February 15, 2023
What is the Metaverse? Business Opportunities, Applications, and Challenges
In Nov 2021, since Mark Zuckerberg announced the renaming of Facebook to "Meta" to transform it into a metaverse company, the term "metaverse" has become hot.
Search volume of “what is metaverse” on Google Trends skyrocketed from Nov 2021.
Source：Google Trends
The concept of the metaverse seems cool but still somewhat illusory to most people.
So, what exactly is the metaverse and how will it change our lives?
This article will help you understand the meaning, business opportunities and, challenges of the metaverse.
What is the Metaverse?
Broadly speaking, the metaverse is a visually rich virtual space where people can work, play, shop, socialize, etc.
You can imagine that you are "in" a virtual world and feeling the presence of others, plus you can customize your avatar and own digital assets.
The concept of the metaverse is depicted in the movie “Avatar” released in 2009.
In the movie, the protagonist Jake is paralyzed, but when he arrives on Pandora, he changes into a Na'vi body and he can walk and run.
His consciousness, however, is still himself, which is a combination of virtuality (Na'vi's body) and reality (his own consciousness).
Source：BBC NEWS
In fact, there is no clear definition of the "Metaverse" as the concept is still NEW and not fully developed yet, so opinions may vary.
It's like when the concept of the "Internet" first came out, no one could define it clearly.
VR vs. AR
Virtual Reality (VR) and Augmented Reality (AR) can be explained better with two Chinese folk cultures.
VR means "virtual reality," which uses technology to create a 3D virtual world and allows users to experience it through sensory analogies.
If you still don't know what it means, you can imagine it as an observation of the Guan Luo Yin (觀落陰) ceremony.
It is a Chinese ritual whereby the living soul is brought to the nether world for a spiritual journey.
During this ceremony, participants must wear a red cloth strip with joss paper in front of their eyes. This is similar to the feeling of wearing a VR headset.
Source: HTC VIVE, The Storm Media
AR means "augmented reality," which refers to the use of image and image analysis technology so that the virtual world on the screen can be combined and interacted with the real world.
If it is difficult to imagine, it can be compared to the Chinese term known as Yin-Yang Eyes (陰陽眼).
People with Yin-Yang eyes can not only see the scenes that ordinary people can see, but also see ghosts or supernatural things, and interact with them.
So what AR can do is like having Yin-Yang eyes, interacting with virtual characters in the real world.
Augmented Reality; Source: Forbes
A Short History of the Metaverse
The term “metaverse” first appeared in the 1992 science fiction novel "Snow Crash" written by Neal Stephenson.
The author created the term by abbreviating the words "meta" and "universe" to describe a virtual world, where everyone has a virtual projection of their real identity (Avatar).
Why did it suddenly become popular in 2021, if the term appeared 30 years ago?
There are 3 main reasons.
Some of the technologies related to the metaverse have gradually matured, such as HTC’s VR headsets.
The concept of blockchain is becoming more and more popular.
Blockchain uses cryptographic and other technologies to create and store massive transaction data, which is difficult to tamper with.
Therefore, almost anything of value can be tracked and traded through blockchain, such as cryptocurrencies and NFTs, which will be discussed in more detail later.
The reason why blockchain drives the development of the metaverse is because of its "unhackability" and "immutability."
Because hacker attacks and data leakage are common in virtual environments, the security of the platform is important.
The COVID-19 pandemic has accelerated the development of the metaverse.
Due to the pandemic, human life has changed significantly, and most people need to work remotely, resulting in a sharp increase in the need for interaction in the virtual world.
Below are the views of several celebrities on the metaverse.
Mark Zuckerberg: Metaverse is the Future of Facebook/Meta
Mark Zuckerberg, the founder of Facebook, has publicly stated that Facebook would eventually become a "metaverse company."
Regarding the definition of the metaverse, Facebook also states on its official website,
“The metaverse is a set of virtual spaces where you can create and explore with other people who aren’t in the same physical space as you.
You’ll be able to hang out with friends, work, play, learn, shop, create, and more.
