Internet giants may be the biggest obstacle to entering the metaverse era

Author: Lu Chang, BlockBeats

What is the Metaverse? This question has been repeatedly asked by many media outlets recently, and their answers are mostly similar:

"Roblox defines it with eight key elements: identity, friends, immersion, low latency, diversity, anytime and anywhere, civilization, and economic system."

This definition frequently appears in reports related to the Metaverse, cited by multiple media outlets, and included in the Baidu Encyclopedia entry for "Metaverse." A search engine query for this lengthy text yields approximately 543,000 results. Although the Metaverse has not yet taken shape, there seems to be a growing consensus around this definition. However, this consensus itself poses a challenge to current Metaverse products: Can we really achieve the economic system of the Metaverse?

The "economic system," listed by Roblox as the last of the eight elements of the Metaverse, may actually be the most important one and also the easiest for most people to overlook. After all, when we are immersed in the beautiful future brought by stunning visual effects, who would be interested in a boring digital game?

The coolest user experience may not be that important

Imagine a scenario: on a certain day years from now, you return home, put on the latest VR headset, step onto a omnidirectional treadmill, and immerse yourself in audiovisual effects that surpass even the next generation, strolling through the streets of a virtual world.

Here, you can play games, binge-watch shows, and visit exhibitions in an immersive way. You can also use VR technology to try on clothes you like and go shopping. Coupled with the new consumption methods we are already accustomed to, such as food delivery and express delivery, you could easily spend a long time without stepping outside your door. But just as you are enjoying the joys of this new era after a month of staying at home, a problem arises: when you go to pay your rent, the message "Insufficient bank balance" pops up.

That's right, during that month in the virtual world, all your activities were merely consumption.

This underscores how crucial a complete economic system is for the Metaverse. If the Metaverse is just a "cooler" version of the internet, it cannot support assets and production activities. No matter how advanced the hardware technology is, it will always be just an "amusement park" and cannot be called a "universe."

As the renowned analyst Matthew Ball pointed out, "The Metaverse is not equivalent to virtual space or virtual economy; it will have a fully operational economic system that spans both the physical and digital worlds." Looking back domestically, the New Media Research Center at Tsinghua University has made similar statements. The "2020-2021 Metaverse Development Research Report" published by this institution states, "The Metaverse is a new type of internet application and social form that integrates various new technologies, closely merging the virtual world with the real world in terms of economic systems, social systems, and identity systems."

The economic system of the Metaverse differs from the current economic systems operating on the internet primarily in the integration of the cyber world and the real world.

As you saw in the movie "Ready Player One," you can earn wealth in the Metaverse and use that wealth to purchase real-world goods. Conversely, real-world currency can also circulate in the Metaverse to buy virtual items and assets.

This integration of cyber economy and real-world economy may be the most challenging aspect to realize in the Metaverse.

The embryonic form of the Metaverse economy predates the "Metaverse"

Generally speaking, an economic system refers to a system that organizes production, distribution, circulation, and consumption activities and relationships, usually mediated by currency and resulting in goods or services.

Focusing on the gaming world, it is not difficult to find that any MMORPG has a relatively complete economic system that is purely cyber. What does the game world of an MMORPG possess? It has circulating currency (game currency), goods (game items, equipment), independent monetary policies (set by operators), a large number of economic activity participants (players), production of goods, trading of goods, and currency circulation and distribution…

Unfortunately, this is an isolated market. The skyrocketing value of rare items in the game does not affect the purchasing power of fiat currency; the Federal Reserve's unlimited QE does not trigger inflation in the in-game currency. It is almost unaffected by external markets and does not impact our real-world economic system. This system operates completely independently and cannot integrate with the real world.

People battle, play, and socialize in the vast world intricately constructed by game designers, forming guilds or legions and establishing identities, with many players even becoming friends in the real world.

Judging by Roblox's eight elements of the Metaverse, such MMORPGs already possess five of them, lacking only "diversity," "anytime and anywhere," and "economic system." "Diversity" and "anytime and anywhere" are no longer issues in more modern games due to technological advancements, but the economic system—especially one that integrates the cyber world and the real world—remains elusive in existing Metaverse concepts.

In the future Metaverse era, how will an economic system that spans the cyber world and the real world integrate?

Looking back to the pre-Metaverse era, when the concept of "Metaverse" had not yet become popular, widely popular MMORPGs like "World of Warcraft" and "EVE" might be the closest non-Metaverse products to the Metaverse. In an era when MMORPGs dominated the online gaming market, the concept of the Metaverse was ironically being pushed forward in a small-scale manner.

RMT, or Real-Money Trading, is a behavior widely seen in MMORPGs, referring to the exchange of virtual items and game currency for real-world money. A massive gold farming studio industry has even emerged around this behavior, where professionals create accounts in bulk, operate them, and produce large quantities of in-game currency or items, which are then sold for real-world legal tender.

Due to the significant disruption this behavior causes to the immersive experience of the game, RMT has become something players detest. Moreover, because it interferes with the purely cyber economic system designed solely for in-game operations, it is banned by most game operators. Even direct exchanges of real money between players can, to some extent, disrupt the sense of "role-playing" within the game.

In the pre-Metaverse era, through the widespread existence of RMT, the cyber economy and the real economy did indeed merge to some extent: activities in the cyber world earned real-world currency, while real-world currency could also purchase in-game assets—just as depicted in the movie "Ready Player One."

Although this was not the designers' original intention and even faced their opposition, when we look back at that era from the threshold of the Metaverse, we find a rather ironic reality: that era may have been closer to the Metaverse than we are now.

