Significant technological progress has been made, despite heavy skepticism: the foundation has been laid. Practical applications are gaining traction in sectors that include sports, Web3 gaming, fashion, beauty, luxury, and art. Standards are being discussed and regulators are addressing the underlying technologies, alongside cybersecurity, privacy, identity, and safety concerns.
During the period, The Metaverse Society has been advocating for the metaverse, advancing the debate, building knowledge. We have hosted our first events, engaged with students, held roundtables with policymakers, contributed to tech conferences, and published key reports on Web3 gaming, online safety, and a meta-trends report on Scaling the Metaverse. All our interactions – with policymakers, regulators, industry peers and academics – have been invaluable.
We would like to thank everyone who has taken part in our roundtables, events, and this cycle of interviews: your insights have contributed greatly to the value of our think tank’s activities. To celebrate our first anniversary, this first opus brings together the viewpoints of thought leaders in the field, focusing on foundational components for the metaverse. We hope you find them as enlightening as we have. They invite us to set out on a journey towards a meaningful and enriching virtual life.
Marine Boulot Director of The Metaverse Society
The promise and the journey so far
Today, our digital future is at a tipping point. Virtual worlds and the technology which enables them have reached a stage of maturity that suggests a fully-functioning metaverse may now be close at hand. Proto-metaverses have existed in the games industry for several years, and had early iterations in virtual worlds like Second Life. But the metaverse that is in gestation will go further, enabling the transition between real life and virtual life to become instinctive and rich in possibility. It will be an extension of our lives. The combined potential of the metaverse, Web 3 technologies and AI will inaugurate a rich new horizon of cultural and creative expression. It creates the opportunity for a once-in-a-generation redefinition of our society towards a new form of economic organisation, in which experiences made by an open network of creators can generate enormous creative possibilities –for everyone. To take stock of the distance we have travelled and the road that lies ahead, we have invited three industry pioneers to report back on what they have learned. Their expertise is beyond question. Herman Narula is the founder of Improbable. Chris Dixon a renowned tech investor. Philip Rosedale’s Linden Lab created Second Life in 2003. In the following pages, they expose their vision of the cultural, economic and societal facets of this new field of possibility.
Interview with Herman Narula
Founder and CEO Improbable
The metaverse transcends being merely a reflection or evolution of our current culture; it transforms into a thriving economy of participatory experiences that go beyond geographical limitations. This brings the prospect of entirely new jobs, fueled by passion and purpose, and spaces that nurture equality where individuals can be their authentic selves. These vibrant, dynamic worlds will form the foundation for new cultures and communities. Young people will forge connections, and isolated communities will find a voice. Through decentralized, bottom-up approaches, we can replace the negativity that plagues social media with the power of unprecedented shared experiences.
What cultural and social potential and opportunities does the metaverse hold?
Imagine a global stage where every brand, influencer, artist, and individual can genuinely connect with audiences and people worldwide. This is what the metaverse unlocks. Such rich connections are not just beneficial but vital to our wellbeing. In my book, Virtual Society, I delve into self-determination theory, which emphasizes our inherent need for fulfillment. This fulfillment fuels our purpose, drives growth, and helps us realize our potential, make meaningful choices, and matter to others. The metaverse expands on this idea, bringing mass-scale virtual experiences that enrich us profoundly.
When hundreds or thousands of people gather simultaneously within a virtual world, new types of cultural value emerge. People can co-create in real time. Just as individuals have long worked together to found cities in the real world, we’ll see communities build metaversal worlds that capture the genuine essence of what makes human culture exciting.
This transformation will reshape industries, unlock new avenues for exploration and growth, and enable a more inclusive and interconnected world. It will foster new relationships and communities, providing accessibility for individuals bound by location or disabilities, creating inclusive social spaces and activities previously unimaginable in the physical world.
For the metaverse and beyond, what do you see as the impact of AI and blockchain technologies for society?
Current technological revolutions point to a radical democratization of technology, an increase in user empowerment, a newfound focus on collaboration, and a surge in digital ownership. The rapid evolution of large language models and generative AI, combined with a boom in digital assets, is revolutionizing how people spend their time and resources. Open-source movements continue to democratize technology, stimulating innovation and competition.