The metaverse isn’t a single product one company can build alone.
Just like the internet, the metaverse exists whether Facebook is there or not.
And it won’t be built overnight.
Many of these products will only be fully realized in the next 10-15 years.“
Matthew Ball: The Full Vision of the Metaverse Will Take Decades to Develop
Matthew Ball is a former Global Head of Strategy for Amazon Studios.
His article about the metaverse, “What It Is, Where to Find It, and Who Will Build It,” was forged into an NFT and purchased by a collector for 100 ETH, equivalent to $460,000.
In the article, Matthew Ball mentions,
“The Metaverse is a massively scaled and interoperable network of real-time rendered 3D virtual worlds and environments which can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of data, such as identity, history, entitlements, objects, communications, and payments.”
Matthew Ball also noted that the full vision of the Metaverse will take decades to develop, and its development revolves around 8 core elements.
Source: MatthewBall.vc
Hardware: Hardware that supports various metaverse devices, including VR headsets, mobile phones, tactile gloves, and hardware used by enterprises such as industrial cameras, projectors, and tracking systems.
Compute: The computing power that supports the metaverse, such as artificial intelligence, projection, motion capture, and translation.
Networking: The provision of real-time connections, high bandwidth, and decentralized data transmission.
Virtual Platforms: The development and operation of a virtual environment wherein users and businesses can explore, create, socialize, and participate in a wide variety of experiences (e.g., race a car, paint a painting, attend a class, listen to music).
Interchange Tools and Standards: The tools, protocols, and engines which serve as standards for interoperability and enable the creation, operation, and ongoing improvements to the metaverse.
Payments: Technology that supports digital payment processes, platforms, and operations, including cryptocurrencies and other blockchain technologies.
Content, Services, and Assets: The design, creation, sale, re-sale, storage, secure protection, and financial management of digital assets, such as virtual goods and currencies, as connected to user data and identity.
Is the Metaverse like a Video Game?
Some might say that the metaverse is similar to a video game.
This may be true.
When Microsoft acquired U.S. gaming giant Activision Blizzard for $69 billion in January 2022, its CEO Satya Nadella said,
“As we think about our vision for the metaverse, we believe there won’t be just one single metaverse.
We need to support many metaverse platforms …
In gaming, we view the metaverse as a collective of social and individual identities based on a strong set of content and monetization rights that can be accessed through any device.”
Now, many companies refer to a single game or platform as a “Metaverse.”
With this definition, anything from a VR music concert to an online game can be seen as a metaverse.
In short, games can be seen as metaverses, but metaverses are not just games.
They can be MULTIPLE.
Metaverse vs. NFT
What is NFT?
NFT is the abbreviation of Non-Fungible Token.
Still a bit abstract, right?
The so-called "fungible tokens" refers to tokens of the same value that can be divided.
For example, you can use two 50-dollar bills to change a 100-dollar bill because their values are the same.
Digital cryptocurrencies such as Bitcoin (BTC) and Ether (ETH) are all fungible tokens.
“Non-fungible tokens” are also a type of digital cryptocurrency, but each token is unique, non-divisible, and irreplaceable.
Examples are any digital form of artwork such as pictures, audio files, video, etc.
These digital files were easily copied in the past but now they can be owned through NFTs.
The original creator of the artwork and the trading record will be recorded and be publicly available.
At the same time, it is VERY difficult to copy.
Therefore, whether it is an article, a meme, or a short film, it can be auctioned off like physical artwork.
In 2021, digital artist Beeple's work was auctioned off in the form of an NFT, selling for $69 million.
Beeple’s digital artwork: EVERYDAYS: THE FIRST 5000 DAYS
Source: CHRISTIE‘S IMAGES LTD
In the same year, the first-ever tweet of Twitter’s founder Jack Dorsey was also made into an NFT and sold for $2.9 million, bought by an Iranian cryptocurrency entrepreneur.
The entrepreneur wanted to sell this NFT in April 2022.
He opened the bidding at $48 million but ended with a top bid of just $280.
In short, NFTs are ownership certificates on the blockchain that will become the key to the economy in the virtual world.
