What is the metaverse? A look at NFTs, virtual real estate and how companies are investing in the digital world

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The metaverse seems to be the Internet’s new buzzword – it’s everywhere. Many tech leaders believe it is the future of our society – including Mark Zuckerberg, who recently renamed and rebranded his company from Facebook to Meta (formally, Meta Platforms Inc.) after the concept. Others, such as Elon Musk, aren’t as convinced, saying the idea of the metaverse is not “compelling.”

In reality, the metaverse represents a variety of innovative concepts with the potential to transform how we use the Internet in decades to come. So what, exactly, is it? Why is it important? And why are companies investing in droves? Here’s a breakdown of everything we know about the metaverse so far.

What is the metaverse?

The metaverse is a three-dimensional online space that combines virtual and augmented realities where people can interact with each other – via digital avatars – by working, playing, shopping, trying on clothes, attending concerts and even buying land. The word was first used in Neal Stephenson’s 1992 science fiction novel, Snow Crash.

As The Globe and Mail’s Joe Castaldo describes it:

Some multiplayer video games, such as Roblox, Fortnite and Minecraft, have been labelled metaverse platforms. Virtual spaces such as Second Life, an online world that replicates mundane tasks of everyday existence, including shopping and talking with friends, can also be labelled as a metaverse. Other popular metaverses include social and virtual real estate worlds such as Decentraland, the Sandbox and Somnium Space.

What can I do in the metaverse?

The possibilities are limitless once you enter into any metaverse space. Each offers opportunities for work, gaming, social interaction and even generating revenue. You can purchase real estate, play video games, shop for virtual products and meet new people.

Socializing is an important aspect of the metaverse. You can attend a dance party or have a virtual coffee. The Globe’s Joe Castaldo reports that you can enter sleep rooms for quiet contemplation or attend a virtual megachurch service. You can even attend a concert with your favourite musician. Ariana Grande, Travis Scott and Marshmello have all staged digital concerts on the Fortnite platform, and Warner Music Group has announced plans to build a stage in the Sandbox for digital concerts.

Companies are also experimenting with the metaverse for remote work by creating spaces for meeting and collaborating with colleagues. Meta released a VR app for meetings and collaboration, and Microsoft Corp. already has a similar application called Mesh. Canadian tech companies such as XpertVR and MetaVRse Inc. are also experimenting with the future of work using virtual spaces to host meetings. Virtual job fairs have even popped up in the metaverse.

What’s the difference between the metaverse, VR and AR?

AR (augmented reality) uses your smartphone or smart glasses to overlay digital elements on top of the real-world. VR (virtual reality) is a completely virtual experience. Both will likely shape the future of the metaverse. They are the computer technology used to create these real-life-mirroring experiences in the metaverse, making things such as virtual meetings, multiplayer games or even a virtual concert possible – with the help of a VR headset or a computer screen.

Is the metaverse the future of the Internet?

It depends who you ask. Companies such as Meta and Microsoft see a huge future for work and play in these shared augmented and virtual reality environments. JPMorgan Chase & Co. estimates the metaverse will represent a US$1-trillion market. Research giant Gartner Inc. projects that 25 per cent of people will spend one hour per day in the metaverse by 2026.

On the other hand, Tesla founder and CEO Elon Musk recently took aim at the metaverse hype in an interview: “I don’t know if I necessarily buy into this metaverse stuff. Although people talk to me a lot about it … I think we’re far from disappearing into the metaverse. This sounds just kind of buzzword-y.” Meanwhile, a Harris Poll survey released in December 2021 found that only 38 per cent of millennials think “the metaverse is the next big thing and will become part of our lives in the next decade.”

Critics also believe that the multi-layered issues of social media such as harassment and lax moderation will only get worse as we venture into the metaverse. A Bloomberg columnist recently documented her experience being the only woman among a dozen or so men in the Horizon Worlds platform and called it an “awkward” and at times “uncomfortable” space for women.

What do NFTs, cryptocurrency and blockchains have to do with the metaverse?

The metaverse translates into a digital economy where people can create, buy and sell goods. It’s also being heralded as a major player in growing the digital economy. Nonfungible tokens (NFTs) – digital assets whose ownership is recorded on an online public ledger called a blockchain – are considered an important aspect of that system.

