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What is the Metaverse and how does it work?

March 22, 2023

10 min

What is the Metaverse and how does it work?

The Metaverse is considered the next Internet by most, a technology poised to revolutionise our lives, not just online. A precise definition with a clear meaning, however, is difficult to formulate. Let’s help ourselves with a few examples, so that we can try to really understand what the Metaverse is, how it works and what it is used for.

When was the Metaverse born? Origin and history

Film and literature have been trying to give a precise definition of what the Metaverse is for decades, although the concept has been popular for a relatively short time. The idea of a completely digital universe, in fact, was suggested as early as 1982: William Gibson called it ‘cyberspace‘ in his book Neuromancer, although Philip K. Dick wrote about ‘building one’s own virtual world‘ as early as 1953 in The Trouble with Bubbles.

The first mention of the Metaverse, however, appears in the work of Neal Stephenson, who coined the term in Snow Crash (1992): a dystopian novel in which the virtual world offers refuge from a reality in economic and social collapse, without national governments and controlled by the mafia. From this ‘sci-fi’ tradition, the films on the subject were born, which contributed to its ‘operational’ definition: they explain neither what the Metaverse is nor how it works, but propose what one could do and be in the virtual world. In this respect, the Matrix was one of the first examples of the cinematic Metaverse, followed by Spielberg’s recent ‘Ready Player One’.

Narrative has no constraints other than imagination, but in order to truly build the Metaverse, we must confront technological limitations. The first virtual worlds, therefore, were fantasy video games based on the exchange of simple text messages (Multi-User Dungeons) in the 1970s. These ‘proto-metaverses’ became increasingly complex, to the point of creating three-dimensional environments, populated by avatars: this is the case with The Sims, or Second Life in the early 2000s.

These examples of the ‘modern’ Metaverse materialise the idea of a ‘virtual society’, characterised by aggregation, collaboration and exchange of value. The Linden Dollar, the currency of Second Life, has in fact allowed various businesses (such as Adidas and the BBC) to enter the virtual world and raise capital by selling products and services.

The baton then passed to the gaming platforms we all know, such as Minecraft, Roblox and Fortnite, also based on blockchain, such as The Sandbox and Decentraland. Therefore, today, if we ask ourselves what the Metaverse is for, it seems natural to consider it a gaming or entertainment experience, but the concept could be applied to other aspects of our lives. So let us try to give an overall definition of the Metaverse, so that we finally understand what it is and how it works.

What is the Metaverse: definition and meaning

“Explaining the Metaverse is difficult, because at the moment we only have ideas and prototypes. Each company describes it in a way that corresponds to their own projects, but what is it in general? Journalist and author Matthew Ball has provided the most accurate answer at the moment, laying down a few points in his definition of the Metaverse:

“A massively scaled and interoperable network of real time rendered 3D virtual worlds that 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”

These elements are the ‘building blocks’ for constructing the Metaverse, but its meaning will always be evolving: today’s technology is not yet up to the potential suggested, in fact explaining what the Metaverse is and what it is for today creates scepticism. Criticism, however, is useful if it asks the right questions and creates debate: in Ball’s words, “confusion is a necessary feature of disruption“; in our words, uncertainty is functional to innovation.

How does the Metaverse work?

Let’s consider the individual components of Ball’s definition, so as to understand at least theoretically how the Metaverse works, or how it should. First, following the etymology of the term, the prefix ‘meta’ comes from the Greek and means ‘beyond, transcending’, while ‘verse’ stands for universe. In practice, the meaning of the term would be ‘universe of universes‘: it is the collection of all virtual worlds, just as the Internet brings together all websites into a single network. In particular, the Metaverse should be unique and scalable, i.e. capable of hosting a potentially infinite number of virtual worlds, i.e. computer-generated simulated environments. Moreover, these individual digital realities should be interoperable, i.e. share the same language, rules and technical standards.

To date, however, a certain ‘fragmentation‘ can be observed: there is no single Metaverse, but several closed and incompatible ecosystems. Different companies have created their own, hoping to gain economic advantage. However, the history of Internet domains teaches us that it is collaboration and open-source that creates value online. For instance, common rules should be defined for 3D objects, so that they can be transferred from one virtual world to another.

