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It's been a while since Facebook changed its name to Meta. Many see this as an attempt to remove the focus from Facebook's methods, compounded by internal leaks and scrutiny from US authorities. It may very well be. But surely the name change is as much a confirmation that Web3, the internet of the future, is under full development.
Morten is CEO and founder of the Media startup Kaupr. Background as a journalist (Dagens Næringsliv), communication advisor (Cox Kommunikasjon & Dinamo), and digital business consultant (The New Company). Today exploring Web3, the Metaverse, and the Next Generation Internet as a founder and editor of Kaupr.io.
This article was written by Morten Myrstad. Myrstad is entrepreneur and editor in kaupr.io. Myrstad has a versatile career as a journalist in Dagens Næringsliv, entrepreneur in the communications agency Cox and digital business advisor in The New Company. This article was first time published in The New Company's blog. The article has also been published as a reader posts at kode24, the developers' online newspaper.
So what does web3 have to do with Facebook's commitment to the metaverse, and what is both web3 and the metaverse?
The metaverse is a virtual reality where we can gradually do more or less what we do in our physical world, such as work, play, learn, shop, create, etc. Unlike today's internet, where we LOOK AT the internet, in the metaverse we will be able to live and stay INSIDE the internet.
Web3 is a collective term for technologies based on a more decentralized infrastructure, including blockchains, digital currencies and more democratic and self-governed forms of organization.
The metaverse can also be interpreted as one of several virtual economies, ecosystems, and technologies included in the web3. But the metaverse is not alone.
When many business developers, tech communities, creators, and others are now turning to web3, including the metaverse, it's because web2, most characterized by the rise of digital platforms, has some fundamental problems. Companies like Facebook, Google, Amazon, Apple, Microsoft and others helped us through web2 to access a variety of new digital services, first via PC and then via mobile and the cloud. But because they are all intelligent platforms, with extensive use of algorithms and artificial intelligence, they can aggregate information about us as users and adapt that information in the form of ever-new content, products and services. There is a “stickyness” that we as users have trouble getting out of, even if we wish. While companies, in turn, are in a growth spiral that is self-reinforcing. The result is that it is now technology companies that are at the top among the world's most valuable companies.
Many of these platforms, primarily Facebook and Google, derive 90% or more of their revenue from the sale of ads. While, as users, in principle, we can use many of them “for free”. The only problem is that when a product or service is free, yes, in many ways we users are the product. On an ongoing basis, we also fill the platforms with new, valuable and engaging content, without getting paid, content that platform operators can once again distribute and create ad offerings around. One group that suffers extra in such a platform economy is artists and artists, where, for example, you have to be a megastar to be able to earn an acceptable income on Spotify, YouTube or Twitch.
For several years now, Facebook has been trying to generate revenue streams other than ads. Facebook arrived too late to the mobile train, where iOS/Apple and Android/Google already had dominant market positions. Facebook also did not succeed in creating a mobile Facebook “launcher” that in effect turned the mobile home page into a Facebook-based user interface. As consumers, we didn't want that. We don't want to be shut in by “Facebook's internet”.
That's why Facebook has pitched itself over Virtual Reality (VR) and Augmented Reality (AR) as a possible answer to the company's ambitions. First up was the acquisition of VR platform Oculus. Eventually, the VR/AR division Reality Labs has grown to over 10,000 employees, and recently Facebook also announced that it is looking to recruit an additional 10,000 metaverse employees within the EU.
At the end of October 2021, Facebook as a company changed its name to Meta. While the company's applications, Facebook, Instagram, Whats App etc., continue as product names. The unveiling of the new name occurred during Facebook's Connect conference, and in a one-hour keynote, Mark Zuckerberg also elaborated on his Visions and thoughts about the metaverse.
