Initial Thoughts on the Metaverse.

If you’ve read any of my previous essays, it will be quite clear that I have an obvious mistrust with regards to the ongoing advancement of technology — and this is as a technologist myself.

Humans are both the smartest and dumbest species on the planet, and technology is helping to stretch that to the extremes. We’re getting smarter and smarter, and starting to do lots of really dumb things — both at an individual and group level.

In the last few hundred years, technology is moving at a pace where technological advancement is obvious year-on-year. This wasn’t always the case. If you transported someone from 5,000BC to 4,000BC, they would pretty much recognize everything, and it would feel quite familiar.

If you teleport someone from 1,000AD to the present day, their jaw would drop to the floor. Our technology would appear like pure magic.

In fact, we could get the same result by transporting someone from 1,500AD. And this “jaw-drop-to-the-floor” affect will only accelerate. We may soon reach a time when technology advancement is so fast, that the only real boundary is how quickly people can learn to use the new technology vs the actual research and development required to create new technology.

If someone receives a ten year prison sentence, we may need education classes on how to adapt to a society that has changed radically within that time period.

There are some crazy convergences that are about to happen in the next few decades, including artificial intelligence and machine learning, ridiculous amounts of cheap computing power, the explosion of user generated content, and the world being back to having two major global superpowers that are antagonistic.

One of the major advancements is going to be the so-called Metaverse. We are really in the infancy of this right now, but it is interesting to remove the constraints, and see how this could look like in the future, and what some of the positive and negative consequences could be.

The concept of the Metaverse has been around for decades, but it’s only in recent years that technology has caught up to the point where it could be a reality. And even then, it’s still very much in its infancy.

But what exactly is the Metaverse?

The Metaverse is a virtual world created by humans and inhabited by avatars. Think of it as a cross between the Matrix and Second Life.

So far, there are only a handful of Metaverses in existence, and they are all still very much in development. But that doesn’t mean they aren’t already having a profound impact on the real world.

In many ways, the Metaverse is a microcosm of the internet — it’s a place where people from all over the world can come together and interact with each other. But unlike the internet, the Metaverse is much more immersive and realistic.

It’s still early days, but the potential for the Metaverse is huge. It could be used for everything from education and training to entertainment and commerce.

The problem is that, as with any new technology, there will always be those who misuse it. And given the amount of personal data that will be floating around in the Metaverse, it’s inevitable that there will be some serious privacy issues to contend with.

There are also the potential dangers of becoming too immersed in a virtual world and forgetting about the real one. We’ve already seen this happen with things like social media and video games, and the Metaverse is likely to be even more addictive.

So while the Metaverse has the potential to be a fantastic place, we need to be careful that we don’t get lost in it. We need to remember that it’s just a tool — it’s not reality.

I have actually touched upon some similar themes in previous thought experiments, especially the one about what would happen if cheap or free teleportation existed. So, this is an initial mind-dump of everything I’ve been thinking about regarding the Metaverse. It’s not incredibly organized — but I hope it’s food for thought.

So, let’s set the premise for today’s thought experiment: there is a Metaverse that is so advanced that it is indistinguishable from real life itself.

What would society look like? In the traditional sense as we know it, would there even be a society? Would this be a win for humanity, or would it reduce us to little pale, wrinkled balls sitting in isolation chambers while we’re hooked up to virtual reality all day long? Would there be a time when a human is born and immediately hooked up to the Metaverse? So an entire human existence is lived virtually, without ever experiencing reality?

And, what does that mean for reality itself? If we can recreate reality virtually, this then raises significant questions about our reality — how do we know if we are not in a simulation ourselves? This is a well-known paradox, because if we end up with the computing power to be able to recreate millions of separate realities, then the argument can be made that a previous society may have already done this. We are part of one of their simulations. After all, this would be statistically likely as there is likely to be only one reality, but millions, or even billions, or virtual realities.

But let’s put this particular question aside as that’s another essay, another time 😉

There could of course be a mix of both real and virtual worlds, with people interacting in both. This may not necessarily be a bad thing. It could provide opportunities for those who want to experience different cultures and lifestyles without having to leave their home. For example, you could visit ancient Rome virtually, or experience what it would be like to live on another planet.