In fact, the three-dimensional form will be key for the Metaverse: it is the way we experience the world, so it is fundamental to achieving a sense of reality. However, not everything will be 3D and the use of VR visors (Virtual Reality) or AR (Augmented Reality) won’t be necessary forever. These tools give better immersiveness, but the virtual world will also be accessible from a simple screen.

To understand what the Metaverse is and how it works on a technical level, we must then consider these 3 properties.

  • Persistence: the virtual world should not ‘reset’, our actions must be recorded and the results preserved over time. Each user leaves a trace, so that they can have a digital identity, formed by the memory of their achievements; 
  • Real-time rendering: environments should be generated ‘live’, so as to respond to user input. The possibility of free interaction would make the metaverse truly ‘live’;
  • Synchrony: there is only one valid version of the metaverse, achieved by co-ordinating the devices of all participants, it is a simultaneous and continuous experience. 

These operations must therefore be ‘multiplied’ by an unlimited number of participants, because the Metaverse is social and shared. The best Graphic Processing Units (GPU) and Central Processing Units (CPU) currently on the market, however, are not capable of performing the immense amount of calculations required by the Metaverse. 

What the Metaverse is for, pros and cons

Among the 5 things you can do in the metaverse, gaming is the dominant application, but we also find concerts, meetings at work and Fashion Weeks. In the metaverse we also find digital twins of real cities, to programme their optimal functioning, so as to create smart cities

Versatility is certainly a pro, but on the other hand some use it as a clever marketing move. In a nutshell, companies would exploit its flexibility to join the trend by simply presenting their products and services with new narratives.

So what is the metaverse for and how many people actually use it? The most common criticism is that the two main crypto metaverses, The Sandbox and Decentraland, are ‘empty‘. Although this may be a con, the low estimates of daily users may vary over time. Furthermore, many activities related to The Sandbox and Decentraland do not actually take place in the metaverse. For instance, SAND and MANA tokens allow users to take part in the governance of the metaverse by voting on important decisions in dedicated forums. Similarly, in marketplaces such as Opensea, players can exchange items, avatars and land because they are stored in the form of NFTs in their wallets.

So, if these virtual worlds seem ‘deserted’, it is also because much is happening elsewhere: power distribution and ownership are the real pros of the crypto metaverse. The virtual world of Facebook, on the other hand, will control the data of its users who, in short, will not really be masters of their digital identity.

The decentralisation, however, could be both a pro and a con of the metaverse: despite the mentioned advantages of blockchain and cryptocurrencies, it seems impossible at the moment to do without a very powerful central server capable of performing the complex calculations needed to sustain a metaverse. In fact, the need for sophisticated and expensive hardware might prevent some users from entering the metaverse, constituting a cons, unless cloud-based solutions are developed.

Some other examples of the Metaverse

The definition of the Metaverse does not present blockchain as an essential technology, yet a large part of the virtual worlds are also ‘crypto’. Besides the aforementioned The Sandbox and Decentraland, we have Axie Infinity, populated by Pokémon-like monsters, and Otherside for the Bored Apes, the famous NFT monkeys. These are the main ones, but we have other examples of crypto Metaverses: Shibarium (Shiba Inu), Pavia (Cardano), Somnium Space, Voxels, up to the portal MultiversX, but the list is still long.

The plans of Facebook (Meta) for Horizon show that the traditional Tech industry is also engaged in the development of the concept; Zuckerberg’s solution, in particular, is expected to have primarily recreational and aggregation functions. Nvidia, a leading GPU manufacturer, provides another example of the Metaverse: the Omniverse, a platform for simulating large-scale virtual worlds, supported by artificial intelligence in the design of 3D elements.  Microsoft, on the other hand, is thinking of a useful tool in the working world, moving Teams meetings into the virtual world: the Mesh integration will give the possibility to participate as avatars in meetings.

Now that we know what the Metaverse is and how it works, it is possible to anticipate two alternative futures: either one of these solutions will win out over the others, or they will be made compatible, creating a single network of virtual worlds. In this respect, crypto metaverses have an advantage: token standards and bridges already make them interoperable. In any case, who will triumph in the battle for the Metaverse will determine its true form.