How the big companies killed the Metaverse?

According to reports from NetEase, in early February 2015, the DNF project team discovered a large gold farming studio in Heilongjiang. The DNF project team collaborated with the Tencent Interactive Entertainment Criminal Security Joint Team and the police. In April, after detailed preliminary investigations and meticulous planning, the Daqing police mobilized forces from three precincts to form multiple arrest teams for a coordinated operation, capturing four studio leaders, five core personnel, and a cheat author named Guo, seizing thousands of computers used for gold farming, two involved vehicles, over 70,000 yuan in cash, more than ten mobile phones, and a large number of related account books and bank cards.

Seized computers

The gang was involved in a total amount exceeding four million yuan, and ten members were criminally detained by the police for suspected crimes of damaging computer information systems. According to the law, this crime can result in imprisonment for up to five years or detention; for particularly severe consequences, it can lead to imprisonment for more than five years.

In the pre-Metaverse era, the quasi-Metaverse cyber economic system brought legal risks to participants: games are owned by game companies, and users cannot obtain real-world economic benefits from the game's cyber economic system without permission. This operator-dominated economic system resembles the current platform economy. Food delivery, online shopping, house viewing, live streaming, job searching—within this framework, you can do almost anything—as long as you pay the "platform tax."

Regulating the economic system to collect "taxes" is precisely what today's giants are keen on. It disrupts the embryonic form of the integration of cyber economy and the real world, but this may only be the least significant part of their obstacles to the Metaverse. The more severe test lies in the fact that under the framework of big companies, you will never truly own your Metaverse assets.

Once, we were incredibly close to the vision of the Metaverse under Tencent's framework: QQ numbers were our unique digital identities, QQ Show was like the NFTs that are now being hyped, QQ Space was our social platform, and we even had a universal currency within the Metaverse—Q coins, which could be used for any product within the Tencent ecosystem. But this was not the true Metaverse.

All these identities, items, images, and virtual currencies are merely data, and the ownership of this data does not belong to you.

In the cyber world, each piece of data corresponds to enormous commercial value; in fact, the existence of certain data itself is valuable—what is now a rare Dota2 item may have been a rare QQ Show ten years ago.

It is worth noting that large companies' user agreements already have comprehensive legal responses; your internet account mostly does not truly belong to you but is owned by the large company, which authorizes you to use it.

Taking QQ numbers as an example, the terms of use clearly state that the "ownership of QQ numbers belongs to Tencent," and users only have "usage authorization." Without Tencent's permission, the original applicant cannot gift, lend, rent, transfer, or sell the QQ number to others, and others cannot use that QQ number through any means, including inheritance. If violated, Tencent reserves the right to pursue legal responsibility against the violator.

This is not just Tencent's "unfair clause"; other internet platforms also have similar provisions. For example, Steam's terms of use clearly state that the games purchased by users are only for indefinite use and do not grant ownership of the games, and Steam can reclaim any game from a player's library at any time.

In the internet era, the ownership of an "entertainment tool" may not be something ordinary users are sensitive to: "At worst, I can play somewhere else." But in the Metaverse era, everything becomes crucial. What the Metaverse carries is your identity, social interactions, and digital assets; it is a universe that merges with the real world.

Would you be willing to hand over your bank account and ID card to a company? If users do not have ownership of their data, the future Metaverse will look like this: once you leave the operating platform, you will have nothing.

Formatted terms of use, users not having control over data, and companies owning everything—under this inherent disadvantage, is this really a "Metaverse" and not a "trap"?

As mentioned earlier, a Metaverse without assets and an economic system is merely an "amusement park." And under the current account system and the dominance of internet economy, we cannot truly own our assets in the Metaverse. Will the future of the Metaverse be bleak?

How can Blockchain make the Metaverse fairer?

Epic Games CEO Tim Sweeney believes that the Metaverse is an unprecedented large-scale participatory medium with a fair economic system.

A fair economic system is particularly important. Just as capital always flows to where the return on investment is highest, (in an ideal situation without information barriers) human labor will also always flow to where the return on labor is highest. If the Metaverse economy continues to operate like the platform economy of monopolistic giants, where platform operators reap the benefits, then people have no reason to embrace and invest in the Metaverse.

Cao Yin, Managing Director of the Digital Renaissance Foundation, believes that "Companies like Tencent actually want to integrate all their product lines into the Metaverse, transforming the original portal website into a portal Metaverse. Once users enter their Metaverse, they can certainly experience sensory enhancement through technologies like 3D/VR/AR, achieving real immersion, but users are still only in a world controlled by them, which is very centralized."

The widespread application of Blockchain provides us with a way to resist big companies: Blockchain, DAO, Token.

Data and storage based on decentralized Blockchain ensure individual data sovereignty. No one can arbitrarily delete or modify the contents of your account except for you.

The new organizational form of DAO replaces big companies' dominance over products; shareholders and boards are no longer the ultimate service targets of products. Communities composed of ecological contributors will truly control the ecosystem.

Tokens replace game currencies to equalize everyone's assets, and operators no longer dominate small cyber economic systems. The cyber economy and the real world can freely merge; your virtual assets truly belong to you and can generate value in the real world.

Decentralized data storage, users having complete control over their own data, true ownership of cyber assets… When the cyber economy and the real world merge, we can truly step into the world of the Metaverse. And as the door to the current Metaverse has slightly opened for us, the Metaverse vision dominated by big companies cannot improve the unfair position of ordinary users in today's internet world.

If we are to eventually enter the Metaverse, would you be willing to hand over your "universe" to traditional internet giants?