The metaverse, particularly its large-scale immersive experiences, relies heavily on generative AI. This allows us, and developer communities, to scale up, streamline production, and build products and experiences that would otherwise be impossible. Understanding the advantages AI brings to content creation is crucial.
I strongly believe that AI will augment – not replace –human creativity. AI’s role is to enhance quality and reduce iteration, accelerating the creation of new metaverse experiences. Creative minds will be able to unleash their potential in unprecedented ways.
Sharing value between virtual worlds is of paramount importance. Interoperability standards based on next-generation blockchains will form the backbone of a new economy within an open metaverse ecosystem of connected worlds. No longer trapped within walled gardens, users will own their digital goods and identities and take them from world to world. Creators will be empowered to build viable businesses within the metaverse. Competing parties will be able to share users, data, and value in a collectively profitable and mutually beneficial way. Existing digital assets will gain utility beyond entertainment, serving as co-ownership in the value created in these worlds.
As technologists, thought leaders, and regulators, it is our responsibility to ensure the development of technologies that empower individuals, foster innovation, and uphold principles of fairness and safety while nurturing a thriving economy with fair competition. Exploring the social and economic impact of these technologies is crucial, as they will reshape industries and open doors to innovation and inclusivity. Engaging in constructive dialogue with regulators is essential to strike a balance between fostering business growth and ensuring this development benefits the greater number.
This is what The Metaverse Society is all about, exploring what makes the right foundations for a virtual society.
How have technology advancements led us to the metaverse, and where is it going next?
When sci-fi author Neal Stephenson coined the term “metaverse” in his 1992 novel, Snow Crash, 3-D multiplayer games had simple graphics and supported interactions among only a few players. Today, hundreds or even thousands of players can interact in the same virtual world, and audiences for games number in the hundreds of millions of players.
Soon enough, digital worlds will have lifelike graphics, audience sizes will continue to grow, and people will spend more time in game worlds. High-quality virtual reality headsets will be common. Haptic interfaces that provide physical feedback will make the experience even more realistic. Artificial intelligence will create an abundance of rich characters, worlds, and other content. Blockchains will enable digital property rights and provide the necessary infrastructure for an open, decentralized metaverse.
What is the best underlying architecture for a metaverse?
I believe the best model would be an open metaverse made up of composable blockchain networks, which themselves interoperate to form a meta-network. Creators could build applications on top of these blockchains, and set up shops to sell their wares, keeping most of their earnings for themselves. They would have a rich design space to work in, including new elements enabled by blockchains like persistent, transferable ownership and economies that span across networks. Digital property rights would be guaranteed by persistent, blockchain-enforced rules. Governance and moderation would be managed by the community.
How important will the metaverse be to our “real” lives?
As the quality of virtual experiences improves, digital interactions will spill over into the physical world. You might make friends, meet a future spouse, or get a new job in “virtual” reality. As more of the economy moves online, more jobs will exist solely in online worlds. The distinction between work and play will blur. What happens in digital worlds will have consequences and meaning in the physical world, and vice versa. Fostering the growth of an open metaverse built on blockchains would ensure our digital worlds remain egalitarian, democratic, and permissionless.
Interview with Philip Rosedale
Philip, what are the dynamics that have enabled Second Life to be so enduring and what are you most proud of?
Second Life has maintained a very lively, active community for over 20 years. Its biggest dynamic is its ability to enable people to create things that are culturally interesting, sophisticated, and valuable. This creative freedom has driven its longevity. Unlike many platforms, Second Life allows people to make genuinely new things and share them with each other.
What sets Second Life apart is its 3D medium, allowing users to create something of genuine personal value, unlike traditional media such as video, audio, or images. The social aspect is also crucial; people are always together when creating. You could build a house while your friend gardens, and you talk to each other during the process. This collaboration fosters positive interactions, contrary to the general belief that the internet often makes people angry. Second Life emphasises pseudonymity, not anonymity. Your avatar isn’t tied to your real identity, but it has rich relationships and social ties, making actions have consequences.
In Second Life, governance is very much bottom-up. As a landowner, you have complete control over your interactions and environment. This contrasts sharply with social media, where conflicts often require intervention from external authorities. You are empowered to manage your immediate social environment directly, which is a fundamental structure that contributes to the platform’s positive community dynamics.
