Defining The Metaverse with Charles Read: The New Internet Experience Built By Gamers

\ The market continues to mature, so I wanted to get back to clearing up some common misconceptions about what the Metaverse is, what it means, and who is building it, hopefully resulting in more conversations with elite teams as we continue to fund in this direction three years after we began. \n I often see investment decks from teams that tell me they are “building a metaverse” which, as time passes, will become more of a red flag as consensus is reached on what the content that makes up the metaverse actually is. It’s quite clear there is a deep misunderstanding, reminiscent of the early stages of the web - when businesses claimed they were “building an internet” rather than a website. \ If you asked someone to define the internet in its early stages they would’ve similarly struggled; yet while the internet’s definition today makes sense, it doesn’t really explain how the internet feels or operates. We’re facing the same situation again. ## This is my contribution to clearing some of that up, and hopefully moving toward consensus in answering the question: What is the Metaverse? \n I largely consider myself a “citizen of the internet”. In many ways I hold a higher regard for the internet than I do for the country in which I was born, after all, I met many of my closest friends online, my business was built online, and so was my wealth. I grew up playing immersive and often multiplayer games like*Runescape* and *World of Warcraft*, where I learned the skills I needed to navigate the economics of blockchain ponzinomics. So it should be no surprise that I am paying particularly close attention to the metaverse and the language being used to explain it; after all, I’m a gamer. \ I wanted to follow on from some of my earlier statements, mostly shared on Hackernoon, where I discussed the evolution of the spatial web as being built by gamers, digital collectables as NFTs, and “museums in the metaverse” to dispel some confusion and help reach consensus on what the metaverse is… with help from some of those who are making it their core focus to build us a better internet. \n I want to start by first acknowledging that in its early form, the internet also promised to provide many of the supposed solutions that we are hearing the metaverse will provide now, whether for digital tourism, education, healthcare, etc etc. It’s important to know that the full potential of any technology will never be ‘realized’, because it is constantly evolving, and therefore so are our expectations and possibilities. What makes this time a little different is that technologies of the last 40 years are coming into a new, more interoperable form, built-in 3D and with the capability of a better economic model than the existing internet. \ **…but more importantly, the “iPad Kids” who have grown up swiping and liking are now graduating school, and the tools for them to help build the internet are getting very, very interesting…** ## The architects of the future are the young The Metaverse, therefore, is what we can consider the next *stage* of the internet. As websites make up the internet, I like to think interoperable “webspaces” make up the metaverse. Here’s the most insightful graphic I’ve come across when trying to break down the Metaverse stack and the essential technologies and philosophies that make it up: \ ![Image credit, https://twitter.com/jradoff](https://cdn.hackernoon.com/images/vhfPFLJQfAMvEOtbrxCh5wj0Z1W2-2022-08-25T08:29:29.098Z-cl78sagln000s0bs6cy7df6o5) \ Some things to point out here as we set the stage for building the spatial web, are the three layers in the center. Creator Economy, Spatial Computing, and Decentralization (notably Edge Computing due to scalability which we will explore later). These are the most important three components to building the metaverse *correctly*, and to keeping it \*open.\*Creators and consumers will become the most important piece of the puzzle, and the tools they have will determine where the main hubs of activity are in the future. \n Just recently Meta announced that creators on the platform would be charged 30% as a base fee, and then a further 25% fee on the remaining would be charged by the Horizon Platform. By comparison, Manticore is taking 50% and Roblox is taking a whopping 75% of creator fees. While this isn’t all bad, it’s definitely something we need to improve upon as we build platforms and tools for creators and consumers. The good thing about this is competition drives prices down, and as tools for creators become more accessible and, in many cases, more decentralized, so do the fees they have to pay. The features of the new internet are more competitive and less monopolistic. \n > *“Even as the world has become so interconnected today, the metaverse will emerge as the next stage of this evolution – an online environment in which ordinary people have meaningful agency to consume but also to produce”* – Lincoln Wallen, CTO of Improbable \ ## The “Spatial Web” & Its 3D Architects \ A subject that doesn’t come up often enough in the metaverse discussion is the spatial web - and I explain this as the move from websites to webspaces; areas of the internet which are built in real-time 3D, but often mimicking social constructs of the real world; I talked a lot about that [here](https://hackernoon.com/the-metaverse-from-websites-to-webspaces-with-charles-read). The Metaverse is the internet but built by game developers, and with the parabolic advance in open-source, real-time 3D software, every day there are new architects of emerging digital worlds for us to explore online. \ We can consider this paradigm shift the result of 40 years of technology being moved into a more interoperable - and explorable - version of the digital world. The more successful games of the last few years were driven by play behaviors outside of typical game objectives. Take *Animal Crossing* as an example, a game intended to be therapeutic, interactive, and expressive, which highlights the desire of players to express creativity and create/consume content rather than just complete objectives. *Animal Crossing* was also fundamentally social, which was timely given the lockdowns that were implemented due to Covid. This really highlighted a previously neglected market segment of non-objective social games and opened the door for highly immersive fantasy universes for sharing and exploring, made by game developers. \ > *“The metaverse, for me, is going to be born out of the revolution around real-time 3D; \n as real-time 3D becomes easy to capture, consume, and share due to advances in game engines” — Marc Petit, Epic Games* \ This means that the metaverse is device agnostic; it is not just experienced through a VR headset, but eventually, through any digital surface we can engage with. Marc talks about a future where we can turn our windows into live displays of whatever we want, from the planet Tatooine from *Star Wars*to the deep oceans of Earth. While there will be a significant reliance on VR and AR to explore these worlds, we can view this advance as more of an augmentation of the internet that enables it to be experienced in real-time 3D. It will transcend across multiple devices, such as phones, tablets, and VR headsets, but even autonomous vehicles and glass panels. It will be dynamically social and integrated with all aspects of our lives. What excites me most for the next few years is how we can tie the digital and the physical together while creating multi-reality (MR) experiences for people all over the world. \n > *“Is the metaverse a virtual world? No. It’s going to have a virtual world, but that’s just going to be an element of it”* — Matthew Ball \ I like to think of our mobile devices as windows, or portals to new worlds. \ Pokémon Go proved product market fit for the first time with AR, but we’re ready to go to the next level - and people are paying attention. [A recent study](https://www.google.com/url?q=https://www.tandfonline.com/doi/full/10.1080/07421222.2021.2023407&sa=D&source=docs&ust=1657880683618230&usg=AOvVaw2iDxRFkfEEsZkhOiLQVeEn) actually showed that Pokémon Go actually decreased depression-related searches locally, which indicates that these interactive experiences could work to improve mental health, particularly in young people. \ The social experiences enabled by this growing market should be life-changing; not just cool technology, but functional technology. I also see a future for social impact projects, such as recycling, becoming enhanced by mixed reality at the civic level. \ **Kevin Kelly,** Editor at Wired is confident that AR will lead the way to the next big tech platform. He dubbed this Mirrorworld; the blurred lines between physical and digital, and the growing digital overlay that sits atop of our physical world. \ > *“The mirrorworld doesn’t yet fully exist, but it is coming. Someday soon, every place and thing in the real world—every street, lamppost, building, and room—will have its full-size digital twin in the mirrorworld. For now, only tiny patches of the mirrorworld are visible through AR headsets. Piece by piece, these virtual fragments are being stitched together to form a shared, persistent place that will parallel the real world.”* \ Location markers and data continue to become more precise, and our handheld devices are becoming more intelligent with faster processing speeds. This means custom environments built atop the real world and presents unique and interesting opportunities for civic engagement, social impact, and of course gaming. \ **The Mirrorworld will be more reliant on our mobile phone cameras and real-world mapping than anything else, and will allow us to intelligently overlay digital experiences to physical environments - the core focus of my next company, which will do this in partnership with forward thinking cities and leaders of the digital world.