Web 2 to Web 3: How to build the metaverse

Angry Birds

It is June 2009. An incredulous birthday boy opens a brittle box to find an iPod touch; a minimalist slate containing a world of games, music, and videos. It stood apart from the fidgety Nintendo DS and the unwieldy Sony PSP. Doodle Jump and Angry Birds were able to capture the zeitgeist, not because of their inimitable simplicity or intrinsic addictiveness. 

Each were built on the infrastructure that enabled a seamless transition from app to app - a bazaar of digital dopamine morsels to cater for fleeting desires of the human brain. Not only could one flick from app to app. You could share your score on Angry Birds with friends on Facebook. 

The rudimentary iPod touch presents a snapshot into what commentators call “web 2.” 

Here, I touched upon the 2 tiers of gatekeepers in web 2:


1. Operating systems & Search engines

The defining emblems of web 2, think IOS, AWS, and the Google search engine, engendered a global network of interconnected actors, including consumers, businesses, developers, and merchants. 

AWS is accredited with the growth of the entire venture capital industry, lowering the barriers to entry to building a startup by democratising cloud computing. Its influence on modern society cannot be understated.

Global iPhone penetration has crowned IOS as the superhost of consumer apps. When it closed off its back doors this year in a privacy update, Facebook, Snap and others lost a total of $10bn. That’s not to exclude Google’s Android OS which is used by 80% of the world’s mobile phones.

Google search: the information directory and digital stream of human consciousness. Google adjudicates a ranking system according to its own incontrovertible laws (SEO). The success of some businesses and individuals’ perceptions of truth rests entirely on Google search. Google notoriously signed a deal with Apple to make it the default search engine on its devices.

2. Social networks

Social networks’ writ over information flows, brand recognition and reputation are well documented. Yet they are dependent on Apple to intrude, thus thrive.

Just as the businesses, public figures and individuals’ can be virtually impeached by the angry mob, so too can these networks themselves. As TikTok supplants Facebook and Instagram, it reminds us that the digital deities controlling trends can too become untrendy.

More of the same

The paradoxical nature of web 2 is that while the gatekeepers created fertile ground for knowledge diffusion and value creation, they did so at the cost of encroaching on individual privacy and spreading incendiary content. It are those costs that the proponents of web 3 seek to obviate.

Web 3 is seen to revoke the power of centralised institutions in favour of decentralised networks, but, in fact, its architects are the same gatekeepers of web 2. Such lofty ideals make for evocative Twitter threads, yet web 3 will look to continue the key trends of web 2, rather than become an egalitarian digital utopia.

Instead of complete decentralisation and anonymity, web 3 will likely combine two defining themes of web 2:

Gamification and interoperability.


Gamification

Whether zero-sum or positive-sum, games characterise most of human life. Simulating the decision-making process in synthesised realities is not a novel idea. But integrating them with real-life tasks, offering incentives, rewards, collaboration and competition began to happen in the mid-2000s.

We see gamification everywhere. From Robinhood reducing an options trade to a congratulatory swirl to Yulife turning life insurance from a macabre fallback policy to a Gilgamesh Project-style game. 

This refers to startups providing game-like UX to simplify real-economy processes that once required manpower, paper and bureaucracy. Zuckerberg's last meta-throw of the dice goes beyond the switch from analogue to digital. His dichotomy is one of a physical vs virtual realm.

It poses an existential threat to Facebook’s gatekeeper status because it is a generational gamble. It is as much of a bet on the Roblox generation as it is on the future of work. In Europe, 73% of 6-10 year-olds play video games, 84% of 11-14 year-olds, 74% of 15-24 year-olds, 59% of 25-34 year-olds, 46% of 35-44 year olds and 31% of people aged 45-64. In Asia, where mobile gaming is endemic among the youth, Meta must find a way bring 2D mobile gamers into the 3D augmented reality.

A bet on the Roblox generation

So in essence. Zuckerberg is banking on the youngest cohorts to stay immersed in a transcendent universe as they grow up. The problem with this approach is if the metaverse only manages to reach the gaming market, which has a far smaller than the Total Addressable Market of a social network: everyone with an internet connection.

If Zucc’ or any assailants’ focus is confined to gaming, the metaverse will be dead before it gets a chance to breathe. 

To avoid this outcome, Mark will need to incorporate other elements. To keep players playing a game, you must create virtual incentives. That may come from scarcity, such as rare, highly-ranked tokens/cards. It may also come from creating a digital currency, convertible to fiat.