This shared environment fosters respect and understanding, as you recognise that you’re both part of the same world. This is what I’m most proud of: that Second Life somehow makes people happier and richer in their interactions with each other.
How did your perspective on virtual worlds evolve over time?
Initially, I was fascinated by the mechanics of building blocks and the imaginative freedom they offered. However, my interest shifted to the personal dynamics and the impact on relationships within the virtual world. Now, I see the more important aspect as how virtual worlds can facilitate cooperation and collaboration, making us better communicators and more connected individuals.
What would you say are your greatest hopes and fears for virtual worlds and the metaverse?
Loneliness is increasing, and trust in strangers is decreasing, but this is something we can fix. Virtual worlds and online social environments can measurably increase trust and reduce loneliness. If we get the societal rules and technology right, we can use these environments to foster better social interactions.
VR headsets can be problematic because they blindfold users, making them feel unsafe. We’re creating expensive devices for communication, which isn’t sustainable. However, the internet has been powerful for accessibility. For example, people with physical disabilities live full lives in Second Life in ways they couldn’t in the real world. Additionally, we should use AI to allow people to communicate in their native languages seamlessly.
I once said I wasn’t building a game; I was building a country. Today, with the world as it is, we have the opportunity to use the Metaverse to explore alternative social, economic, and democratic structures that can’t yet be realised in the real world. We can prototype new ways of living together online and apply those learnings back to the real world. Complex ideas like different types of democracy or basic income can be tested in virtual worlds and, if proven valuable, deployed in the real world.
The economy of the metaverse
The metaverse has the potential to foster a whole new system of value. The emergence of Web 3 technologies has enabled a decisive shift from value transfer to value creation. In this decentralised environment, everyone will be free to trade values which they have created themselves directly, with no need for centralised mediation. Powered by a new wave of innovative digital commodities – be they assets, tools, services, or experiences – the metaverse is set to dramatically expand the field of economy possibilities. At the heart of this transition is a paradigm shift in the way in which we manage trust. Blockchain technologies now provide the foundation for trustworthy infrastructures, which will enable people to create and exchange value safely with others, wherever they are in the world. This new trust environment constitutes a revolution, whose implications are social as much as economic. By introducing unprecedented levels of transparency and accountability, it has unique potential to foster democratic engagement and drive social change.
Interview with Joachim Schwerin
Principal Economist DG GROW, European Commission
Joachim, you are an economist specialised in the digital transformation of industry. How do you see the economy of the metaverse developing?
The metaverse represents an ever more immersive convergence of multiple technologies, and its economy is poised to grow in fascinating ways. That is what comes through clearly in The Metaverse Society’s meta trends report, Scaling the Metaverse. This ecosystem is vibrant, teeming with energy, ideas, and projects. We’re witnessing an integration of artificial intelligence, blockchain, quantum computing, and more, all of which contribute to its complexity and potential. The metaverse goes far beyond just digital interaction, it’s a comprehensive platform impacting sports, culture, arts, and industry, like a digital layer of our real lives.
Its economic landscape is equally multifaceted. On one hand, you have significant investments from major tech companies, which is akin to the centralised governance of Web 2.0. On the other hand, there’s the decentralised approach, where smaller entities and individual creators have the potential to drive substantial innovation and inclusivity. That triggers debate about the type of digital world we wish to cultivate—one driven by large corporate entities or a more grassroots, community-driven approach.
Does Europe have anything unique to offer when it comes to shaping the metaverse of the future?
Europe holds a unique position in shaping the future of the metaverse, primarily due to the fact that decentralisation, self-organisation and the desire to protect our identity are part of our DNA. The GDPR has laid a foundation for data protection and identity development that aligns well with the decentralised ethos of the metaverse. Historically, the region has seen various forms of cooperative structures and localised governance, which now find digital expressions in decentralised autonomous organisations (DAOs) and blockchain technologies, and give Europe a unique opportunity to lead in the development of the metaverse, emphasising inclusivity, diversity, and community-driven governance.
For the past couple of centuries, we have had to rely on intermediaries to create value, and those intermediaries have – in my opinion – largely failed. The financial crisis showed everyone the risk that lies in centralised structures. But we now have decentralised, trustworthy infrastructures on which the metaverse and Web3 can be built. Infrastructures that enable people to engage – safely and at very limited cost – in value creation and value exchange with other people, anywhere in the world.
