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17 February 2022

Building Blocks: The Metaverse

Imagine being on a trip to the museum. You step off the city’s public transport system and are instantly immersed in a verdant green landscape dotted with buildings, hearing conversations in a melting pot of languages, and watching as two people close by bond over wearing the same dress. Nothing out of the ordinary so far, except the method of transportation was by portal, the people are avatars (customisable digital representations of people), and the city is Genesis City, Decentraland’s first digital world and a harbinger of the Metaverse. Though in the digital realm, the Metaverse still requires foundations to be built.
 
The Metaverse. A much-vaunted concept, this refers to the 3D internet – a virtual network of 3D worlds where every object and person is connected. Ownership of every object would be identified and verified, people would have virtual personas for work and leisure that can be distinct from, though linked to, their personal selves and represented by avatars. Importantly, the true characterisation of a Metaverse is one of decentralisation. Whereas today data is stored on central servers, which concentrates power in those who control the servers, it would be stored in a distributed fashion across a network of ‘nodes’ that prevent any one individual or institution from exercising undue influence or control over its operation. By being decentralised, the Metaverse would strictly uphold property rights, allowing a virtual economy to form, from purchasing plots of land in Decentraland to buying digital Nike shoes for your avatar to wear.
 
When assessing any construction, the door is a prudent place to start. The development of access point devices (devices needed to access the Metaverse) has come a long way, and it is crucial that they are of a high standard before mass adoption. Since its acquisition of Oculus in 2014, Meta has been innovating in this field. The company owns the IP to a technology that solves an eye-focusing issue that has plagued Virtual Reality (VR) from the start, causing blurry vision, eyestrain, and visual fatigue. This will allow consumers to wear VR headsets and stay in the Metaverse for extended periods of time. Improving the mobility and convenience of access point devices is also key, and removing clunky controllers is an apt way to do that. With its acquisition of Ctrl Labs, Meta is developing a wristband that transmits electrical signals from the brain into computer inputs, which would also significantly increase The Metaverse’s verisimilitude.
 
But once through the door, it is the interior that counts, which is to say, the design of The Metaverse’s virtual worlds. This is a field where an expansive ecosystem of human capital has already developed through the video game industry, where realistic graphics, physics and interactive worlds are in hot demand. Beyond the graphics, successful world design involves empowering users and enabling them to lead the world’s development. A contemporary success story comes in the form of Roblox, which superficially operates like a Metaverse world. Roblox is a platform that gives its users easy-to-use creation tools, who then develop game modes and areas for social experiences. An in-game currency is used to exchange goods and services, and creators are rewarded for creating experiences with high user demand, with Roblox users earning US$329m from the platform’s economy in 2020.
 
Decentraland is a true Metaverse…
 
This article was taken from the December 2021 Market Insight. To continue reading please visit the issue. To subscribe to our investment publications, please visit www.redmayne.co.uk/publications.
 
Please note that this communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned.
 
Building Blocks: The Metaverse
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