On the other hand, it could lead to people becoming increasingly isolated from each other as they spend more time in their own little virtual bubbles. We’re already seeing this happen to some extent with social media — people are becoming more tribal, and less likely to interact with those who have different opinions. The Metaverse could amplify this effect by several orders of magnitude.

My initial consideration about the Metaverse was that it would be a complete free-for-all with no rules, but then with some thinking, I realized that this really wouldn’t work, mainly as the Metaverse develops and becomes more and more realistic.

This is because any trauma experienced in virtual reality would end up affecting an individual in the real world, because the experience would be so real that our brains would not be able to tell the difference.

Right now, if you’re playing Call of Duty or any other first-person shooter, it is not a big deal getting shot at or having a grenade explore near you. At worst, it is annoying or surprising. You respawn and start the level again.

But, what if you really experience the bullet entering your stomach? What if the grenade exploding nearby gave you the experience of a concussion? In the real world, you would be physically fine. Your stomach acid wouldn’t be leaking on the rest of your internal organs via a bullet hole, and your brain would not have been bouncing around your skull like a ping-pong ball. But, you would have had the experience — and is that enough to cause serious psychological damage and have PTSD-like symptoms, or even PTSD itself?

And this is just how what happens to you affects you, but what about your actions? If you do enough strange things in the Metaverse and it feels real, does that change who you are in the real world?

Let’s jump into the deep end:

  • If you rape children in the Metaverse, does that make you a paedophile?
  • If you shoot up a virtual shopping mall, should the police keep a closer eye on you in the real world?
  • Is it okay to live most of your life in the virtual world as someone of a different race?

There was an episode of Black Mirror (a highly recommended TV show by the way) that has two male best friends who end up sleeping with each other in the virtual world (one has a female avatar). Does that make them gay? Maybe, maybe not; after all there was a female avatar involved. But what about if you sleep with members of the opposite sex in the Metaverse — does that make you gay in real life? We can see that questions regarding your own identity could become even more confusing than they are today.

What about recreating virtual LSD or Heroin, both of which would be theoretically possible in an advanced Metaverse environment. One would imagine that if the experience is realistic enough, this may also lead to real-life dependence.

And so, getting back to my original point — I don’t think a Metaverse could be without any rules at all, especially as it becomes closer and closer to real life. In fact, the closer and closer it becomes to real life, the more closely the rules of the Metaverse would have to resemble the rules of real life.

Of course, this assumes that everyone in the Metaverse is sharing the same virtual reality or at least a set of realities. But, if each person has their own reality filled with AI characters, then perhaps the rules don’t matter much in that scenario. We may even have both options, like single-player and multi-player options in modern games.

The next question that follows logically from the need to set rules is who the hell is going to have the responsibility for doing that? Would we let Meta/Facebook and Mark Zuckerberg set the rules, or should it be existing governments? But, because borders in the Metaverse are largely irrelevant — which set of laws should be followed?

I can easily imagine a scenario where Chinese citizens are only allowed to use the Chinese version of the Metaverse, the same way social media works today.

Or, perhaps the Metaverse will be much more like the internet, where you can create your own space and people will join and leave at will, and so it is just a loose network of virtual spaces, some more popular than others. Organizations with more resources to invest in their virtual spaces will attract larger audiences and have more monetization opportunities than other organizations.

And talking about money, if everyone is on the Metaverse eventually, the margins are going to be incredible for whoever controls it, because any product or service that you can buy in the Metaverse will follow the typical cost-distribution curve of software — where the cost of distribution is essentially zero after you have made the first copy.

Imagine buying a coffee in the Metaverse. Whoever sells that to you will have no production cost after having coded the coffee in the first place. Of course, there will still be the cost of mindshare — how to inform and get in front of consumers as this hits against a hard barrier, the fact that every person on the planet has a limited attention span.

Based on what I know about market economics, I would imagine that the marketing and advertising costs for these types of products would grow a lot, because of the high margins, which means that whoever is selling can spend a lot more on sales and marketing than a company can do now with real products that actually do have a cost of production.

