One More Time: Web3 is Not the Metaverse
Crypto Winter is coming, and this distinction is more important than ever
Sigh.
I really didn’t want to get into it, and yet as the market is correcting, so too must our thinking.
For all but those living under the largest and most impenetrable rocks, it’s very clear that the larger blockchain world has been having an ongoing series of no-good, very bad days. What is being described as a “crypto winter” is being discussed (ad nauseum) quite widely, inclusive of ramifications for Web3 projects. At a high level, the implications for Web3 are described as either:
A death-knell for a bad-faith hellscape of scam-filled and impractical technology,
OR
A “cleanser/good riddance” of sorts to purge the Web3 world of the scam artists/opportunists/flimsy projects/etc.
Very little nuance exists between these two positions, and one’s disposition towards either extreme largely depends on feelings of bullishness about the Web3 landscape more generally. Indeed, as I type these words NFT.NYC is in full swing and seemingly unperturbed, complete with all manner of cringy parties, talks, and highly questionable marketing ploys (I’m not going to link the execution in question to avoid further amplification, but evoking the symbolism of hate-speech into a fake “protest” of NFTs is seriously disgusting and shameful. Do better, folks).
Regardless of which position you feel is more correct, recent circumstances have made it clear that we must disentangle the conversation around the Metaverse from Web3. More specifically, the basic fact that Web3 is not the Metaverse, and vice versa. What was once an annoying conflation of terms is now tying all aspects of a potential future internet to the market, and in a bear market this can get ugly.
Financial market sensitivity is part of the game for Web3, as the concept is essentially a rebranding of crypto, with the general idea being that the future of the architecture of the internet will be wholly decentralized by utilizing blockchain technology. At best, it paints an utopian future where community-based development of the internet frees it from centralized platforms that commodified user’s attention (often via ads) in our current version of the web (Web2). At its worst, it replaces the commodification of attention in Web2 with the commodification of…everything into speculative assets not entirely unlike cryptocurrencies.
Conversely, Metaverse need not have the same sensitivities. The Metaverse is a vision for how we will access and traverse the web, usually described as an embodied, persistent series of virtual worlds. The heavy reliance on virtual worlds is why I (among others) argue that Metaverse has more in common with gaming than Web3, given a some-50 year history of virtual worlds in gaming. Whether or not the architecture of these worlds are based on blockchain (Web3) or the same semi-centralized systems of today (Web2) is irrelevant.
Web3 and Metaverse may or may not come to fruition, but their success or failure is independent. I recognize that to many, the various distinctions here might not be entirely different from being careful to not confuse unicorns and leprechauns. Such cynicism is not necessarily misplaced, given that the early nature of both concepts has yielded an environment with far more hyperbole than substance.
Aside from making muddy water a bit more clear, distinguishing these ideas reduces the potential to migrate undesirable elements from one set of ideas to the other. One of the reasons that Web3 enthusiasts are keen to attach blockchain technologies to something like the Metaverse is that it provides a practical output for the technology. More practical outputs of the technology drums up popular interest, which in turn increases the value of speculative assets tied to the blockchain (be they cryptocurrencies, NFTs, or otherwise), and so forth.
However, the potential end-game to this association is getting glum - a quick search for “metaverse” in Amazon books will yield dozens of titles, and almost all of them referencing investing (with a not-so-subtle bend towards “get rich quick”). Such titles are partially attributable to platforms like Decentraland, The Sandbox, or other blockchain-based virtual worlds, mostly due to headlines about virtual land grabs where values are propped up by scarcity enforced by NFTs. However, these platforms often host extremely small numbers of users (at the time of writing, about 1,200 folks are kicking around Decentraland), because aside from the thrill of ownership…there isn’t much to do there. When combined with the near-ubiquitous veneer of naked financial gains attached to all things blockchain, the effect on conversations for the Metaverse are ones where consumption and profit is the only real point, and even then the potential for profit has become increasingly uneven.
As previously discussed, some degree of the interest towards gaming in recent years can be reasonably chalked-up to enthusiasm around the concept of the Metaverse, occasionally accentuated (often via VC money) by the potential for profit from Web3-styled financialization of virtual worlds. As Web3 weathers a potential “crypto winter,” it’s becoming imperative for builders, marketers, and otherwise to think critically about what they are really trying to accomplish on the frontiers of these new technologies.
Building experiences in virtual worlds makes sense to the extent that the experience provides value to the denizens of the world, on the terms through which they are enjoying that world (be it gaming, socializing, or otherwise). Merely existing as a brand or offering a digital bauble isn’t enough, and at worst may dilute a potentially interesting experience as merely an attempt towards a financial fast-grab. Mashing together technology buzzwords has been a sure-fire way to secure funding as of late, but potentially leads to a Metaverse that is composed of financially-rich but human-vapid worlds.
As the potential for these worlds to be financially-rich becomes less likely in a very bearish market…what’s left is all the more stark. As noted at the onset, we’ve been in need of correcting the conflation of these topics for quite some time - one upside of market corrections is that they allow for a natural shift in strategy. Without such a shift, innovative thinking around otherwise seemingly infinite worlds will continue to be trapped by our tendency to formulate them in a way where capital extraction is the only real purpose.