Each NFT is protected by an unchangeable, unduplicable, and undestroyable encryption key, which gives it the ability to authenticate a person's virtual identity and digital assets, which is essential for the metaverse.
The Role of NFT in the Metaverse
NFT and the metaverse are in a symbiotic relationship, where NFT enables real-world assets to generate economic value and ownership in the metaverse.
Its "non-fungible and unique" nature is also key to the operation of the metaverse.
Both concepts are relatively new, but a few companies have already found ways to apply these two concepts simultaneously, with great success.
Virtual Marketplace:
VRChat is a large-scale online VR game where players can interact and communicate with each other through virtual characters.
In such a space, it can be used as a marketplace for NFTs since sellers can easily provide links and previews for buyers, or even create assets directly in the VR environment, while buyers can decide whether to purchase.
The VR and NFT marketplace may attract brands from all walks of life to join, such as Nike.
Nike has already joined the virtual world through "Nikeland" and has acquired a studio called RTFKT, well-known for producing NFT products.
In the future, perhaps we can see sparks fly between these two concepts in Nike's virtual world.
Source: eon visual media
Museums
For art appreciation, VR may be the best platform as we can view the art piece closely from every detail and angle.
For example, many museums have placed NFT art pieces in the Cryptovoxels Metaverse, which is supported by the Ethereum blockchain.
According to The Art Newspaper, Cryptovoxels Metaverse has art galleries and museums, including the San Francisco Museum of Modern Art and the Museums in Austria.
Source: stealthoptional
Real Estate
In the real world, real estate is a lucrative industry and the same holds true in the virtual world.
This does not refer to the sale of real houses or land in a digital form, but rather to the sale of digital land in a virtual space.
For example, Decentraland is a decentralized platform based on the Ethereum blockchain, whose core asset is land.
The plots of land can be traded as NFTs.
At Decentraland's first auction in late 2017, a total of 34,356 pieces of land were auctioned off, representing a market value of more than $30 million at the time.
Land auction on Decentraland; Source: Atomic Wallet
Business Opportunities of the Metaverse
Facebook (Meta)
Of all the tech companies, Facebook has the greatest determination to develop the metaverse, as it changed its name to Meta at the end of October 2021.
So what kind of metaverse does Meta want to build?
We all know that Facebook is a social media platform, and its core is "connections between people."
On current Facebook, we interact with family and friends in ways such as posting and liking, leaving comments on posts, chatting with Messenger, and interacting in live broadcasts, but such interactions are relatively passive and mostly text-based.
In Facebook's metaverse, "connections between people" remains the core, but the space becomes 3D, and interaction can be more diverse and realistic.
For example, you can put on glasses to enter a virtual cafe and appear in your virtual avatar, then send a message through Messenger to invite your friends to come up.
In this space, you can play cards, chat, and drink coffee, just like your friends are really beside you.
During the process, you can also video call your family on your phone, and the virtual and reality are completely integrated.
Playing poker with friends in the metaverse while using video software to chat with family in the real world; Source: Meta
Remote working issues brought by the COVID-19 pandemic can be solved in a more efficient way in the metaverse.
During remote working, colleagues communicate through emails, messaging apps, or conference calls.
Though it saves commuting time, it lacks social interaction and the boss is unable to keep track of employees' status.
Therefore, many bosses asked employees to return to the office after the pandemic.
In August 2021, Facebook released a service called "Workrooms" that uses VR technology to enable remote work.
Workrooms; Source: Meta
With Facebook's Workrooms, virtual offices can be built anywhere, including mountains and beaches, allowing colleagues to meet, chat, and even work as if they were in a real office.
This will help businesses save expensive office rental fees and commuting time, thus increasing efficiency.
In short, Facebook's Metaverse will make future socializing more realistic.
Although the development is still in the early stages, this vision gives us a lot of room for imagination.
Microsoft
Unlike Facebook, which mainly focuses on social functions, Microsoft focuses on its original strengths, services related to "work."
It provides a more interesting and personalized experience for remote work and virtu
