---
title: 6.1 Theory and Evolution of the Metaverse
description: Moving from a 2D to 3D interface for the internet 
---

# 6.1 Theory and Evolution of the Metaverse

The metaverse as a topic is often the subject of much confusion and misunderstanding. The goal of this first lecture is to come to a clear and concise picture of what we mean, when we talk about a ‘Metaverse’. This requires first and foremost, an understanding as to the presuppositions underlying the Metaverse. From that, we can get into the nitty-gritty of different types of Metaverses and how they are poised to evolve into the future. 

## Presuppositions: Crypto and the Metaverse

In order to properly understand the metaverse, we need to start with the idea of _digitization_ and the increase in the world of bits. Since the early 2000s, the world has begun a process of digitizing: What started with basic information, expanded to the likes of streaming services and content, social media, gaming, and now value itself through the crypto-currency revolution. 

As these processes have unfolded, people have spent more and more time living in ‘digital worlds’. This is the basis for understanding crypto - from a high level, and consequently, the metaverse. 

**Crypto:** Is the domain of ownership in the digital world. Such ownership can be tangible (money, commodities, and other types of fungible value), as well as intangible (non-fungible value). Crypto is the mechanism by which value is attached to the digital world - on its own - and not reliant on any physical entity or institution. 

**The Metaverse:** The metaverse is the domain of _user experience of the digital world._ This refers to how we as people are able to interact digitally, - with one another, different products, and the internet itself. With the metaverse, we are challenged to imagine what ‘living inside a digital world’ might look like. 

To fully understand this, lets look at some quotes from Crypto-Punks podcast with a16z (referenced in our lecture on NFTs): 

_“The internet is becoming more immersive and more integrated. And we will be spending more time there. In which case we will want to have our stuff there.”_

In tandem with spending more time in the digital realm, we are in the process of transitioning from a localized and segregated internet, to a global and unified internet. This the second major presupposition underlying the rollout of the metaverse: 

_“The Metaverse is going to be the interim but with better visualization, augmented mixed reality. The field of vision will include mostly the world around you, and some digital objects. So one is better visualization, and the second is persistent digital objects. I have persistent cross-application digital objects on LinkedIn that are not cross-application or interoperable. If I want to make it interoperable I need to get an API key. Whereas a single contract can represent everything on-chain. Any number of thousands of different things you will be able to do with a crypto-punk in 5 to 10 years. The value here is that it is interoperable. The metaverse is the internet with better visualization and persistent digital interoperable objects. (13:05)”_

This is to say, crypto is intricately tied to the metaverse: The objects of the digital world are transitioning from fully centralized and connected to the outside world, to semi-centralized, with pockets of value living on their own. In a similar vein, interfacing with the digital world is moving from siloed, site by site exploration, to uniform and aggregated visualization. In short, the internet is moving from 2D to 3D: And the 3D interface is known as the Metaverse. 

To be crystal clear we could say the following: 

_As we digitize more of our world, we find ourselves ‘living online’ more and more. The Metaverse refers to the aggregated interface for interacting with the host of digital systems living on the internet. It is primarily an enhancement of visualization and experience combined with interoperable objects - living across digital systems of the internet._

Put more concisely [by Metaversed.net:](https://metaversed.net/)

“_The[ Metaverse](https://en.wikipedia.org/wiki/Metaverse): a persistent, live digital universe that affords individuals a sense of agency, social presence, and shared spatial awareness, along with the ability to participate in an extensive virtual economy with profound societal impact.”_

### Public or Private?

With this loose definition, we can now begin to discuss one of the more controversial and confusing aspects of the Metaverse: Namely, a distinction between the _metaverse_ as an open-public, and decentralized concept - and _virtual worlds_, as private, closed, and centralized experiences.

