Metaverse: Better understand its gigantic potential

In a report on the metaverse sector, Coinshare delivers insightful insights into how the metaverse could change society through breakthrough blockchain technology.

The notion of metaverse remains unclear for the moment

Like many web3 concepts, the definitions and interpretations of certain language elements may still remain unclear. The metaverse is one of those terms. It can mean a lot of 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 metawhich comes from the Greek and means “after, beyond”, and pours for universe in English. We understand that this term therefore means beyond the universes, something more extensive. It is in “The virtual samurai” by Neal Stephenson that we find this concept of metaverse for the first time, in 1992, long before the creation of Bitcoin.

In order to give a general definition, the report tell us : ” Overall, we think it’s okay to strive to create global, user-owned, interoperable 3D virtual worlds built on top of the existing internet. To avoid confusion, the Metaverse is neither a game, nor an application, nor a store. It’s not just virtual reality either. Nor is it a single digital world or space. It will not replace the internet and will (probably) not entirely consume our lives. »

This vagueness around the notion of metaverse will therefore affect the perception of investors and users 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 recorded a rate of 293% per year in 2021 in because of its explosion in popularity. ” This is likely due to the excitement around the opportunities and value the metaverse could create. This has led to larger funding rounds, an increase in the number of funds and the notional value of capital deployed. There are more than 455 companies in the metaverse in 2021, only 50 in 2018. Mark Zuckerberg goes so far as to designate the metaverse as the opportunity of the century.

Regional Metaverse Fundraising Crunchbase
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 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 which intends to change its place in the Web3, and 2% in South America, the African continent is currently off the radar.

Coinshare raises that this situation is particularly alarming and contrary to the web3 mentality, “ Global initiatives should rebalance metaverse development to avoid a landscape dominated by big tech. This could help reduce Web2-like characteristics, namely data mining and privacy issues. »

This geographic inequality is not the only problem around 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 technology to take full advantage of these digital worlds. The metaverse will not be lived fully on a screen, for this it is necessary to be equipped with virtual reality (VR) helmets, augmented reality (AR) glasses, as well as extended reality (XR) handheld devices. All of these tools are the future of the metaverse. But for now, they don’t offer an experience that is intuitive and immersive enough to be adopted by many.

In addition, developments around the metaverse remain very dependent on the cryptocurrency market. A major problem when you know the volatility of this market and the possible crashes it may suffer. This therefore affects the growth and sustainability of the development of metaverse projects.

Major concern US metaverse
Source: Morning Consult, CoinShares, data available as of May 18, 2022.
Disclaimer: Survey conducted from March 3 to 5, 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
100% due to rounding.

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

Although user ownership is an important feature, digital ownership does not guarantee monetary value. Using blockchain technology, one could create a fixed number of NFTs representing a virtual land. 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 such as the Palm Islands in Dubai. Scarcity does not always determine the value of a good. It’s the demand that does it. One could create a fixed number of NFTs representing a virtual land, using blockchain technology. Rarity only has value 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 where web2 and centralization remain omnipresent. In addition, 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 real metaverse. As when one wants to define a new world, a new concept, many questions arise. Despite the difficulties and obstacles ahead, 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. Whether 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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