Welcome to The TBEN Exchange, a weekly newsletter about startups and markets. It is inspired by the daily TBEN+ column from which it takes its name. Want it in your inbox every Saturday? Register here.
Happy Saturday! A few notes from home before we get to work. TBEN’s new crypto-focused Chain Reaction podcast launched this week, which excites me. And the TBEN+ team is host a Twitter space Tuesday, April 26 with Silicon Valley-based attorney and TBEN+ columnist Sophie Alcorn, who will discuss immigration issues and answer relevant questions for startup founders and workers.
I think that’s all. Now to work!
Ever since Facebook decided to chart a new future for the metaverse, even changing its name to mark the change, the term has become ubiquitous. A myriad of startups and public companies are slathering themselves with the term in hopes of catching the wave.
I don’t really have a problem with companies adapting their marketing to the current moment. What I struggle with is exactly what the metaverse is. For example, in January, this bulletin said the following:
The most fun I’ve had this week has been a visit to Decentraland. Long story short, I was editing and trying to distract myself from disturbing the editing team while they were working, so I turned on the social-crypto environment – the metaverse, in other words – and I went for a walk. With a mohawk and some pretty cool pants, I managed to get lost, visit an NFT gallery, and miss out on an arena.
Is the metaverse a social-crypto environment, bringing together human interaction and decentralized ledgers? That may be part of it, but it doesn’t seem like a comprehensive enough definition.
The definitional nuance of the term emerged this week in an article Jacquelyn Melinek wrote for TBEN+ about how music and visual artists are leveraging crypto products to connect with fans and make money:
The meta version of the metaverse mainly consists of virtual reality or augmented reality allowing friends to interact with each other, while the web3 version of the metaverse is more focused on how users will experience the internet in a digital world.
What’s nice about that particular Melinek riff is that she’s got it right. The are several definitions of what the metaverse is. This is the precise gray area that has allowed anyone working with digital communities, or truly digital assets more generally, to claim the label. The result is that everything is the metaverse, which amounts to saying that precisely nothing is.
As Melinek notes, there are two main axes to build the metaverse. The Meta approach seems to start from the point of view of personal representation in a persistent environment similar to that of a video game. This means that the “metaverse” is akin to an MMORPG, but without a genre-specific quest objective; it is more open, and therefore more open to continued thematic expansion. The more crypto, or web3, approach is to consider digital assets that can be seen as an extension of itself like the metaverse, or at least a part of it. A “PFP NFT” being, for example, the way you want to appear in a digital environment. That sort of thing.
It is possible to imagine a hybridization of the two definitions. A place where you and I could have some kind of persistent avatar and where digital assets are stored on some kind of decentralized ledger.
The problem with this vision is that it is not super possible to build at the moment. Why? Because there is no way to build an MMORPG on top of the blockchain, and companies capable of building such a platform do not want to allow decentralized creation and management of assets, as this would limit their ability to extract value from their game or digital living environment.
Yes, it’s a tension between decentralized and centralized systems, but in this case it’s worth noting that it seems to be keeping what might be the metaverse out of reach. It’s not also hard to find a way forward. For example:
- A DAO is created to raise several billion dollars.
- The DAO funds the creation and maintenance of a persistent digital environment, perhaps with its own token.
- The software – an amalgamation of Minecraft, Slack, the Unreal Engine and do not Elden Ring – is open for people to modify, create worlds, etc., maybe even allowing companies to build more virtual desktops.
- From there, everyone can participate and do whatever they want.
Is it a compelling metaverse? I guess at this point if that is not then we have to completely rewrite what we mean when we say the word. Because that’s as close as I can get to putting things together without literally dropping all current definitions and starting from scratch.
Good luck, Facebook!