Interestingly, when it comes to regulation, the metaverse presents a unique challenge. Unlike traditional technologies, the metaverse encompasses a broad array of elements, making comprehensive regulation difficult. It’s not a single technology or business case but a digital extension of our world. So how could you regulate something so diverse? In part, recent EU policy measures and regulations in blockchain and crypto assets have set the stage for more bottom-up, community driven peer-topeer models. Moving forward, in my view, policymakers need to allow the market more breathing space to adapt and innovate within the currently known framework. Collaboration between the private and public sectors will be essential to drive this forward and allow a better understanding of what is at stake, opportunities as well as challenges.
How do you view the implications of the decentralised system the metaverse is based upon for democracy?
At its core, decentralisation empowers individuals, allowing for a bottom-up approach to governance and community building. The metaverse, with its global reach and ability to connect like-minded individuals, fosters a sense of engagement and activism that transcends physical boundaries. This can lead to more inclusive and participatory democratic processes.
Decentralisation, facilitated by technologies like blockchain, is in my opinion a true social revolution, as it introduces a level of transparency and trust previously unattainable. It offers a trust environment where individuals can interact and transact securely and transparently. This not only democratises access to digital spaces but also ensures accountability through collective, rather than individual, liability.
The concept of collective liability within decentralised systems is particularly intriguing. It allows for legal and regulatory responsibilities to be distributed across the community, ensuring that no single individual is unfairly targeted. This approach aligns with the democratic principles of shared responsibility and collective governance.
Ultimately, the metaverse has the potential to revolutionise democratic engagement. By providing platforms for virtual interaction, it can bring people together, foster dialogue, and drive social change. If that space is used in a creative way, it will enable people to feel much more engaged and active. I think that is fantastically democratic.
Perspectives from Claire Enders CBE
Founder Enders Analysis
Why do you think the broadcast, entertainment and advertising sectors will integrate the metaverse into their business strategies in 2024?
Immersive interactive worlds are becoming the forefront of the entertainment experience for many, particularly the generation now coming of age, who are already natives to Fortnite, Roblox and Minecraft. As those audiences mature the impact will be profound, and a reason for our established media, be it broadcast television, film, or the advertising industry that supports so much of our entertainment ecosystem, to explore and understand what that impact will be.
You have been a vocal advocate for the role of media in a democracy. How do you think the metaverse will affect that?
This isn’t our first technological transition, and in the past we haven’t always protected those things we value most. We know people want, need and value distinctive local content, that is relevant to them. Creative institutions with more than purely commercial objectives, with a mandate for public service, are a vital part of the media ecosystem, helping to promote democracy and the flourishing of humanity. Their presence in these online experiences and on many different platforms is vital.
Where do you think the UK stands in terms of supporting and developing emerging technologies such as AI and the metaverse? Is it well placed to seize the opportunity?
We have seen early experimentation from some businesses in our sectors. Yet immersive interactive worlds continue to evolve and grow, so this is the time to figure out what kind of user offerings work, and advocate for plurality, fair access and protections for the values that matter to us. There is opportunity: if we get this right we can build a fairer, more democratic technology sector, and bring the world-class entertainment and brands that the UK has to offer to a new global audience.
The technologies of the metaverse
We stand at the dawn of a new era. A combination of emerging technologies and the scaling of existing tech stacks is generating a multi-track technology environment of unprecedented complexity and scope. It is this convergence of gaming technologies, generative AI, blockchain-based digital asset models, and – before long – quantum computing that will unleash the full potential of the metaverse – a metaverse in which people and assets can transfer and compose seamlessly between different technologies and worlds. Distributed systems will be an essential component of this new world, enabling multiple computers to work together to create a continuous virtual experience at scale. The result will be a truly open metaverse, whose constituent parts can be developed independently and then integrated. This open technological environment will foster growth and innovation at the grassroots – evolving organically as innovations developed at the fringes work their way to the centre, continually reshaping the whole.
Hi Rob, can you describe the technologies of the metaverse and why distributed systems are so important ?
