Metaverse, what it is and what it could become

«We are at the beginning of a new chapter of the internet age». A new platform that «will be even more immersive; an embodied internet where you are part of the experience, you don’t just look at it ». These words of the number one on Facebook were enough Mark Zuckerbergdelivered at the now famous Connect conference in October 2021, to consecrate the metaverse as the “next big thing” in the digital world. More than six months later, however, there are still more questions than answers on the subject.

The abc of the metaverse

Speak about metaverse today, argues Wired, it’s a bit like talking about the internet in the 1970s. Despite being something that formally exists, in fact, it almost seems that no one has really understood what it is. The task becomes easier if we begin to consider it no longer as a specification technologybut as our way of relating to technology itself.

In fact, the metaverse is a kind of internet that overlaps the physical world, allowing users to interact in a more direct and less artificial way and participate in planned or spontaneous events. This experience is made possible by a mix of devices and infrastructures: augmented reality (AR, that is, the one that enriches the real world with virtual elements), virtual reality (VR, that is the entirely digital one, visible through the so-called “goggles”), connection superfast 5G, blockchain… However, it does not end in any of them.

An example? Today for meetings with colleagues you connect to platforms such as Zoom, remaining seated at your desk and scrutinizing the rectangles with their faces framed by a webcam. A mode that has literally saved millions of companies during the lockdown, but which is also artificial and tiring (according to Harvard researchers).

With the metaverse you can meet in a virtual room, populated by realistic and 3D avatars of colleagues. The question is much more than aesthetics. In fact, body language is added to facial expressions. In addition to modifying shared documents in the cloud, a prototype of a machine or a new season dress can be passed from hand to hand. Medical specialists, instead of watching a video of an operation, will be able to virtually work alongside the surgeon.

The metaverse is made possible by technologies such as virtual reality, but it does not end in any of them © Vinicius “amnx” Amano / Unsplash

How many metaverses are there

As things stand now, it is more correct to speak of “metaversi“. In fact, Zuckerberg has self-attributed the role of pioneer by launching Horizon Worldsa virtual space that can be accessed with your Facebook account and wearing Oculus viewers (a company acquired by Facebook itself, now Meta, already in 2014).

According to the data of February 2022, about 300 thousand users connect to Horizon Worlds to play, build their own separate mini-world (there are more or less 10 thousand) and participate in virtual events. There is also an ad hoc platform for work, Horizon Workrooms. With a curiosity: the avatars reach up to the waist and float in the void. Tracing their movements of legs and feet and reproducing them faithfully, in fact, still goes beyond the technical possibilities of the platform.

Well before Zuckerberg’s announcement, millions of people were connecting daily to a space that comes close to his idea of ​​a metaverse: it is the video game. Fortnite, the same one in which American rapper Travis Scott gave a spectacular concert while the world was paralyzed by the first wave of Covid-19. Despite these interesting evolutions, Fortnite is not a metaverse (or at least, it is not yet) because users can only perform the specific actions that are required by the rules of the game.

This is why his development house – Epic Games – is now intent on building a metaverse proper. Sony and KIRKBI (the holding company to which the Lego brand belongs) seem to believe in it a lot, so much so that they invest a billion dollars each in 2022.

Between cryptocurrencies and speculation

Wanting to choose the examples of metaverse that so far appear to be the most successful, the experts appear unanimous in indicating two names: Decentraland And The Sandbox. The first was founded in 2017 by two Argentine developers, Esteban Ordano and Ari Meilich, and has been open to the public since 2020. It is a virtual world in which users buy and sell plots of land (land), entire properties (estates), contents of any kind and NFT (non-fungible token). You pay through a cryptocurrency called MANA and is linked to Ethereum.

There is always the Ethereum blockchain behind the operation of The Sandbox, a metaverse that comes from the video game of the same name and now travels over 30 thousand monthly users. Its map is made up of 166,464 plots (LAND), to be bought through a native cryptocurrency ($ SAND) and aggregated together, forming ESTATE and DISTRICT. To pay back the investment, you can rent land to another user who creates games; or, charge a sort of ticket to those who visit it or participate in the experiences that take place on site.

In the meantime, too Nvidia, Unity, Roblox and Snap they went to work to create their virtual worlds. And many companies – from Balenciaga to Nike – come on board, attracted by the tempting prospect of having a new market available in which to sell their products, revised and corrected in a purely digital key. With a big limitation: at the moment, the various platforms they do not communicate with each other.

The comparison with Monopoli would be made, were it not for the fact that you pay with real money. And they are far from small change: a transaction worth 4.3 million dollars has just been closed on The Sandbox. As long as this money circulates within the metaverse, it is the single platform that sets its rules: The Sandbox, for example, has always imposed a tax of 5% on each transaction. Whoever accumulates a treasure and converts it into current currency, however, is required to declare it to the tax authorities.

Speaking of tax havens

Pandora papers

From the 12 million documents of the Pandora Papers the names of politicians, billionaires and businessmen who exploit tax havens and offshore companies

But what happens when, for example, an artist goes on tour in the metaverse? In autumn 2021 the pop star did it Ariana Grande on Fortnite, grossing around $ 20 million, including merchandising. Who has the right to tax this money? The jurisdiction in which she performed or the state in which each member of the audience resides? This aspect still is smoky, reads an analysis by the consulting firm EY. And it’s not the only one. When you sell land in the metaverse, the proceeds are subject to VAT or should be framed as capital gain (financial return) which raises income?

The Organization for Economic Cooperation and Development (OECD) is trying to develop a shared framework. But the process will still take a long time, not least because it will only make sense if it is supported by a broad consensus at the international level. In the meantime, each state will try to regulate itself in its own way. “This adds a level of complexity and risk for international companies that need to navigate carefully in this rapidly changing tax landscape, ”emphasizes EY.

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