I have partaken in both of these phenomena when I bought a rare Yu-Gi-Oh card from EBay for £20, and when I spent purchased ‘Fifa coins’ from a friend for the eponymous game Fifa 12. It’s clear that NFTs and crypto fit the bill for this function. 

In addition, we have already seen Epic Games (Fortnite) harness the power of the audiovisual paradigm hosting a Travis Scott concert. Musical purists decry the sea of flashlights from smartphones at gigs. In the metaverse, the audience could feel as though they are in a 3D music video, rather than a live show. 

To integrate such features, Zucc will need to adopt another defining feature from Web 2: interoperability.


Interoperability

As I alluded to in the opening monologue, Web 2 benefitted from its positive-sum nature. Allowing applications to interact and interlock was a boon to all parties. Zucc will need to co-opt this principle to ensure the metaverse integrates external elements such as currencies and digital art.

Luckily for him, these two asset classes are already gamified to some degree. Altcoins gyrate in price, propelled by a totemic effigy of Elon Musk’s dog, showing how Gen Z see both NFTs and crypto as trivial fun. 

What they aren’t is interoperable, partly because of the decentralised nature of blockchains. Apart from Ethereum and a few other networks, there are no use cases as of yet for crypto and NFTs. Particularly so for art - where does one display a non-fungible token to impress dinner guests? The metaverse of course.

Back in the real world, the primary consumers of art are wealthy, middle-aged professionals unlikely to find gratification from inconspicuously owning a virtual Picasso. So what would make them put on a Meta (Oculus) headset?

A. If it enhances remote work collaboration - Teams on steroids.

B. To interact with their kids who have become detached from the physical universe.

C. To simulate romance - yes, I am talking about that Black Mirror episode.

D. Virtual conferences.

E. Fitness - Meta-Peloton

F. Guided meditation.

G. Edtech - simulators for practicing hobbies and vocational tasks E.G. Surgery simulator.

Augmented AR: Metaverse by function

It is the former that Zuckerberg courts the most. It would certainly ameliorate Zoom fatigue. But it would have to embed many of the enterprise applications that businesses rely upon. It’s no wonder Microsoft announced its own metaverse plans (Excel-as-a-universe) as a future-of-work play, although Microsoft Teams will partner with Facebook’s intranet Workday

If Mark’s metaverse is the domain of choice for the international workforce, he will need to ensure it is open source, to allow a whole host of compatible APIs and plug-ins from elsewhere. Is a virtual world with a Coinbase API to trade Bitcoin and a CashApp API for creators to receive payments conceivable? We’ll have to wait and see.


Questions and answers

There remain many problems and contradictions in the amorphous metaverse project. However, many have solutions too. 

How will ads, the cornerstone of Web 2 revenue generation, be integrated? Perhaps subscription, freemium or one-off cost models would be more suitable. 

How will social media platforms be integrated, if at all? Will digital flows of written word, the descendent of the printing press, be rendered obsolete?

How will the other gatekeepers respond if the metaverse takes off? Surely Meta will be co-dependent on Google, Apple and Microsoft. Nick Clegg insists that ‘no-one will own the metaverse,’ yet each of the Web 2 gatekeepers ‘owns’ the internet in some way.


The hardware trap

They say that disrupting yourself is the best way to leap into the future. In Facebook’s case, they now have no choice. Although technology runs on an exponential growth curve, sometimes the hype around nascent tech can be overblown. 

Since Facebook acquired Oculus for $1Bn in 2014, AR headsets have remained unsexy for non-gamers. In that timeframe, you might remember the ephemeral buzz around 3D TVs which are almost extinct. The human retina is easily engrossed in feedback loops on a screen, yet headsets/goggles resting on irritable ears are unlikely to have the same half-life.

That being said, hiring 30,000 engineers, voraciously buying VR studios and investing $10B in R&D is one way to accelerate towards ‘the successor of the digital internet.’ Advances in spatial computing may be able to construct a bridge between 2D mediums and their descendants by eventually removing the hardware element.

Zuckerberg and his avatar as he dusts off the cobwebs from his Nintendo Wii.


Connecting people

My instinct tells me that humans will resist the centralised metaverse; that we are wired to prioritise human interaction in only its purest form.

But Zuckerberg knows human nature better than anyone. As he repeats the maxim of ‘connecting people’ over and over, I have no doubt that humanity will acquiesce to the meta-realm of ultra-connectivity.

Tal Feingold