These digital universes have their own cryptocurrencies and marketplaces for digital clothing and accessories for avatars. You can buy digital property, build on it, rent it out and sell advertising space. Parcels of land, along with any clothing purchased for your avatar, are technically NFTs and transactions are recorded on a blockchain.

For example, Decentraland has some 50,000 daily active users and its own cryptocurrency, MANA, with a market cap of US$3.5-billion. One of the primary activities for Decentraland users today is shopping. They can purchase items such as digital clothing and accessories for their avatars, and digital artwork. Each virtual object is considered an NFT and can only have one owner at a time, meaning it can be traded and resold almost as though it were a physical object.

What do Mark Zuckerberg and Facebook have to do with the metaverse? What’s the Zuckerberg metaverse?

Facebook helped popularize the term when it changed its company name to Meta in October, 2021. Chairman and CEO Mark Zuckerberg announced the name change at the Facebook Connect augmented and virtual reality conference, reflecting the company’s ambitions to grow beyond social media.

The rebrand is an emblem of the company’s long-term bet that users will increasingly spend time in virtual worlds. “We believe the metaverse will be the successor to the mobile Internet, we’ll be able to feel present – like we’re right there with people no matter how far apart we actually are,” Mr. Zuckerberg said.

Mashable has reported that Meta will spend the next five to 10 years creating an immersive virtual environment that includes fragrance, touch and sound to allow users to lose themselves in virtual reality.

Is it possible to buy land and real estate in the metaverse?

A handful of upstart companies are spending millions to purchase land in online worlds that can only be visited on computer screens or through virtual reality headsets – in worlds such as Decentraland, the Sandbox and Somnium Space. These virtual real estate moguls plan to monetize their pixels through property development, rental income and advertising.

The hype around the metaverse has spiked interest in purchasing digital land and virtual real estate – and prices are soaring. These platforms are divided into land blocks called parcels, which can be purchased using a cryptocurrency token or as NFTs. Once you purchase real estate, you can sell it at a higher value, or lease it to a property developer or a metaverse event organizer to generate revenue.

Decentraland, whose creators raised about US$26-million in an initial coin offering in 2017, opened its online playground to the public in February, 2020. Land parcels sell for tens of thousands of dollars there; one prime parcel is currently listed for more than US$1-million.

Which companies are investing in the metaverse?

“Business leaders and boardrooms around the world are now asking themselves, ‘What is my metaverse strategy?’” according to a JPMorgan report released earlier this year. PwC tells business leaders that “getting started early can help make sure your company won’t be left behind.” Accenture suggests executives who ignore it “will soon be operating in worlds defined by others.”

Companies ranging from General Motors Co. to Estée Lauder Cos. Inc. have experimented with advertising installations, Samsung unveiled a store of sorts, and JPMorgan built a lounge with a pixelated portrait of CEO Jamie Dimon. Sotheby’s set up a gallery in Decentraland last year to auction NFT artwork, and Atari Inc., the video game company, built a casino. In April, Wendy’s entered the metaverse by launching Wendyverse, a virtual restaurant on Meta’s Horizon Worlds platform – though “there’s not much to do beyond take in the Wendy’s branding,” reports The Globe’s Joe Castaldo.

The world’s biggest fashion companies have also experimented with making virtual clothing, which people’s avatars can wear in metaverse environments. Fashion retailers such as Forever 21 are selling NFT clothing and some designers have staged digital runway shows. A Tokens.com subsidiary established a luxury shopping district where Dolce & Gabbana, high-end Italian fashion house Etro, jeweller Jacob & Co., and others set up branded stores to sell a mix of physical and virtual clothing

Even celebrities are experimenting with the metaverse. Snoop Dogg erected a virtual estate in the Sandbox to throw members-only parties and Paris Hilton has a virtual island built within Roblox, called Paris World, where users can raid her wardrobe and purchase outfits.

More reading:

Is the metaverse the future of the internet? A Globe journalist steps inside to find out

Virtual real estate in the metaverse? There’s a burgeoning market for that

Are NFTs and the metaverse the future of fashion?

Why your company might want to consider meeting in the metaverse

With files from Joe Castaldo.

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