** \ There is, however, great difficulty in getting multiple worlds to speak to each other, as many devices and software have different rulesets, such as Unity and Unreal Engine having different ways of enumerating 3D space. This makes interoperability between worlds very tricky at present, and a problem that few are interested in solving because it’s resource intensive and would require changing practices across several of the industry’s largest companies without clear financial motivation. \n In practice, this means the metaverse right now is “instanced,” meaning most experiences have boundaries and aren’t connected to other experiences. You still need to “log in” and fire up different software or hardware to access different instances. \ For the metaverse to be truly open, we need interoperable game engines and a virtual economy layer. \ Many of the people leading the charge on real-time 3D aren’t rushing into the blockchain, because we have to be careful with what we build, since we also have to live with it. But there is a separate group of open-focused leaders who are collaborating with them to hopefully eventually converge on more standardized, accessible, and fair systems. \n Today’s internet has a distinct focus on watching, liking, and swiping. In return we are monetized for our data, but the promise of the next phase that is built in real-time 3D means that we become part of the experience itself. It’s inherently social and interactive rather than the slave and master relationship that existing internet content provides, and the users become the primary creators of the content and the experience itself. \ > *“The internet as we know it is antithetical to what it was designed for. The commonality, hyperlinks, gave it so much value… The current internet is like being in a shopping mall and needing a different identity card for every store. Where every store has different card vendors, sizing schemas etc.”* — Matthew Ball \ ## Infrastructure, Scaling & Limitations While the iPhone isn’t the internet, its adoption has allowed hundreds of millions of people access to it, and it is a valuable piece of the internet story. The Metaverse will have similarly important hardware, services, and experiences. If we had to make assumptions about what they are now, we would definitely start with Unreal Engine. Because the people making movies want the same thing as the people making games; there is a shared technical requirement across these industries which is pushing things in the right direction, but that also means the interactive elements are starting to converge. Furthermore, many other industries are also implementing game engines into their design process because of the need for complex simulation software - such as architecture, urban planning, fashion, engineering, live music and events. This is what makes Unreal Engine, and Unity to an extent, so disruptive. \ Unreal Engine is world-leading technology for building out the spatial web, and therefore fulfilling the promise of the metaverse, but it comes with its own limitations, particularly when we are talking about building hyper-connected worlds in high fidelity and throwing in mixed reality. So we need simulated distribution cloud software to help ship it. \ Amazon’s Luna is a cloud-gaming software that is currently capable of 100-90ms real-time streaming, and 5G promises to make this faster by (almost) solving the “speed of light problem” which means information is travelling different distances to the same server. Framerate is currently a major limitation and the reason why there is a lack of high-fidelity, multiplayer spatial games. It’s also why games with lower fidelity but faster scaling are so popular - see Minecraft for example, which has as many as 150 million players worldwide across 55,000 different servers. \ As well as 5G bringing us closer to the promise of high fidelity, Marc Petit believes that the mobile phone will act as a central processor for connecting you to the metaverse, but it might not be by the providers we know today; instead, decentralization and edge computing will come to the fore. \ Right now, creating an MMO is very difficult in Unreal Engine, but as we continue to work toward scalability it will become much easier. The same can be said for mobile gaming tools like Unity having different rulesets to UE, which often means building things twice if you want a high-fidelity mobile and desktop game. \ > \n *“The one thing that is very clear to me is that everything about the advance of technology leads clearly towards supporting the metaverse” —* Ed Catmull, Co-Founder of Pixar \ ## Blockchain games… GameFi and Play-to-Earn *(Disclosures: I am an investor and stakeholder in some of the protocols or companies mentioned here.)* \n * ![](https://cdn.hackernoon.com/images/vhfPFLJQfAMvEOtbrxCh5wj0Z1W2-2022-08-25T08:29:29.102Z-cl78saglq000t0bs68dkzgkly) Now that we’ve addressed some common misconceptions, we can look at the important steps we need to take to make the Metaverse Open, a vision shared by many of the key individuals aiming to reach consensus on what the metaverse is. \ While the internet is not exactly closed, areas of it are siloed by certain rules that authentication is built on. When we look at how to make it more open, accessibility is important, but so is ownership. In Web2, you sacrifice ownership of your data in return for free access, which obviously has grave implications. You have to log in with different credentials each time, and the more applications and websites you engage with, the more logins you have to use. This is a problem that “connect with wallet” can aim to solve, and while there is no denying that wallets aren’t super user-friendly, there are steps being taken to improve that. \ If we think about the metaverse as a collection of spaces that are connected and eventually seamless, we won’t be logging in with a different username and password each time. \ > *“There is no global currency except crypto. There is no global infrastructure except blockchain infrastructure. So without a global infrastructure and without a global currency, you don’t have a metaverse. You have a splinterverse.”