Dead Pants in the Metaverse? “We experience disillusionment”

Every idea, no matter how crazy, was thrown after millions and billions in 2021 under the label of the metaverse. The purport: it will be the new 3D internet. A billion dollar economy.

So far nothing has come out. On the contrary. Metaverse platforms like The Sandbox or Axie Infinity hardly attract users. The big hit of Meta (formerly Facebook) is still a long time coming. Has the dream of a virtual paradise already burst?

Europe’s largest digital asset manager Coinshares recently published a critical report on the current state of the Metaverse. A conversation with two writers, Matt Shannon and James Butterfill.

BTC-ECHO: Did you believe the hype story surrounding the Metaverse, or were you skeptical from the start?

Max Shannon: I think the Metaverse is more of a concept than a reality at this point. It fits perfectly into Gartner’s hype cycle. Expectations were at their peak. Now we are in a valley of disillusionment. We will see a number of companies going out of business in the future. People are confused about what the Metaverse is supposed to be.

James Butterfill: There is a lot of content on the Metaverse that is way too missionary. One should approach the matter with a healthy dose of skepticism. We’ve seen that with other technologies, like the early Internet in 1996. There were really compelling concepts, but no real user base. But many critics ended up getting a better lesson. The Metaverse is a long-term investment concept. A lot of infrastructure has to be built and users need a lot of hardware. However, it is wrong to reject it completely.

BTC-ECHO: If it’s so hard to build, why do we need it? Aside from profits, how can the Metaverse benefit society?

James Butterfill: We live more and more in the digital world. We watch Netflix, use Google and work remotely. Our money is largely digital, be it bitcoin or the euro. This is all the more true for the younger generation. My son is a good example of this. He bought a Fortnite skin for $200 and sold it for double that a year later. It is part of their daily life. The Metaverse is just the next step in this journey. I don’t want to judge whether that’s good or bad.

Max Shannon: Each social medium in which we are active has its own terms and conditions. It is a kind of isolated infrastructure on the Internet. For a metaverse to benefit society, it must be open, decentralized, secure, interoperable, and user-owned.

BTC-ECHO: With Meta (formerly Facebook) as a potential precursor to this development, there are fears that a dystopian version of the metaverse will become our reality: everything we do and feel will be tracked and fed into the algorithms, leading us to do more or become less of a digital prey for corporate profits. Is this just excessive hysteria or is this a genuine concern for you?

Max Shannon: I think that’s a very reasonable concern. Public polls show that tracking and using personal information is one of people’s top concerns. Another issue is bullying and mental health. Meta has nearly two billion active users. With an 80 percent share, it also dominates the VR headset market. You could have control over the virtual experiences people have.

BTC-ECHO: The metaverse you envision should be interoperable. That means: you have to be able to take the things you own digitally to other virtual worlds. This is a major technical problem. Do you see positive breakthroughs?

Max Shannon: I think blockchain bridges are the most important breakthrough. It allows assets, tokens, and data to be transferred across ecosystems.

BTC-ECHO: Many security experts warn that bridges are a major risk. Twelve of them were hacked this year and stole $2 billion. Most say this will continue, as bridges are more difficult to protect than conventional smart contracts. Is this really the way of the future?

James Butterfill: New technologies often have security gaps. The crypto exchange industry initially saw many very expensive hacks, such as Mt. Gox in 2014 (Editor’s note: 800,000 Bitcoins were stolen at the time). The exchanges have matured over time, have implemented protective mechanisms. Now that rarely happens. I’m optimistic we’ll see a similar development with bridges.

The latest issues of BTC-ECHO Magazine