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What is the Metaverse?

2023.08.22 MEXC

1. What is the Metaverse?

In 1992, American science fiction author Neal Stephenson first introduced the term "Metaverse" in his novel "Snow Crash." This work depicted a vision in which people live in a virtual three-dimensional space through digital avatars. In this virtual world called the "Metaverse," there exists a fully functioning economy, data, content, intellectual property (IP), and more.

The Metaverse is a virtual space parallel to the real world but independent from it. It is an online virtual world that mirrors the real world and is becoming increasingly realistic in the digital realm.

"The First Metaverse Stock" — Roblox defines eight attributes that the Metaverse should possess based on the characteristics of its platform: Identity, Friend, Immersive, Low Friction, Variety, Anywhere, Economy, and Civility.

Essentially, the Metaverse is about utilizing new technologies such as blockchain, cloud computing, AI, and the Internet of Things (IoT) to create a massively scalable and interactive 3D virtual environment. Users can experience continuous and synchronous interactions with other real users within this environment. Each user possesses an independent 3D representation, encompassing identity, history, ownership, objects, communication, transactions, and more. This forms a comprehensive human society and will give rise to a self-contained economic ecosystem.

2. Features of the Metaverse

Immersive Experience: Users experience the pervasive immersion of the Metaverse through technologies like AR (Augmented Reality), VR (Virtual Reality), and MR (Mixed Reality). Within the Metaverse world, they engage in a wide range of real-life online and offline activities such as gaming, socializing, and working, all enhanced by immersive experiences.

Persistence: This refers to storing data in storage devices that are capable of long-term retention.

Decentralization: An analogy for this feature can be drawn from payment systems. For instance, when making a transfer, the conventional methods involve using bank cards or payment services like PayPal, which both require a centralized entity to facilitate the transfer. However, with decentralization, the key difference is the absence of a central entity, as all interactions occur directly between the involved parties, without the need for a central intermediary.

Online 3D Virtual Environment: The world of the Metaverse is essentially a reflection of the real world, and the virtual environment is a digitized representation of the real world.

3. Foundations of Metaverse Technology

Blockchain Technology: Blockchain technology ensures the integrity of the value transmission system, achieving stability, efficiency, transparency, and certainty in the operation of the economic system. It guarantees that the assets we hold within the Metaverse remain under our ownership in the real world.

Sensory Simulation Technology: The continuous iteration and advancement Augmented Reality (AR), Virtual Reality (VR), Mixed Reality (MR), Virtual Taste (VT), and Extended Reality (XR) technologies deepen sensory perception and interaction.

Artificial Intelligence (AI): The Metaverse involves processing vast amounts of information, such as data privacy protection, network security maintenance, security vulnerability checks, and more. Assigning these tasks to AI will enhance efficiency and ensure the smooth operation of the Metaverse.

Cloud Computing: The Metaverse requires significant storage costs and computational power, encompassing real-time network transmission, GPU servers, edge computing, spatial positioning algorithms, and more. Cloud computing is essential for providing users with a seamless and smooth gaming experience.

Video Game Technology: This encompasses game engines that support the program code and resources (graphics, sounds, and animations) required for games.

4. Capital Influx

2021 is often referred to as the "Year of the Metaverse." The popularity of the Metaverse concept was closely tied to the influx of capital, resulting in the birth of numerous Metaverse projects.

On March 9, 2021, the U.S. VR social gaming platform Rec Room achieved a valuation of $100 million.

On March 10, 2021, Roblox went public on the New York Stock Exchange, becoming the first Metaverse stock to do so, with a market value surpassing $40 billion.

On April 13, 2021, Epic Games secured $1 billion in financing for building the Metaverse.

On August 29, 2021, ByteDance acquired VR startup Pico for 900 million RMB, positioning itself to enter the hardware sector.

On October 29, 2021, Facebook rebranded as Meta, and Mark Zuckerberg announced a $15 billion investment to support Metaverse content creation.

On November 2, 2021, Microsoft introduced two products, Dynamics 365 Connected Spaces and Meth for Teams, to develop the Metaverse.

On November 9, 2021, NVIDIA announced a product roadmap upgrade to a "GPU+CPU+DPU" three-core strategy, positioning the Omniverse platform as an engineer's Metaverse.

On November 10, 2021, Unity acquired visual effects company Weta Digital for $1.6 billion, expanding its presence in the Metaverse.

On December 9, 2021, Meta's VR social platform, Horizon Worlds, became accessible to individuals aged 18 and above in the United States and Canada.

5. Metaverse Application Scenarios

Creating a complete virtual world that is scalable and interactive in the Metaverse requires encompassing various domains such as economy, social interactions, retail, entertainment, advertising, culture, travel, and health.

5.1 Economy

DeFi, or Decentralized Finance, a financial system built on blockchain technology, experienced explosive growth in the summer of 2020. It has made significant progress across various applications, continuing to generate substantial interest. Its applications span decentralized lending, decentralized exchanges, payments, and other areas.

5.2 Entertainment

NFTs, or Non-Fungible Tokens, are unique and indivisible digital tokens that are poised to become a foundational element of the Metaverse. Currently, NFTs find applications in various fields including gaming, art, collectibles, digital music, virtual assets, identity features, and digital certificates, among others. Series of NFT works such as Cryptopunks and Bored Ape Yacht Club (BAYC) have gained widespread popularity and recognition. GameFi, a business model at the intersection of gaming, DeFi, and NFTs, has garnered significant attention due to the success of blockchain game Axie Infinity's "play to earn" (P2E) concept. Axie's daily revenue has surpassed the average daily revenue of popular games like Honor of Kings multiple times, drawing significant interest. GameFi serves as a window for people to understand the Metaverse, and with the advancement of blockchain-based gaming, public awareness of the Metaverse continues to grow.

5.3 Gaming

One of the most popular Metaverse gaming genres today is the Sandbox game. The Sandbox game can be likened to a blockchain-based version of the game "Minecraft." In this game, players enjoy full autonomy over the game's content, and each player can participate in creating and contributing high-quality content. Additionally, players can use Sand as the in-game token for transactions. Tradable in-game assets include game lands and game materials.

5.4 Others

Another example of a Metaverse application scenario is digital real estate (MANA). Numerous platforms within the Metaverse provide opportunities for digital real estate, such as Decentraland, a VR-based Metaverse digital real estate project. Similarly, users can create, experience, and develop platform content within the Decentraland world to generate earnings. Esteemed artists and designers have embraced such projects, creating high-quality art. Decentraland provides these artists with a showcase platform and offers players a wealth of premium content.

6. Conclusion

The Metaverse, with its strong social nature, immersive experiences, and robust virtual identity recognition, has attracted the attention of global tech giants, leading them to enter the field. It has become the next focal spot of competition for investment institutions and industry leaders. However, the Metaverse is currently an evolving and developing concept, still in its early stages of development. It faces challenges such as fragmentation of applications, poor connectivity and interaction experiences across different sectors, and low sustained user engagement. Hence, building a complete virtual world remains a formidable task.

This presents both opportunities and challenges. While the maturity of Metaverse technology and the establishment of regulatory consensus require considerable time and practical development, and the foundational infrastructure is not yet fully refined, the popularity and exposure of the Metaverse have led people to recognize its development potential. For tech giants and investors, this is not only a promising developmental opportunity but also a chance to seize.

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