* — Nicolas Pouard (Ubisoft) \ **Player Owned Assets (Through NFT):** As I talked about in my opening statement, I ‘grew up’ online. I have played countless games over the last 3 decades, and I’ve spent more time and money on them than I’d care to talk about. This is why the concept of player-owned assets really clicked with me when I first learned about NFTs back in 2018. All the items, all the skins and experiences I’d accumulated over the years across the games I’d played, had all been lost the moment I decided to stop playing them; or even worse, when the creators decided to stop working on the game. Perhaps the latter of the two is worse because player control is taken away. Many of the items we compete for in games are digital trophies, and to be able to carry them between games, websites, webspaces and 3D environments is something everyone would benefit from. \ For those who remain confused about what an NFT is or how it works in-game format, consider it a token or ticket to which you can attach data (pictures, video, audio) and which is typically visual, held by you in your own wallet. When you connect to a web2 game server, you log in with a username and password; but when you log in with a web3 wallet like metamask, it holds all your tokens, which have all the data on them. It tells the game what you own, rather than the other way round. This liberates players and creates intriguing opportunities for game developers who want to create value atop of existing assets. \*\* \n > *“Without blockchain there is no metaverse.”* — Nicolas Pouard \ ## What this enables is a decoupling of a game economy from the game itself. \ Good examples of this in practice are blockchain-based games which turn NFTs into playable characters in their worlds such as Digination with CryptoPunks, and the same in Galaxy Fight Club, where you can play as your NFTs. \n ![](https://cdn.hackernoon.com/images/vhfPFLJQfAMvEOtbrxCh5wj0Z1W2-2022-08-25T08:29:29.103Z-cl78sagls000u0bs6a46v9bbb) This means that anyone with these NFTs can connect to the game server and already have a game “skin”. It’s a great way to attract new players but also creates more value for existing NFT collections. \n Gamers are sadly still fighting this opportunity in many cases, thinking it is a further attempt at monetization of their favorite games, but really it’s about utilizing the technology to give them true ownership of all the assets (often skins) they are buying and locking in their future value. \ It was [recently revealed](https://(https://www.forbes.com/sites/paultassi/2021/05/11/epic-reveals-it-made-50-million-from-one-set-of-fortnite-skins/)) that Epic made $50 million from just one skin sale - and that skin will likely only ever exist in the Fortnite universe, and will only be useable when you’re logged into your Epic account. \ While I am not naive enough to think this is going to be an overnight phenomenon, it is an exciting one that is already working for blockchain-based games. The trick will be attracting traditional gaming businesses who will likely have to rethink many of their business models and hopefully cooperate with other ventures to build new systems that are more interoperable. \ > “The metaverse is the internet built by game developers…it’s not any *one* specific experience or world” *—* Ryan Gill, CEO of __[Crucible](https://crucible.network/about-2/)__ \ ## Play. Earn. \ A perhaps controversial take of mine is that play-to-earn in many cases creates environments that resemble digital sweatshops, where the majority of users are farming clicks for pennies. \ Philip La from the *Axie Infinity* team [recently published](https://philonaxie.substack.com/p/axie-infinity-what-media-misses) a very important piece on play-to-earn, and something notable he highlighted was the move from play-to-earn to play-*and*-earn. Axie is perhaps the most iconic P2E game because of the socioeconomic impact it had in Southeast Asia. \ While I think there should be opportunities to earn in the metaverse while playing, I do not believe it should be expected in every interface. I don’t want to talk too much about P2E in this piece, as I do not feel it yet has the significance specifically to the metaverse many of the other concepts do, despite having remarkably interesting and impactful potential. \ When I talk about guilds I think more of *Runescape* clans or *WoW* guilds than I do hierarchical discord servers with NFT treasuries and trickle-down economics. I believe that in open-world, socially-driven