While Facebook has been working on its VR and AR plans, there has been a dramatic explosion of new ideas and solutions for what the future of the Internet might look like. Blockchain technology, which allows it to interact without the expensive middlemen or “gatekeepers,” has made mega-leaps. This has not only turned into rising prices of cryptocurrencies such as Bitcoin and Ethereum, but also the launch of another 18-19,000 other cryptocurrencies, with more or less substance behind them. But it has also made it possible to program money and develop new products and services where purchases and sales are paid in the form of a crypto-currency. The crypto currency is thus no longer the target, but a vehicle that can create new utility values.
In area after area, we see existing business models being challenged, just as desktop and the browser did under web1, and in the same way that mobile and cloud did under web2. An example is DeFi (= Decentralized Finance), a technology that offers financial services in competition with traditional banking services, such as loans, savings and payment intermediation. Here, the new DeFi players have grown to manage close to $100 billion in total on their balance sheets.
Another example is the rise of NFTs. NFTs are so-called Non fungible tokens, i.e. they cannot be copied, but exist in unique or numbered copies, similar to a graphic print. Here, it can be very easy to dismiss NFTs as pure objects of speculation, where digital art of monkeys, lions, or whatever it may be, is now traded for millions of dollars. But the technology, a visual representation in the form of a JPG, and an underlying smart contract documenting ownership, can in principle be applied to whatever assets there may be, such as property. Many people therefore believe that NFTs, and a digital wallet where you store your NFTs, can become just as important markers in the internet as what we use today, the URL or the URL.
Gamification is another example, where many new gaming platforms are built on a blockchain technology and where it is possible to both hand out prizes and gifts and buy and sell products and equipment using a cryptocurrency. Yes, the gaming platforms are probably today the best example of a metaverse, where we can enter with our real or artificial identity and interact with others.
“The Creative Economy” is another example of the evolution within web3, where creators, whether artists, writers, streamers or whatever it may be, can now launch their own Token, or Coin. For example, over 250 creators have launched their own Creative Coin on the Rally.io platform. The creator currency can be invested in and used by fans to purchase access to VIP events and concerts, subscriptions or purchase clothing and other items.
In business and finance, too, things are happening. Dcommerce is now being launched, for example, as an alternative term to e-commerce, where the d again stands for “decentralized”. Here, for example, the UK Boson works to develop protocols and infrastructure that make buying and selling products and services possible independently of large trading venues such as Amazon. At the center of Boson's protocol lie two types of tokens or digital assets, one representing the product itself, and another representing the purchase contract itself. In corporate finance and venture, too, things are happening, where the tokenization of stocks and property makes it possible also for a “regular” savings audience, not just for the wealthiest, to invest in unlisted assets.
In parallel with this explosive development within web3, Facebook is launching both Meta as a new company name and its vision for the metaverse. And then, naturally, the questions arise: Do we want Facebook's metaverse? And can we trust Facebook's promises that they will develop metaverse solutions in collaboration with others, within an open internet? When it is precisely de facto monopolists like Facebook, Google and Amazon that web3 wants to be an alternative compared to? Or will we be able to experience many different metaverses, where we as individuals have greater control over our own personal identity, and with what our personal data is used for?
Currently, it may seem that web3 offers unique opportunities for new entrants. The largest cryptocurrencies are called Bitcoin and Ethereum, the largest crypto exchanges are called Coinbase and Binance, the largest NFT platform is called OpenSea and the largest web3 game is called Axie Infinity. And so we can continue to list names that many of you have never heard of, both actors organized in a traditional way and networks based on the more decentralized and democratic organization model DAO (= Decentralized Autonomous Organization) which in many ways can be described as a modern, digital cooperative.
But. We've heard the tune before. Web1 also promised a kind of new democratic nirvana, where we could all express ourselves freely, for example through blogging. Similarly with web2, where social media promised a unique opportunity to converse with each other. But what happened? The platforms took over, turned us into products and retained even the huge profits that the platform effect made possible.
We are therefore probably facing a new battle, about the internet of the future, about what web3 is going to look like, and whether we are going to see a few or many metaverses. Will it once again be the hegemonists who win? Or will we finally be able to realise the freedom and flexibility promised by the internet?