The metaverse will ‘not fully consume our lives’
By Carine Lee
05:23, 4 August 2022
Interest in the metaverse seems to have waned or failed to deliver.
According to a metaverse sector report by CoinShares, smaller producers of core technologies could shake out or fail going forward.
“To prevent confusion, the metaverse is not a game, an app, or a store. Nor is it just virtual reality. And it is not just one digital world or space alone,” said Max Shannon, Digital Asset Analyst at CoinShares.
SAND to US dollar
“It will not replace the internet and will (probably) not fully consume our lives,” he added.
Investments in the metaverse, such as the Sandbox (SAND), could likely continue due to the fact that the success of the metaverse is highly correlated to the crypto industry.
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The metaverse is not new
The metaverse is not a new concept and was introduced in sci-fi novel Snow Crash, online game Second Life in 2003, and was even on the big screen in Ready Player One in 2018.
Non-fungible tokens (NFTs) are used to represent user-ownership, which is the core feature of metaverse.
This is because it is recorded and kept on the blockchain forever for all to see, while being verified and recorded on many computers across the network.
Information asymmetries
The blockchain acts as an obstacle in data tampering, fraud, and information asymmetries, as it is very difficult to attack because there is no central attack vector.
The metaverse faces other challenges including safety and data privacy, poor interoperability, regional fragmentation, and user risks:
Safety and data privacy risks
Identification and privacy safeguards have been prioritised from the start as they are crucial for interacting and transacting in the metaverse.
Devices such as virtual reality headsets and augmented reality glasses used to experience the metaverse also allow misbehaviour, spam and harassment.
In an interview with RFOX, which is looking to roll out localized metaverses with its own token based on the Ethereum blockchain, its CEO Ben Fairbank acknowledged the issue.
He said the use of haptic suits will overcome the issue of physical misbehaviour.
Proximity alert
This is because the haptic suit has a proximity alert allowing its user to approve or deny any proximity activity, Fairbank said.
ETH to US dollar
According to CoinShares’ report, blockchains need to communicate with one another easily to transfer value and data to cater to the growing use-cases of the metaverse.
Bridges are at the core of interoperability as chains on either side of the bridges will likely have different consensus rules, speeds and structures.
This results in composability between the decentralised applications, and not between networks, as most blockchains are siloed.
This therefore leads to bad user experiences as liquidity is fragmented between chains and transaction fees are high.
User risk
The Breach on Nomad bridge on Monday is an example of user risk where investors lost $200m.
Hackers also targeted the Ronin bridge, run by the firm behind Axie Infinity, breaching the security of the validators on the network and running away with ETH worth around $600m and $25.5m of stablecoin USDC.
USDC to US dollar
According to CoinShares, most metaverse products and services have very low use and commercial viability is unproven.
And given that metaverses often play catch-up to protect their citizens, it does not seem that the metaverse will replace the internet anytime soon and will probably not fully consume our lives.
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