games, we can turn governance tokens into player votes and revitalize the DAO experience by gamifying it, and this is something we expect to see as more graphically advanced web3 games are released. We may even see some games adopt existing governance tokens in return for investment or support from certain guilds or DAOs. There are really interesting complications and opportunities here. \ I think it’s also important for me to state that I don’t believe Axie should be referred to as a “metaverse game”, despite our industry's excessive profiling to make it so. I believe that the Axie Universe is part of the metaverse, and I expect them to continue to build upon their IP to become more prominent, which we already see with __ __. As mentioned above, these assets (axies) are player-owned and therefore encourage value creation atop of them, driving ecosystem growth through Immersive World IP. \ Matthew Ball, the author of “The Metaverse”, often talks about the future of media as more focused on immersive fantasy worlds. He cites the fact that *Lord of the Rings* does not compete as a book, but rather as a franchise, with inter-category IP. I expect similar movements from Axie to turn their game into more of an immersive universe, which becomes accessible across a number of platforms and mediums rather than just the game experience they currently offer. \ **You will absolutely see more of the Axie Universe due to the composability of the assets that make up the game and the popularity of the IP.** \ **Decentralized Identity:** As briefly touched on above, and beautifully demonstrated in Jack Butcher’s visual; Web3 opens the possibilities of single sign-on in a new way. While companies like Epic Games are using single sign-on (for all their game library) self-sovereign, decentralized identity presents new opportunities for us as we move around the new internet; one where we control our identity credentials in our web3 wallet. \n Right now most applications, websites, etc. require identity credentials such as an email and password, but there is a future wherein we hold our identity credentials in our web wallet, so that when we access a web3 application it immediately knows who we are, since we have already signed into the wallet when we opened the internet. \ This is a very important consideration when looking at an open internet built by game developers. Data sovereignty is important, and the internet right now does not support it at all; in fact, it feeds into data as a commodity to farm and sells to big corporations. \ As you can tell, there are a lot of moving parts involved - and while not all of them are moving in harmony right now, we are certainly on a parabolic trend of really cool experiments combining a number of the subjects outlined in this writing. \ > *The metaverse will be “people-centric; relationship centric; interaction-centric. The rest is noise” —* Lincoln Wallen, CTO of __[Improbable.io](https://twitter.com/Improbableio)__ \ ## Direct to Avatar and Redeemables When we look at identity, we can’t overlook avatars. \n ![(from ReadyPlayerMe) ](https://cdn.hackernoon.com/images/vhfPFLJQfAMvEOtbrxCh5wj0Z1W2-2022-08-25T08:29:29.104Z-cl78sagls000v0bs65ut44bpw) \ The ‘Direct To Avatar’ economy is set to explode as more webspaces become popular hangouts, and AR and VR technology continues through the seismic shift it’s currently experiencing. While we are all familiar with the concept of avatars, it’s worth noting some significant moves made by retailers and fashion giants in the last year that foreshadow the next few years of fashion… however concerning they may be to some of you. \ Gucci recently made strides into “digibles” with its investment into Superrare DAO, and a collection called Gucci Superplastic - merging digital art and physical art. We also saw intent from Dolce & Gabbana on UNXD, with ultra-niche and ultra-rare collectible high fashion pieces that are redeemable for physical items. Most recently, D&G sold Family Boxes, with the boxes enabling access to rare redeemable for holders, as well as private invite-only events at unique locations. \n ![](https://cdn.hackernoon.com/images/vhfPFLJQfAMvEOtbrxCh5wj0Z1W2-2022-08-25T08:29:29.121Z-cl78sagm900100bs6f87v2xex) This is particularly exciting for brand engagement and the concept of the “superfan,” which we will continue to see NFT play a major role in over the coming years; as we start to view NFTs more like tickets with ever-growing datasets that can be developed over time, like loyalty cards. \ Sometimes it’s difficult to adjust your perspective to understand target audiences on the new internet. At first I was sceptical of places like Gucci Town on Roblox, or Tommy Hilfiger livestreaming their NYC fashion show into the game; but after speaking to my 11-year-old sister who regularly asks for Robux at Christmas, you quickly begin to appreciate that the demographic is changing rapidly and also serves as a good way to onboard younger people into high fashion. \ On top of this, the world-building environments and game creation tools presented by Roblox mean that the next generation of world builders are not only getting