Facebook has been planning its foray into the metaverse for some time, possibly even several years. But only recently have its ambitious expansion plans catapulted the concept to major headlines around the world. Changing the name of the parent company to Meta was perhaps the biggest and boldest statement of intent the company could make. Suddenly, the mainstream media was awash with explanatory articles, while finance websites were full of excitement about investment opportunities in this emerging sector.
However, within the crypto sphere, the response has been understandably quieter. After all, decentralized versions of the metaverse have been developing in these parts for several years. Worse still, the arrogant attitude of the tech giants towards user privacy and data collection has informed many of the most cherished principles in the blockchain and cryptocurrency industry.
However, metaverse tokens such as Decentraland (MANA) and Sandbox (SAND) enjoyed extensive rallies in the news, and just days after Facebook’s announcement, the decentralized metaverse project The Sandbox received $ 93 million in investor funding. , including Softbank.
But now that the dust has settled, do the plans of the company, formerly known as Facebook, represent good news for non-fungible token (NFT) and metaverse projects in crypto? Or does Meta have the potential to sink this still fledgling sector?
What is known so far?
Facebook hasn’t released many details about what to expect from its version of the metaverse. A promo video featuring the company’s co-founder and CEO Mark Zuckerberg himself, along with his metaverse avatar, looked suitably brilliant. Still, there was little information on how things would actually work under the hood. However, based on precedent and what is known, some distinctions can be made between what Facebook is likely to be planning and established decentralized metaverse projects.
Facebook has some form when it comes to questions about whether it will adopt a decentralized infrastructure based on its efforts to launch a cryptocurrency. Diem, formerly Libra, is a currency managed by an authorized network of centralized companies. David Marcus, who runs Diem, has also confirmed that the project, and by extension Facebook, is also considering NFTs integrated with Novi, Diem’s compatible wallet.
Based on all of this, it’s fair to say that Facebook’s metaverse would have a Diem coin-centric economy, with NFT-based assets issued on the licensed Diem network.
Announcing @Goal – the Facebook company’s new name. Meta is helping to build the metaverse, a place where we’ll play and connect in 3D. Welcome to the next chapter of social connection. pic.twitter.com/ywSJPLsCoD
– Meta (@Meta) October 28, 2021
Announcement of @Meta, the new Facebook company name. Meta is helping to build the metaverse, a place where we will play and connect in 3D. Welcome to the next chapter of social connection
The biggest difference between Facebook’s metaverse and crypto metaverse projects is that the latter operate on an open, permissionless blockchain architecture. Any developer can come and build a metaverse application on an open blockchain, and any user can acquire their own virtual real estate and participate with virtual assets.
Critically, One of the greatest benefits of an open and decentralized architecture is that users can join and move seamlessly between different metaverses. Interoperability protocols reduce friction between blockchains, allowing assets, including cryptocurrencies, stablecoins, utility tokens, NFTs, loyalty points, or anything else, to be transferable between chains.
Then, The most crucial question regarding Facebook’s plans is to what extent the company plans to make its metaverse interoperable and the metaverse assets to be fungible with other assets not issued by Facebook.
From a decentralized metaverse point of view, it doesn’t necessarily sound like great news. After all, Meta’s global user base dwarfs that of cryptocurrencies. But there’s another way of looking at it, according to Robbie Ferguson, co-founder of Immutable, a second-layer platform for NFT:
“Even if [Meta] decides to pursue a closed ecosystem, it remains a fundamental admission of the value that digital property provides, and the fact that the most valuable battlefield of the future will be who owns the infrastructure of digital universes. “
Centralization could be the most limiting factor
Based on the fact that Diem is already a closed system, it seems likely that the Facebook metaverse is also a closed ecosystem that will not necessarily allow direct or easy interaction with decentralized metaverses.. This “walled garden” approach would follow the monopolistic trends of the company, but limit the growth potential or the NFTs issued by Facebook to achieve any value in the real world.