It’s a little bit like rentals across the globe. Regardless if there is an $8,000/month rent in Manhattan, New York or a $500/month rent in Siem Reap, Cambodia — the cost of rent tends to hover at around 20% to 30% of the average monthly earnings of a single individual, or a couple, depending on the size of the place.

So, the Metaverse has the potential to provide an individual with everything that they desire in an unlimited quantity.

That sounds great, especially if that individual has the short end of the stick in the real world.

But, is that going to lead to happiness? The Greeks didn’t think this would be the case 2,500 years ago — and I believe they were right.

The more things we have, the more we will want. If we jump on the hedonic treadmill, there is no stopping, regardless of how many new experiences and material goods we have (virtual or real!). We just end up frying the dopamine receptors in our brain, and cannot then experience any pleasure.

I don’t think this is something that the Metaverse can solve if it goes down the commercial path that I think it will head. There is, of course, the potential for it to be a great thing for our psychological health. You could plug into the Metaverse and have the perfect space and teacher for meditation, and rejoin the real world a calmer, more mature, and balanced individual.

But if the current internet is anything to go by — that will just be a feature, but one that is seldom used compared to everything else available.

The internet and social media already prey upon us by exploiting our evolution psychological makeup against us, the same way that casinos have done for hundreds of years before. Is the Metaverse going to be any different?

Or, will the Metaverse’s benefits and dangers simply reflect how you use it? Very much like owning an iPhone. You can wreck your life and attention span by being pinged with notifications all day long, or you can treat it as a useful tool that can provide you with reminders, instant questions to important answers, and as a practical way to have a taxi show up where you are and when you need it?

The role of economics in the Metaverse is going to be a strange one because typically, economics deals with scarcity, which is something that might be completely eliminated in the Metaverse.

In the real world, if we were to add up the desires and ambitions of every single person in the world, we would find that we would require a production capacity that is likely several hundred times the production capacity of the world. This is why we have prices — it allows individuals to make trade-offs based on what is important to them at any given time.

Maybe you’d like to have a Ferrari, but because you also need a place to live, you decide that you will buy a house instead of a car. Multiply these by trillions of yearly decisions by billions of people, and you end up with thousands, or perhaps hundreds of thousands, of interlinked markets that can communicate a significant amount of information just with price alone.

This is why housing in Manhattan is more expensive than in Siem Reap — more people want to live in Manhattan, and they bid the price up on all the available housing until some of them drop out of that market and go and live somewhere else. Siem Reap has significantly fewer people bidding on housing; thus, the upward pressure on prices is not as intense, resulting in monthly rents of $500/month.

But without scarcity, what would drive prices or the economy? I don’t know the answer to that. Still, I wonder if perhaps access to the Metaverse might be charged as flat subscription fees — or perhaps levels of tiered subscriptions with different features — and then everything else is unlimited.

It is interesting to consider how real-estate prices in the Metaverse would work. We are already seeing people buying real estate in the current iteration of the Metaverse, but it does feel strange that it has any value at all. After all, there is essentially unlimited real estate available in the Metaverse, and travel time is also not going to be an issue because we will be able to teleport instantly to any location within the Metaverse. The only thing I can think of that may drive value to particular locations if that there is a lot of foot traffic, and thus it is easier to get in front of a lot of people and gain exposure to your brand.

This would then create a real-estate market for some locations, as it would make sense to invest funds to buy or rent a location in a popular area because more people would be able to interact with you.

This is very much how there are essentially an unlimited number of domain names available on the internet, but there is still a significant price attached to premium domains. I’ve purchased and specifically because I know that short, memorable domains are essential for a business.

This touches on perceived value, especially for new classes of assets, where the future value is difficult to understand or predict. Often this creates FOMO (Fear Of Missing Out), which drives up the value of an asset far beyond what would be logical based on the expected future cash flows of that asset. This is the whole Dutch tulips story.

For whatever changes in the future, some things, like human psychology, will stay the same, and this allows those who take the time to think about these things to make interesting assumptions about the future — and be right more often than we are wrong.

I know one thing — this is a topic that is only going to get more interesting in the coming years, and something I’ll be thinking a lot about.

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