younger, but they are already working and in many cases highly profitable. \ It cannot be overstated how important this young demographic is when looking at the future of the internet and ecommerce. \n Just last year a limited edition Gucci bag sold in Roblox for 350,000 Robux, the equivalent of $4,115 - actually more than the bag was sold for in the real world. \ ![](https://cdn.hackernoon.com/images/vhfPFLJQfAMvEOtbrxCh5wj0Z1W2-2022-08-25T08:29:29.114Z-cl78sagm2000z0bs64xn5235i) It doesn’t stop at Gucci handbags in Roblox though; just recently we have had news of a major jeweller and watchmaker entering the metaverse through exciting collections. \ Luxury watchmaker Jacob & Co have recently partnered with UNXD to launch the “Astronomia Metaverso collection” which “features 8 unique watches turned into NFTs. Drawn from the metaverse, each NFT returns with a special set of powers. Each watch is represented by a digital NFT artwork inspired by a metaversal version of planets from our solar system.” \ This collection features 4 redeemable watches from the planets closest to Earth, and the further planets are digital-only collections. \ Just as interesting was the recent announcement from Tiffany & Co that they would launch a collection of 250 limited CryptoPunk-themed necklaces made by the brand, redeemable by holders. \ ![](https://cdn.hackernoon.com/images/vhfPFLJQfAMvEOtbrxCh5wj0Z1W2-2022-08-25T08:29:29.113Z-cl78sagm1000y0bs63yzeb0x4) \ These pendants are priced at 30eth each, approximately $50,000 at the time of writing. While this announcement aroused mixed feedback, it’s absolutely indicative of the direction the brand is moving; and I expect they’ll have no problem selling out the collection for a total of approximately $12,500,000 - as they have identified their audience well. ## It’s All Going In The Right Direction. \ In the next 3-5 years, your mobile phone is on the precipice of being turned into a portal to custom worlds. Turning your current environment into a totally different, interactive landscape. You can digitally explore the town or city you live in, and be rewarded for playing, all while helping to advance the technology just by taking part. The AR market was valued just over $5bn in 2020, and is expected to reach $225bn by 2026. \ In parallel, VR headsets will continue to grow in popularity based on accessibility and price point decline. In 2014, when Facebook bought Oculus, they were too early. Eight years on, we are starting to see monumental DAU increase consistently, closing in on 200 million worldwide users, and with an estimated 70 million units to be shipped by the end of this year alone, we have seen a 16x increase in demand for hardware since 2018. \n What Pokemon Go did for AR, Zenith MMO, SuperHot and others are now arguably doing for VR - and we are here for it (as users). \ ![](https://cdn.hackernoon.com/images/vhfPFLJQfAMvEOtbrxCh5wj0Z1W2-2022-08-25T08:29:29.113Z-cl78sagm1000x0bs6g5effmj5) \ With the emergence of highly engaging VR games, we will start to see a wider acceptance of VR again after a rough start. \ On the software side, amazing tools continue to improve and become more accessible. An army of young world builders are being trained on Roblox and Minecraft, some of whom have been hosting servers and building games already since they could walk and talk - because it’s not just about gaming anymore, it’s about *world-building.* \ This concept is set to massively disrupt many industries including engineering, logistics and real estate, as it allows creative customization and experimentation with little to no risk. \ More users, more data, more direction, more ideas, more funding. \ There are many challenges presented to us in building a better internet, but the fundamental tools are there for us to make it fun… Now we just need the right teams to combine them and experiment. \ **So while it’s not crystal clear yet what the metaverse is, there is obviously an amazing convergence going on with these technologies - and we all have a part to play in making sure they are built the right way.** \ Do you get it yet, anon? \ Don’t worry if not. I’ll be talking about all this for many years to come, and pretty soon I’ll announce my new company - until then, find me on twitter @chatwithcharles. \n ![](https://cdn.hackernoon.com/images/vhfPFLJQfAMvEOtbrxCh5wj0Z1W2-2022-08-25T08:29:29.112Z-cl78sagm0000w0bs674i6g6gl) \ *I’d like to give special thanks to the following people for their insights and opinions that helped me form mine.* \ * *Rare Hydra* * *Kevin Kelly* * *Piers Kicks* * *Ryan Gill* * *Nicolas Pouard* * *Marc Petit* * *Lincoln Wallen* \ *and a special thanks to Matthew Ball, for leading the charge on defining the future. [Check out Matthews Book](https://www.amazon.com/Metaverse-How-Will-Revolutionize-Everything/dp/1324092033)* \ ***If you have a cool idea or are looking for funding, please reach out to us on the website contact form over at Rarestone.Capital*** \

Defining The Metaverse with Charles Read: The New Internet Experience Built By Gamers

Too Long; Didn't Read

People Mentioned

Companies Mentioned

Coins Mentioned

@btcread

RELATED STORIES