Also, as Nick Rose Ntertsas, CEO and founder of Ethernity Chain, an NFT marketplace, pointed out, users are getting tired of Facebook’s centralized dominance. He added in a conversation with Cointelegraph:
“In the middle of the transition [digital impulsada por la pandemia], cryptocurrency adoption increased fivefold. At the same time, public opinion polls around the world show a growing distrust of centralized technology platforms and more favorable ratings of the very nature of what cryptocurrencies and blockchain offer to protect privacy, enable peer-to-peer transactions, and defend the transparency and immutability “.
This point is even more relevant considering that Diem’s usefulness has been pre-emptively limited by regulators even before its launch. Regardless of how Diem could eventually be used in a Facebook metaverse, regulators have made it clear that Diem is not welcome in the established financial system.
So it seems clear that a closed Facebook metaverse will be limited to the point that it will be a completely different value proposition than what decentralized metaverse projects are trying to achieve.
In the meantime, decentralized digital platforms are already being built and thriving. Does that mean that there is a risk that blockchain-based platforms will fall into the same fate as Instagram and WhatsApp and be absorbed as part of a wave of Meta acquisitions? Sebastien Borget, Co-Founder and COO of Sandbox, believes that decentralized projects can take a different approach:
“Typically, big tech sits on the sidelines while new entrants fight for relevance and market share – and then swoops in to buy one of the strongest players. But that strategy only works if startups sell. So there has to be a different economic incentive, which is exactly why Web 3.0 is so powerful. It aligns the platform and the users to build a platform that stands on its own, where users have ownership over its governance – and ultimate success. ”
A metaverse operated by tech giants?
Instead of trying to dominate Facebook may decide to integrate with established crypto financial protocols, games and metaverses, a potentially much more disruptive scenario. It could be seriously transformative for the crypto space, given the scale of Facebook’s user base.
So, could there be a scenario where someone could move NFT assets between a Facebook metaverse and a decentralized network of metaverses? Sell NFT assets issued by Facebook on a DEX? Importing a $ 69 billion Beeple into the Facebook metaverse for display in a virtual gallery?
This seems to be an unlikely scenario, as it would involve substantial changes in Facebook’s mindset. While it would create exponentially greater economic opportunity, regulatory concerns, risk assessments, and Facebook’s historical attitude toward consuming competitors rather than playing alongside them are likely to be major blockers.
The most likely outcome appears to be that Facebook will attempt to play with established centralized financial and tech companies to add value to its metaverse.. Microsoft has already announced its own foray into the metaverse, but perhaps not as a direct competitor to what Facebook is trying to achieve. Microsoft’s metaverse focuses on improving the “teams” experience compared to Facebook’s VR-centric approach.
But it seems more plausible that the two companies offer some kind of integration between their metaverse platforms than either would be quick to partner with decentralized open source competitors. After all, Facebook’s original attempt to launch Libra involved other big tech and financial firms.
Take advantage while you can
Just as Libra generated a lot of buzz, which was eventually silenced by regulators, it seems likely that the development of a Facebook metaverse could play out in the same way regarding its impact on the cryptocurrency sector.
Regulators will limit Facebook’s ability to engage with money or finance, and the company is unlikely to develop a sudden desire for decentralized and open source solutions.
Nevertheless, the only positive boost Libra brought to cryptocurrencies was advertising. Ntertsas believes that this, alone, is sufficient to provide a boost to the decentralized NFT sector, explaining:
“Meta’s plans will allow for an increase in public services for issuers and minters of NFT. Then NFTs can be used as metaverse goods, from wearable devices to art, collectibles and even status symbols, there is an infinite use case and utility for NFTs and what they can become in the NFT ecosystem in constant growth”.
In this regard, there are many opportunities for decentralized metaverse projects to come into the spotlight with their own offerings and show how decentralized solutions are already delivering what Facebook is still developing. Borget urges the community to seize the moment:
“Now is the time for us to redouble building our vision of the open, decentralized, user-driven metaverse. We also have to invest time and money in explaining the benefits of our vision of what the Facebooks of the world have offered so far. “