With private companies like Facebook rebranding themselves to _Meta_ and virtual reality (through Augmented Reality headsets) becoming familiar, it is easy to confuse virtual worlds with the Metaverse. To a certain extent this becomes a pedantic argument of terms - but for our context - we will follow a16z, in differentiating between _a Metaverse_ and a _Virtual World_ based upon its primary attribute of either being _open_ or _closed._


![](@site/static/img/bootcamp/mod-em-6.1.1.png)


As the framework above explicates, the _theory_ underlying the development of a metaverse, centers on the notion of it being _open._ Specifically, this means that it would be blockchain-denominated, as all other software systems would require a central entity in charge of governing the ‘rules’ of the interface - while crypto can be governed via smart contract and token based incentives. 

Hence, the primary distinction of a metaverse, is the following: 

_A Metaverse is an open-decentralized and public interface, for interacting with digital reality. A Virtual World, is a closed-centralized and private interface, for interacting with digital reality._

The challenge underlying this distinction centers on the fact that both of these concepts are largely _theoretical._ No one has built a scalable or widely adopted metaverse or virtual world - specifically one that is not itself a game. 

## Features of the Metaverse, Or A Framework For Living Digitally

With this premature distinction in mind, let’s address the primary features of a metaverse, to get a better intuition surrounding ‘what’ role the Metaverse plays. 


* **Property Rights**: Just as in the physical world there is a notion of land ownership or possession, such is the same in the Metaverse. Once more the premise of moving our realities online is increasingly the theory undergirding the drive in value of metaverse property (see our next lecture specifically on this topic). 
* **Self-Sovereign Identity:** Proving who someone is, functions as the basis of building up a history of behavior for that account, and inadvertently a reputation as well. A Metaverse, unlike a Virtual World, would allow the user to control their identity, without having their data harvested by a private corporation. 
* **Composable Infrastructure:** Meaning a technical design, that would allow creators to collaboratively build value into the Metaverse. As the quote below explains, the Metaverse is a middle ground between some of the innovation in gaming, and some of the convenience of Fintech services. Living on-chain means that users can act as creators, and others can share in the creativity and value creation present. 

_“To feature [composability](https://future.com/how-composability-unlocks-crypto-and-everything-else/) — a concept closely intertwined with interoperability — a metaverse would have to offer high quality, and open, technical standards as a foundation. In games like Minecraft and Roblox, you can build digital goods and new experiences out of the basic components supplied by the system, but it’s harder to move them outside that context or modify their inner workings. Companies offering embeddable services, like Stripe for payments or Twilio for communications, work across websites and apps — but they don’t allow outside developers to change or remix their black boxes of code.” ([a16z](https://future.com/7-essential-ingredients-of-a-metaverse/))_



* **dApp Integrations:** Offering services and activities in a Metaverse, requires third-parties, building, leasing, selling, and interacting with one another. Like blockchain ecosystems, providing the basic infrastructure for dApps to create value, a Metaverse is a specific front-end from which these dApps can also participate in the same world, user-base, activities, and incentives. 
* **Community Ownership:** Crypto-economics goes hand and hand with open-source, value denominated infrastructure. Community governance does as well. In this sense, Community Ownership encompasses both governance of a metaverse, as well as the monetary system built into that metaverse. 

This list is not exhaustive, but it should help paint a picture of what we mean when we say _‘Metaverse’_. We are referring to an immersive digital space - primarily via screen and eventually via headset or hardware immersion - from which uniquely identifiable users (could also call them ‘characters’) interact, and ‘live’ in a massive digital reality (world, with property), that is grounded with a set system of governance, economics, and sociality. While thrown around often, a _Metaverse_ is not a simple concept. 

## The Metaverse and the Crypto Product Stack

We are here after all to learn about crypto and the internet of value. So to fully-conceptualize what a Metaverse is, let’s dip into the role that the Metaverse plays in the crypto product stack. We can summarize this, as four separate potentials - that ideally - harmonize to create a ‘flywheel’ of users and value. 


