Why is Facebook interested in the metaverse?
A company formerly known as Facebook Inc. has taken an interest in the concept of the metaverse. Here is why.
A company formerly known as Facebook Inc. has taken an interest in the concept of the metaverse. So much so, Facebook Inc. has changed its name to Meta.
This move has stirred up online discussions about what exactly the metaverse is, and why Facebook is interested in the metaverse. While their move to embrace new social trends is admirable, there is also no short of backlash from the crypto community.
So, why is Facebook (now Meta) interested in the metaverse? Read further to get to the bottom of this.
What is metaverse?
Before we dive in, let’s review what the metaverse is.
The best synonym for the metaverse is probably the word “cyberspace”. This is where people can meet, socialise, shop, and play, regardless of their location — basically the Internet, social media, and virtual worlds like Minecraft servers.
One key difference is that the metaverse takes this a step further using decentralised technologies, like blockchain and cloud computing. Decentraland and The Sandbox are both well-known virtual worlds, which run on Ethereum and use their own cryptocurrency.
In the metaverse, users can buy virtual land, and the title deed is enforced by the blockchain. Landowners can then build and create content within them, like shops, NFT galleries, and even gaming platforms.
What is NFT? Learn more about NFT and how they work
Why Facebook changed its name to Meta
Much debate can be found on the Internet about the true intent behind Facebook’s name change.
In an insightful interview with Mark Zuckerberg, Alex Heath from the Verge, learned that the name change from Facebook Inc. is to avoid confusing the parent company with one of its social media platforms, Facebook, whose name remains unchanged.
This is understandable. The parent company of the search engine Google, for instance, was called Google before it was changed to Alphabet in 2015.
This signaled the world that Alphabet Inc. is more than a search engine company. It is informally a big data conglomerate with an array of services that feed its hungry algorithms with the world’s knowledge — everything between A and Z.
One answer remains unanswered, though. Why change the name specifically to Meta?
Zuckerberg told the Verge, “One interesting analogy here is I think we’re basically moving from being Facebook first as a company to being metaverse first. I feel like this is in a way like when Microsoft went from being Windows first to cloud first.”
It seems that Meta has been eyeing the concept of the metaverse with much intent. It simply fits in with the area of business they are in. That is, an array of social platforms where reality can be brought to life in a virtual world that is designed for play.
Like any business, Meta sought to gain a large market share in what seems to be the new economy of virtual worlds.
What can you find in Decentraland? Learn more about Decentraland here.
How valuable is the economy of virtual worlds?
According to a November 2021 report “The Metaverse: Web 3.0 Virtual Cloud Economies” published by Grayscale, the revenue from virtual gaming worlds could grow from $180 billion in 2020 to $400 billion in 2025.
This doubling figure may be a conservative estimate. Users in decentralised metaverses like Decentraland are pushing prices of virtual goods beyond what’s possible. But there are those willing to pay for them.
Furthermore, there is a growing trend among game developers to monetise virtual in-game items. According to Grayscale, players nowadays prefer to play free games with in-game purchases over pay-for-once premium games. In this model, players can “enhance gameplay or social status within these virtual worlds.”
Interestingly, the Web 3.0 metaverses, powered by crypto networks, were never designed to be money-making universes with high-priced virtual goods. At $27.5 billion in total market cap, virtual goods may as well be priced arbitrarily, as there is no centralised authority to manipulate the market.
The secret to the success of these metaverses is the permissionless and non-custodial ownership structure. Monetary value can cross easily between various metaverses, and also to and from real life.
Owners also feel more confident paying a high price for virtual goods. They can verify with the blockchain that they truly own virtual goods. Such ownership deeds are not enforced by any centralised authorities, but by their own private key.
How do you own something virtually? Learn about private and public keys
Meta’s metaverse “is a fake metaverse”
A barrage of criticism from the metaverse community is plentiful. Artur Sychov, founder of the metaverse Somnium Space, remarked that Facebook’s rebrand felt rushed. “Kind of like trying to insert themselves into the metaverse narrative which is happening right now.”
Yat Siu, chairman and co-founder of Animoca Brands (investor of metaverse platforms), told Reuters that it’s not real metaverse “unless they actually have a real description as to how we can truly own it.”
Dave Carr, communications lead at the organisation that runs Decentraland, commented that Meta’s metaverse is “likely centralised”. But he also suggested that it’s unlikely that Meta will have a monopoly over Web 3.0’s “true metaverses”.
“People who want to determine the future of the virtual worlds they inhabit, maintain ownership of their creative output and move freely between them will choose the decentralised version,” he told Reuters.
The criticisms were mostly aimed at Meta’s misnomer. To members of communities who have pioneered Web 3.0 metaverses, the term should be reserved for open source, permissionless, and decentralised virtual worlds, where multiple metaverses can connect with each other.
“Until then, it’s just Disneyland,” remarked Yat Siu. “It’s a beautiful place to be, but we probably don’t want to really live there. It’s not the kind of place where we can actually build a business.”
Despite the criticism, some early metaverse adopters suggested that Meta’s exploration of virtual worlds could raise the general public’s interest in the concept. After all, decentralised technology and Web 3.0 are here to stay, and it’s only a matter of time before people try out the blockchain alternatives.
Decentralised infrastructure has made it impossible for governments and business conglomerates to monopolise open source and permissionless innovations, such as Web 3.0 metaverses.
There is really no need to be concerned that social platform giants like Meta would take over Decentraland and a myriad of other virtual worlds. In fact, Meta’s move follows an interesting trend that has been happening over the years:
A decentralised innovation, like Bitcoin, appeared and threatened institutions, like central banks. So, central banks create their own digital currency, albeit centralised, to offset the risks of becoming overpowered by decentralised cryptocurrencies.
Likewise, Meta’s move into the “metaverse” may be in part a defence mechanism. Who truly knows Meta’s real intent other than Mark Zuckerberg himself?
Also, don’t forget to subscribe to our monthly newsletter to have the latest crypto insights, news, and updates delivered to our inbox.
Disclaimer: Information is current as at the date of publication. This is general information only and is not intended to be advice. Crypto is volatile, carries risk and the value can go up and down. Past performance is not an indicator of future returns. Please do your own research.
Last updated October 18, 2022