The development of the metaverse is a complex, multi-layered challenge that hinges on advanced technologies, systems and models. It relies on a convergence of technologies such as gaming, AI, cloud computing, and open-source standards. Creating a high-fidelity, interactive virtual world requires more computational power than a single computer can provide. This is where distributed systems become essential. Distributed systems enable many computers to work together, sharing the computational load needed for a seamless virtual experience. Unlike websites, where multiple servers handle isolated tasks, virtual spaces need all servers to communicate continuously to maintain connectivity and synchronisation. These systems manage data for simulation, AI, and computation, forming the backbone of large-scale virtual worlds. The complexity and unpredictability of these systems mirror the challenge of coordinating numerous individuals to achieve a common goal. Therefore, distributed systems technology is crucial for the scalability and functionality of the metaverse.
It’s worth mentioning that blockchains are also complex distributed systems - where instead of scaling to increase computational power, they scale for security reasons. We’re finding high-performance distributed system development is also an area of value to this space too.
Co-Founder and CPO Improbable
What does interoperability and composability mean in practice, and where are we at?
Interoperability in the metaverse means people and things can seamlessly be used across different products and technologies.
This is a multi-layered problem - it’s not just enough to know you own something, you need to know what it is, how it behaves, and what it looks like!
1. Ownership: Managed by NFTs and blockchain, ensuring that digital assets are uniquely owned and transferable.
2. Semantic Understanding: Defining what an item is, such as distinguishing between a hat and a tree.
3. Behavior: Ensuring items function consistently across different virtual environments.
4. Visualisation: Making sure items look the same regardless of the platform.
Currently, we see progress in visual and behavioral interoperability, with standards being developed. However, economic interoperability, which allows seamless transactions and value transfer between different systems, is still emerging. For interoperability to be fully realised, all these layers must work together effectively. And making the glue is quite challenging.
Composability, akin to Lego blocks, allows different creators to build upon each other’s work, enhancing creativity and economic value. For instance, in blockchain technology, one person creates a token, another builds an exchange, and another develops a marketplace for that token. On TikTok, creators are constantly remixing and stitching together existing content to make new forms of related media.
These interconnected components exponentially increase value by integrating seamlessly. This principle is crucial for creating rich, dynamic virtual environments where diverse contributions can combine to form something greater than their individual parts.
Why is decentralisation
so important for the metaverse?
Decentralisation is vital for the metaverse because it democratises creation, ensuring diverse and organic growth. It allows different pieces of the metaverse to be developed independently and then integrated, much like how decentralised finance works on blockchain. Each component, from tokens to marketplaces, adds value by connecting and integrating with others.
It also preserves the open metaverse, preventing monopolies by large corporations from dominating the space. Decentralisation fosters grassroots cultural development, allowing innovative ideas to flourish at the fringes and gradually influence the mainstream. This cultural evolution is essential for creating meaningful, authentic virtual spaces.
Lastly, it supports economic composability. It will enable the economic frameworks of the metaverse to evolve, expand, and integrate new functionalities, enhancing the overall value and utility of virtual environments. This flexibility is crucial for the dynamic and rapidly evolving nature of the metaverse.
To sum up, decentralisation ensures that the metaverse remains open, inclusive, and adaptable. It allows for a diverse range of contributions, fostering innovation and creativity. By decentralising creation and economic frameworks, we ensure a vibrant, diverse, and sustainable metaverse that can grow organically and inclusively.
AI and the metaverse
The metaverse is still waiting for its TikTok moment. As yet, there is no mass-market tool that enables anyone –whatever their level of technical training – to create their own 3D world and experience. AI will make that happen: leveraging content creation, and supercharging the metaverse in the process. It has emerged as a crucial element in the metaverse ecosystem: a leveller, a driver of innovation, a means to accelerate content creation and scale-up moderation. The metaverse requires significant computing capacity, and AI can help there too: optimising network performance and substantially reducing data needs. As such, generative AI looks set to make everything easier, democratising the creation of virtual worlds and reducing technical friction. But it may also give rise to new regulatory challenges, particularly in the areas of content moderation and copyright. The EU’s new AI Act represents the first comprehensive attempt to respond to those challenges with a regulatory and legal framework.
Interview with Dan Nechita
Dan, you have been directly involved in the genesis and negotiations of the EU’s AI Act, the world’s first legislation on Artificial Intelligence. Can you explain how this pioneering regulation will now be implemented?
The AI Act represents a new type of regulation, not only because of its development process but also because it is grounded in the core values of the Union—democracy, individual freedoms, fundamental rights, and more.