* **The Business Potential for the Metaverse**. If the metaverse purports to allow users to ‘Live’ digitally, the business potential of the Metaverse is to offer users items, services, and experiences, similar to what they might be able to expect in the real world. From clothes, to items, to property, to generation services, there is a unique opportunity for existing brands to cross-launch items in the Metaverse (think Nike), and in tandem, Metaverse native companies to launch Brands digitally, before moving into the physical domain. Non-fungible tokenization and fungible tokenization play a prominent role here. 
* **The dApp potential of the metaverse:** For dApp creators in different blockchain ecosystems, a robust metaverse offers a simple home to jumpstart users from that ecosystem. This means that new games, new financial services, and new communities, can leverage an active metaverse to participate and grow themselves through a mature and active community. 
* **The Composable potential of the metaverse:** Within and beyond crypto, the Metaverse has the potential to allow for composability to exist across applications. Presupposing that there are dApps integrated with the Metaverse, a game might allow an in-game item to leave the game-world, and to translate into the larger Metaverse it is collaborating with. That item could then be used inside of a second game also connected to that Metaverse. The same concept would apply to coupon incentives leveraged by a company in one dApp, that could likewise translate over to another dApp. 
* **The Social potential of the metaverse:** At root, much of the existing growth in PFP communities in crypto, is based on socialization - via Twitter or another platform, such that it makes the discord or group look appealing to be a part of. An established Metaverse creates a home base, from which different communities can leverage social reputations, establish skills and expertise, engage in activities with one another, and share in collaborative value creation. 

At its best the Metaverse is the ‘glue’ of digital reality, that holds together the different independent objects, users, dApps, and services, that the on-chain world purports to bring to the world of internet users.  

## The tech tree evolution of the metaverse: Too soon?

As we close our initial overview of the Metaverse, we need to seriously consider the following question:

_If all Metaverses’ presuppose notions such as sovereign identity, public and private property, composable value creation between dApps, community involvement, as well as some form of social immersion,  AND much of crypto today is barely live - value creation in itself is in its earliest stages, identity remains unknown to many, and communities form sporadically and temporarily - considering all of these factors - is it too soon to talk about a scalable Metaverse? More importantly, is there a risk that a player like Meta, successfully uses their existing users on Facebook, Whataspp and Instagram, to cultivate a synthetic virtual world under the guise of it being a Metaverse?_

To close out, lets look at the ‘tech tree’ for a crypto-denominated Metaverse, and then talk about hybrid concepts between a Metaverse and Virtual World that may emerge sooner: 

## The Tech Tree for a Metaverse

Active users, value producing dApps, unique identifiers for users (identity), scalable infrastructure for transacting between users in the metaverse (high transaction throughput), an ecosystem of events, incentives, services, and tokens, as well as a well-designed and community governed economic system - are all required for a successful metaverse. 

Today, perhaps the only blockchain ecosystem mature enough for such capacities would be Ethereum - except the cost of transaction on the native network would eliminate it from realistically being used. 

All other ecosystems, first need to focus on the following:


* Active Users.
* Revenue Producing or Value Accruing dApps. 
* DAO infrastructure. 
* Communities of Diverse Tastes and Interests. 
* An ecosystem wide account model, used by all users such that they can reliably build an identity around a specific account. 

Interestingly, when we look at this from the perspective of a private corporation like _Meta_ moving into the Metaverse / Virtual Reality space, they already possess the active users and communities of diverse tastes and interests - missing are the unique identifiers, and composable integrations with other service providers on their platform. Massive games, meanwhile, may already possess a world, active users, and communities, but would need to expand ‘out of game’ in order to accommodate a broader set of services and potential users. 

Based upon the current state of crypto, it's fair to say that it will be a number of years before a robust metaverse grows and scales to the point of becoming ‘complete’. Nevertheless, as we will see in the proceeding lecture, the starting basis for these early stage projects centers upon the ‘reality’ component of the metaverse specifically in relation to digital property, digital worlds, and in-world items and objects that can be utilized or created, to offer optionality to future users.