Metaverse: Better understand its gigantic potential

In a report on the metaverse industry, Coinshare provides insights into how the metaverse could change society through revolutionary blockchain technology.

Like many web3 concepts, the definitions and interpretations of some language elements may still remain unclear. The metaverse is one of those terms. It can mean many things. And users don’t always agree on the exact definition.

First of all, if we analyze the etymology of the word, metaverse is the contraction of halfwhich comes from the Greek and means “after, beyond”, e pour for the universe in English. We understand that this term therefore means beyond the universes, something broader. It is in Neal Stephenson’s “The virtual samurai” that we find this concept of metaverse for the first time, in 1992, long before the creation of Bitcoin.

To give a general definition, the report tells us: Overall, we believe it is right to strive for interoperable, user-owned, 3D virtual worlds based on the existing internet. To avoid confusion, the Metaverse is neither a game, nor an application, nor a shop. It’s not even just virtual reality. Nor is it a single world or digital space. It won’t replace the internet and (probably) won’t consume our lives entirely.

This vagueness around the notion of metaverse will therefore influence investors ‘and users’ perception of its possible uses and how it works.

More and more investors but with different visions

The figures relayed by Coinshare are particularly impressive, the number of companies in the metaverse sector has increased by 20%, according to the compound annual growth rate (CAGR) since 2001 and has registered a rate of 293% per year in 2021 due to of its explosion in popularity. ” This is likely due to the enthusiasm for the opportunities and value the metaverse could create. This has led to larger funding cycles, an increase in the number of funds and the notional value of capital employed. There are more than 455 companies in the metaverse in 2021, just 50 in 2018. Mark Zuckerberg goes so far as to designate the metaverse as the opportunity of the century.

Regional Crunchbase for Metaverse fundraising
Source: Crunchbase, CoinShares, data available as of May 17, 2022 close.

But this investment knows strong territorial differences. According to Coinshare, more than half of the companies in the metaverse sector are located in North America, followed by 31% in Asia-Pacific, far behind we find the European Union with 14%, then 3% in the Gulf, despite the hard work from Dubai intending to change its place in the Web3, and 2% in South America, the African continent is currently off the radar.

Coinshare reiterates that this situation is particularly alarming and contrary to the mentality of web3, ” Global initiatives should rebalance the development of the metaverse to avoid a landscape dominated by big technology. This could help mitigate Web2-like features, especially data mining and privacy issues. “

This geographic inequality is not the only problem surrounding the expansion of metaverses.

Many problems for users and regulators

The first major obstacle to the development of the metaverse is the lack of cutting-edge technologies to take full advantage of these digital worlds. The metaverse will not be fully experienced on a screen, for this it is necessary to be equipped with helmets for virtual reality (VR), glasses for augmented reality (AR) and handheld devices for extended reality (XR). All these tools are the future of the metaverse. But for now they don’t offer an intuitive and engaging enough experience for many to adopt.

Furthermore, developments around the metaverse remain highly dependent on the cryptocurrency market. A big problem when you know the volatility of this market and the possible collapses it could suffer. This therefore affects the growth and sustainability of the development of metaverse projects.

The main concern of the US metaverse
Source: Morning Consult, CoinShares, data available as of May 18, 2022.
Disclaimer: Survey conducted from 3 to 5 March 2022 with a sample
from a representative sample of 4,420 American adults.
unweighted margin of error of +/- 1 percentage point. Due to rounding, the sum may not be possible
100% for rounding.

At the heart of the metaverse is the possession of NFT. This market is also evolving and it is still difficult to know what will become of the real value of these digital assets.

While user ownership is an important feature, digital ownership does not guarantee monetary value. Using blockchain technology, a fixed number of NFTs representing a virtual earth could be created. It’s almost similar in the real world, where you can always increase the total physical land supply. But with a lot of difficulties and money. See man-made lands like the Palm Islands in Dubai. Scarcity does not always determine the value of an asset. It is the question that does it. A fixed number of NFTs representing a virtual land could be created using blockchain technology. Rarity has value only in desirable places: location, location, location.

For regulators and users, the big challenge remains data security and management. Because, before arriving at a fully decentralized universe, the metaverse goes through many phases in which web2 and centralization remain ubiquitous. Furthermore, hacks and bugs remain a danger in web3, with the example of the 600 million stolen with the Ronin Chain.

We are therefore at the beginning of the true metaverse. Like when you want to define a new world, a new concept, many questions arise. Despite the difficulties and obstacles that await us, the metaverse is attracting more and more people. Thousands of stakeholders remain convinced that this new digital world with almost infinite possibilities is transforming our daily lives. Be it in the way we consume, work, live or interact. The metaverse will be everywhere, so you might as well understand and master it as soon as possible.

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Alessio Patin

Observer of the monetary, economic and social revolution.

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