, Sandbox, etc.) to conduct virtual events by paying real money. Owners of virtual real estate can lease the land for occasions or resell it to potential buyers. Assume a virtual Disney Land on Metaverse. The ticket sales proceeds will go to the owner of the virtual land which hosts the virtual Disney Land or to the company that has taken it on a long-term lease.

The objects within the Disney Land would be your virtual self and the NFTs in the form of rides, animations, etc. The NFT is also owned by those who have purchased them on the blockchain and have the right to earn from them. All payments are made in cryptocurrencies.

The Uncertainty and Ambiguity: What the Anti-Trust Agency Needs to Fix

The post, until now, attempts to explain web3 and Metaverse. Barring some obvious blockchain jargon, I have tried to decode the world which awaits us. Your question would be to know where the uncertainty lies within the complexity of Web3. Blockchain, web3, and Metaverse are based on the philosophy of anti-trust in humans. The inception of decentralized finance post the 2008 recession was to denounce the financial structures and the central banks. The recession attributes the irregularities to the traditional banking sector, making it the primary culprit of the event.

It created a parallel universe that does not rely on human trust. The idea does not align with pre-existing religions, nations, or sports concepts. For each of these concepts did not flourish on its own. The establishment of God did not lead to people following a religion automatically. The trust in humans (priests and pandits) pushes the idea of religion and creates followers. Likewise, imaginary boundaries do not define a nation. Trust in leaders, workers, policymakers, and the people at the government offices binds a nation together.

A Few Questions that Seek Clarity

1. How will the anti-trust agency propel web3 into a utopian life is a mystery and therefore builds uncertainty. Additionally, no authority means no responsibility and no protection. Remember the table of rights and duties taught to us in schools. How do fraud prevention, resolution, and risk mitigation work on the blockchain?

2. What about interoperability? How do I pay my real-life bills with cryptocurrencies if vendors and utilities do not accept them? The ongoing war in Ukraine and Russia has created some heroic case studies of cryptocurrencies. However, we are talking quotidian life here. Will third-world countries seamlessly leapfrog into web3 without having drinking water and sanitation requirements?

3. When you select your avatar for the Metaverse, as Mark Zuckerberg shows in his keynote video speech, who tracks the avatar behavior? Also, how do you differentiate between a human avatar and an AI avatar on the metaverse? What are the case studies or scenarios for which you need to determine? The plot moves from being uncertain to even ambiguous.

4. The NFT prices and sales today are influencer and social media-driven. If we want to create an ethical marketplace on web3, how are pricing and inflation regulated on the blockchain? I have already mentioned NFTs sold by imposters to naïve buyers in the marketplaces.

5. Lastly and importantly, how will big tech behave in the Metaverse and web3? With huge acquisitions and capital expenditure, how do they generate profits by giving us the power to control data and information?

Will the Metaverse and web3 merely be an enriched version of Web 2.0 instead of the promised land that circumvents real-world problems? We have to see, understand and test a lot more to understand this space better. The platform will require to provide logical answers. Importantly, we need to raise questions where answers aren’t available.

Note:

This article does not promote web3 and is not a piece of investment advice. It merely explains the concepts of the platform and exposes some of its advantages and loopholes.

About the writer

Roshan Shetty is an author, corporate coach, and consultant. He trains corporates on Leadership, Emotional Intelligence, Change Management, and Wellness.

His book Shift Left on Emotional Intelligence and skills required for the future is available on Amazon worldwide.

Learn more about his work at www.roshanshetty.com. Subscribe to his YouTube Channel, Cult Curator, for life hacks on well-being.