Businesses across industries will be pouring billions into the next evolution of the internet – the metaverse
Beware the ‘boomerverse’.
That’s Centrality chief executive and co-founder of Non Fungible Labs Aaron McDonald’s message for 2022 as corporations throw billions at ‘the metaverse’ to see what sticks.
The ‘boomerverse’ is what the internet has called Facebook’s rebranding to Meta, the social media platform associated with use by the Baby Boomer generation.
But there is no doubt since Facebook’s rebranding that the concept of the metaverse has come into the mainstream.
Google trends show searches for the term metaverse spiked following the social network giant’s October announcement.
McDonald says the notion of the metaverse being “a thing” is flawed. It’s more a state of evolution of the digital economy, with no launch date.
He says the metaverse already exists, but is in its infancy and next year more people will try and educate themselves about it.
“It’s just an evolution of what’s been happening over the last 20 years of the internet.”
So what exactly is the metaverse?
Put simply, the metaverse is a virtual world where people can do a whole range of things, create, share and monetise content with other people from all over the world.
McDonald works with companies that build virtual worlds and avatars for people to buy to own as non-fungible tokens they can then use to innovate.
And Kiwis are innovating in this space.
Kiwi-founded Non-Fungible Labs created Fluf World – 10,000 unique 3D digital artwork bunnies based on one of the project leaders’ pets – in early 2021 and has since taken the world by storm.
The ‘Flufs’ are stored as tokens on the Ethereum blockchain.
The original non-fungible tokens (NFT) sold for about $4 million to users around the world.
“We feel like that was fair compensation for the work we put into creating this awesome set of characters and all the technology behind them. But what happens to it after we sold is up to the owners. They’re monetising it themselves.”
A smart contract programmed in the platform allows the Kiwi entrepreneurs to make a 5 percent cut on every transaction.
Users have generated more than $100m worth of trading activity from buying and selling the NFTs.
“The metaverse brings content portability so you’re not trapped in anyone’s walled garden anymore.”
– Aaron McDonald
Its second avatar collection in December sold for $5 million in about 12 minutes.
Each Fluf owner has full commercial control over their rabbit. In the future, owners of Flufs will be able to breed, distribute their newest music and content to their fans, or even play in games on the platform.
McDonald says the two key components of how the metaverse differs from how the internet has operated so far is that the metaverse allows for individual ownership of content and assets and it also merges different sectors on one platform.
“We used to have distinctive silos for things like finance and gaming, social and media. And now with this digital evolution those things are collapsing into one.
“The metaverse brings content portability so you’re not trapped in anyone’s walled garden anymore.”
He makes one thing clear, Facebook’s Meta rebrand isn’t really the metaverse.
“It doesn’t pass that first test which is about individual content ownership. They’re just putting virtual reality on their app.
“[Facebook] is latching on to the idea but they’re doing it in a way that a trillion dollar behemoth, who’s run by a cis white male would do it, you know, ‘This is my metaverse’. But you can’t have your metaverse because the metaverse is explicitly about interoperability and portability.”
He says corporations have taken notice of where culture, technology and attention are going.
“I think we’ll see a bifurcation of companies who really get it and are prepared to take steps to be authentic in the space and connect with communities and the ‘corpoverse’, which is kind of the inauthentic ‘slap the metaverse on what we already do’ method.”
McDonald believes New Zealand is positioned well to succeed in the metaverse space.
“Our years of excellence in the film and media, production capability and special effects and all of that stuff means that we’ve got amazing talent, not necessarily through selling their labour but by being creative and innovating in these viable micro communities.”
He says the metaverse is already changing the music industry creating “micro stars” and artificial intelligence pop stars.
Gaming platform Fortnite has already streamed concerts by the world’s biggest musicians, similarly artists could perform shows from their home to users in the metaverse platform around the world.
“That’ll be another trend, we’ll start to see kind of the emergence of micro stars, as opposed to the world having attention focused on a few very, very successful people. We can kind of create a much more vibrant and rich, creative community because they can exist at smaller scales now and still be viable,” McDonald says.
Bell Gully special counsel Campbell Pentney is an expert on tax law and blockchain law and says the ability to create and monetise in the metaverse brings the potential for “real life tax” to be imposed for virtual transactions. He says NFTs are already considered a form of property.
“What that means is that the extent to which you are trading NFTs can have a legal and tax effect, because you are effectively becoming a person who deals in these assets. The potential for a sort of real life tax could apply to your transactions within what might seem a video game.”
Pentney says in 2022 he expects to see more big companies and brands announce their ambitions for the Metaverse.
“I suspect it will certainly be the various large players piloting virtual worlds.
“I’m personally looking forward to scalable options in the NFT space because a large amount takes place on Ethereum, which is a very, very expensive blockchain to use. It’ll be interesting to see how the market reacts to trying to find alternative ways to make these large-scale blockchain work.”
He explains the metaverse’s end game as “a sort of Ready Player One type environment”, the 2018 Hollywood film directed by Steven Spielberg in which the virtual world is indistinguishable from reality.
“That is kind of an ultimate end game and whether it’s multiple universes or one sort of interlinking metaverse, I don’t know what the answer is there.”
And people are already spending real money in these virtual worlds, from outfits for their avatars to real estate.
Games like Second Life, Decentraland and Fen are virtual worlds that have specific multiplayer worlds, and within those worlds players have the ability to buy real estate.
A company called Bloktopia is a virtual reality skyscraper that is leasing out floors as NFTs to build and advertise on.
“It gives you the right to have conventions or conferences. It’s virtual real estate that gives you ownership rights that you might have with real land in a virtual world.”
But Pentney warns there is a degree of speculation buying virtual real estate as people are banking on the metaverse’s popularity to grow. And on the internet there are certain trends that don’t always persist for that long.”
Ultimately, McDonald says the metaverse is another attempt at democratising the internet.
“I’ve been on this journey for like 20 years now. I was involved in taking technology in the telecommunications sector, when dial-up was still a thing.
“I could see where it was supposed to be, and then where we’ve ended up is kind of like a shade of that. It’s brought a lot of good, but also created some very, very powerful entities, at the expense of humanity in some cases. And now we have a chance to reset that, and give the power back to communities.”
McDonald says people have two choices in front of them.
They can spend their time and attention on an asset locked inside someone else’s application that they have no control over. Or one that they can own, adapt, innovate and monetise.
“So it’s inevitable that this is what will happen. But there’ll be this kind of fight along the way, between this new generation of Internet users who understand it and the institutions who have been in charge.”