Regarding its implementation, the Commission will need to issue guidelines in the coming months to make the legal requirements of the Act more practical. Another crucial aspect involves the work assigned to standard-setting bodies, which will be essential for understanding how to implement the Act at a technical level. However, what’s really important—especially when considering the Metaverse and the convergence of various technologies—is the establishment of the AI Office. This office will serve as the central European enforcer for very powerful general-purpose AI models, particularly those with systemic risks, which might be the type of AI deployed in a Metaverse environment.
Looking back, it’s interesting to note that the AI Act was initially intended as a product safety regulation, but we ended up focusing on high-risk use cases. This is a powerful approach because it genuinely considers how technology is used and its impact on end users or those interacting with it. We’ve established a flexible governance structure to monitor the frontier of technology, featuring an interactive component with the AI Office supervising the market. Essentially, it acts as a European supervisory authority, enabling flexible enforcement through model analysis and industry empowerment. This gives me confidence that the regulation will be futureproof. We’re not over-regulating; instead, there’s a dynamic interaction between industry and the regulator.
Overall, I believe that policymakers today are responsible for less and less, and it’s the people building our digital future who need to carefully consider their creations. The technology they develop will be with us for a very long time; once it’s here, it won’t disappear. This enduring presence brings with it a profound responsibility. While the potential is enormous, so too is the moral responsibility, for both AI and Metaverse developers.
What specific opportunities and challenges do you see being associated with the Metaverse. And are these going to call for regulation too?
While I believe in the potential of the Metaverse, it’s important to remember that this isn’t the Matrix; it hasn’t reached societal level integration yet. We shouldn’t scare ourselves unnecessarily or rush into regulation. Currently, regulatory needs address the entire digital environment, tackling issues like cybersecurity, identity theft, manipulation, and targeted advertising. These concerns are being managed. However, the tools and capabilities being developed now will shape our digital future. Soon, technologies like the Metaverse, quantum computing, and AI will converge, creating a new paradigm.
Regarding the Metaverse’s opportunities and challenges, you could imagine this is a sandbox for exploring and testing new technologies or systems. For instance, using AI to distribute tokens in a virtual environment might be safer than allocating state allowances to underprivileged families. The Metaverse can recreate the real world with different rules, offering a space for human creativity, beyond the limitations of the real world.
Social interaction in the Metaverse could also evolve positively. If we can build virtual worlds with better business models than ad-driven social media, we could create environments that foster genuine social connections and community building. This could be a remedy for the shortcomings of current social media platforms, encouraging more meaningful interactions.
Finally, the Metaverse presents complex questions about democracy and individual freedoms. In a virtual world, voting might be blockchain-based, but who sets the rules for voting? Who runs the system? Ensuring that the Metaverse facilitates democracy requires vigilance. It could potentially enable a greater extent of democracy than we have today, but this outcome is not automatic. Democracy is a complex system built over centuries, and the same care must be taken to establish its principles in the Metaverse.
How will the EU’s new AI Act apply to the Metaverse?
Considering the end goal of a large-scale Metaverse, it makes sense that the AI behind it would be a very powerful general-purpose model, akin to those currently being trained at the cutting edge of technology. While we hope these models will not be risky or dangerous, they will likely fall under the purview of ensuring their safety, a task designated to the AI Office.
I also believe that in the not-so-distant future, all these technologies—Metaverse, AI, quantum computing— will merge and intersect. Currently, there’s a lot of experimentation at these intersections, but eventually, they will work seamlessly together. This integration will unlock new possibilities and foster greater creativity.
As I was saying earlier, with this immense potential comes great responsibility for metaverse developers.
Thank
you for exploring
the metaverse with The Metaverse Society.
We look forward to continuing the journey with you in our upcoming reports: on AI, Content Creation, and Fashion and Luxury. Look out for more interviews online, and in our next opus. Scheduled for publication in Q3 2024, it will examine key issues for the metaverse – including accessibility and education, urban design and creators’ rights.
Brochure published by The Metaverse Society - 10 Bishops SquareLondon E1 6EG - United Kingdom - Publication Director: Marine BoulotEditor-in-Chief: Marine Boulot - Design, creation, and production: Havas Paris - Print run: 100 copies.
