Web3 and the metaverse are two concepts that catapulted out of the world of startups, venture capital, and cryptocurrency enthusiasts in 2021. By October of that year, Facebook had decided to rename itself Meta, as part of a big strategic bet on future growth in virtual realms. Now, many larger companies are exploring potential use cases and developing strategy for both Web3 and the metaverse. So we’ve created a brief guide to these two concepts, and how they may eventually be linked.
Web3: This next evolution of the web is being built right now on top of a more decentralized internet infrastructure powered by public blockchains, tokens, and smart contracts. Just as cryptocurrencies use “consensus algorithms” and “distributed ledgers” to maintain ownership records of tokens like BTC (bitcoin), emerging Web3 projects are being developed by new kinds of organizations without traditional ownership or organizational structures.
Projects: Many new Web3 services are calling themselves “projects” — rather than startups or companies — due to their decentralized, community-based approach to development, operations, and governance. These projects are appearing in nearly every industry, from DeFi (decentralized finance) protocols in areas like lending, to consumer and enterprise web services like social media and cloud storage.
Coins: A large share of these projects utilize “native” token incentives to bootstrap growth and reward participation and value creation within their ecosystems. These tokens can be distributed directly by the projects or purchased on cryptocurrency exchanges, and they represent everything from a stake in the project, credits for a future service, governance rights, and more — often at the same time. As an example, a project called Filecoin in 2017 raised more than $200 million to offer decentralized data storage, letting users rent out empty space on their hard drives to one another. Filecoin is both the name of the coin and the name of the storage service. Similar to shares of stock, as projects launch, improve, and attract users, the coins tied to them can gain in value.
1, 2, 3. What’s now being referred to as Web1 was the original World Wide Web that many people first experienced in the late 1990s — largely static web pages that you could view. Web2 came about in the mid-2000s, when websites became more dynamic, enabling people to post their own writing, audio, and video, and rate or comment on what others shared. Social networks like Friendster, MySpace, and Facebook emerged.
Power shift. Because a key aspect of Web3 is that the technology is decentralized, and ownership from the start is open to individuals (not just venture capitalists and private equity investors), a key part of the vision is that power may shift away from major platform operators like Facebook and Amazon, and into the hands of the people organizing these new projects — who purport to operate more transparently. Could Web3 projects eventually knit together to replace many of the things that we do today on the Internet? That’s the vision espoused by many Web3 boosters.
Metaverse. The term metaverse is used to describe the emergence of more immersive, 3D, virtual worlds using avatars that interact with digital assets. The term originated from Neil Stephenson’s 1982 science fiction novel Snow Crash. Today, there are many popular metaverse worlds enabling consumers (Fortnite, Minecraft, Roblox) and enterprises (Horizon Workrooms, Virbela, EngageVR) to communicate, collaborate, transact, and more. While many of today’s worlds can be viewed as walled gardens — similar to AOL — the future of the metaverse is expected to be interoperable, with the avatars and digital assets able to move seamlessly from world to world.
Virtual reality. You don’t need virtual reality goggles to enter most metaverses. The most popular entry point for today’s metaverse destinations are still desktop-based. But these worlds — and many others that have recently launched or are in development — are being designed to support fully-immersive, VR-based, “you are there” experiences. The metaverse is also expanding into physical spaces through augmented reality headsets and smartphone applications.
Linking the two concepts. Together, the metaverse and Web3 are key drivers in the next evolution of the internet, representing the convergence of immersive and interoperable digital worlds (metaverse) running on top of a more decentralized internet infrastructure powered by blockchains, tokens, and smart contracts (Web3). This will enable new forms of interactions (experienced through avatars), commerce (including digital assets paid for in cryptocurrencies or traditional fiat currencies), and more.
(Featured image by Armando Arauz on Unsplash.)
