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A Detailed History Of The Metaverse — And What's In Store Next

A Detailed History Of The Metaverse — And What's In Store Next

Explainers Metaverse

14 Feb 2022

In the past few years, the metaverse has become a trending topic in both the crypto industry and the broader tech world. And Facebook's recent rebranding to Meta gave a major boost to the hype around digital realms.

Earlier, we have already explored what the metaverse is and how the decentralized virtual worlds of the Sandbox and Decentraland compare with each other. But do you know where the concept of the metaverse comes from?

Read on to learn the brief history of the metaverse as well as the key questions around the development of virtual worlds!

The Brief History of the Metaverse

The metaverse space has an exciting history, with many trends, theories, concepts, and technological innovations shaping its future.

To make things easier, we have categorized all the important events in metaverse history that contributed to the development of virtual worlds into three eras that will take you through the sector's early days to the present.

Let's see them!

Where It All Started: The Metaverse's Inception in Books and Pop Culture

It may sound surprising, but the metaverse's history dates back to the early years of the internet.

Interestingly, while the phrase "virtual reality" appeared for the first time in Antonin Artaud's essay titled "The Theater of Cruelty (First Manifesto)" in 1932, the metaverse (which is a portmanteau of the words "meta" and "universe") was coined in Neal Stephenson's 1992 science fiction novel Snow Crash.

In Snow Crash, Stephenson envisions the metaverse as a virtual reality-based world that would replace the internet. In the novel, the author describes it as an online realm where people utilize the digital avatars of themselves for exploration.

In this cyberpunk dystopia, individuals often use the metaverse to escape the real world dominated by mercenary forces, corporate mafia, and private guards protecting sovereign gated communities in the aftermath of a worldwide economic collapse.

Interestingly, just like how James Dale Davidson and Lord Williams Rees-Mogg forecasted the rise of encryption technology and cryptocurrencies in the Sovereign Individual, many of Stephenson's visions about the metaverse have already (or will soon) become a reality.

As a side note, it's important to mention the history of the World Wide Web. Invented by Tim Berners-Lee in 1989, the internet's launch likely had an influence on Stephenson's novel.

Later on, in 2011, Ernest Cline published Ready Player One, the novel that Stephen Spielberg's 2018 movie was based on, which envisioned a similar dystopian reality as Snow Crash. In the book, the author invites readers to a world where humanity plays a metaverse-based virtual reality game called OASIS to escape the chaos on Earth.

Nowadays, due to the increased popularity of the concept and the technological innovation since Snow Crash, it's common to find science fiction involving the metaverse in pop culture. Examples of such include the Matrix movies or the Fifteen Million Merits episode of the Netflix show Black Mirror, where citizens ride exercise bikes to gain credits and participate as viewers in song contests via their digital avatars.

Initial Development and Early Metaverse Applications in History

In the 2000s, the rise of multiplayer gaming and the launch of MMORPGs like the World of Warcraft offered an excellent chance for developers to test the concept of the metaverse.

In 2003, Linden Lab launched the online multimedia platform Second Life, which is commonly believed as the first-ever application of the metaverse in history.

Instead of completing a pre-written storyline and objectives or solving a conflict manufactured by the game's creators, players (called residents) have the freedom to create their own content, interact with others via digital avatars, as well as explore the world and participate in different activities.

As a result and due to the fact that Linden Lab's virtual world had one million active users in 2013, Second Life residents have created tremendous amounts of content in the game and contributed to the development of the game's own economy, which is powered by the Linden dollar (L$) digital currency.

In the years after Second Life's debut, multiple games were released that either featured their own virtual worlds or influenced the development of the metaverse space. Some of the key highlights in the metaverse history include:

  • Launched in October 2003, features a very similar virtual world to Second Life, in which users can create, experience, interact, socialize, and trade with each other. Interestingly, There also has its own digital currency called Therebucks (T$).
  • Roblox: Launched in 2006, the online gaming platform and storefront Roblox allows users to develop and play user-created games. Like with Second Life, users are represented in Roblox via their avatars, where they are free to buy, sell, and create digital in-game items as well as participate in both real-life and virtual events.
  • Minecraft: Just like Roblox, Minecraft has become a popular video gaming solution among users worldwide (in fact, it is the best-selling video game of all time). With infinite terrain, players can explore voxel graphics-based 3D worlds, in which they can extract raw materials, craft in-game items, and build virtually everything – from Lord of the Rings' Middle Earth to an 8-bit processor that can run its own games.
  • Fortnite: Released in 2017, Fortnite is among the most successful Free-to-Play (F2P) multiplayer games in history to date. In addition to featuring battle royal as its primary game mode, creator Epic Games has extended the IP's universe with multiple other activities and interactive features since its launch. One notable event includes the virtual concerts of Travis Scott and Marshmello that were attended by a total of 23 million users. Considering its success in this field, Epic Games have decided to double-down on the metaverse by completing a $1 billion funding round in April 2021 that would be dedicated to virtual world development.

Regarding the early applications within the metaverse, it's essential to mention the history behind the development of virtual reality (VR) and augmented reality (AR) technologies. While VR allows users to enter the digital realm (or at least give that impression by replacing their vision) through headsets, AR adds virtual elements to the real world (hence the name) to enhance it via smartphones, smart glasses, and other AR-compatible tools.

One of the most important milestones in the history of VR includes the overfunded (received $2.4 million but with the goal of only $250,000) Kickstarter campaign of Oculus. After releasing dev versions of its product, the startup launched Oculus Rift in 2016 as its first consumer-grade VR headset. Interestingly, the company was acquired in 2014 by Facebook for $2.3 billion.

Now called Meta Quest, Oculus kickstarted the development of the VR industry, with multiple competitors entering the market and a whole new line of games getting developed for virtual reality headsets in the last few years.

While AR's history dates back to the 1990s, its commercial applications have only started becoming popular in 2016 with the launch of the Pokémon Go augmented reality-powered mobile game that reached a monthly user base of 250 million at its peak. Its success paved the way for the AR gaming space, giving a huge boost to its development.

At the same time, in the B2B sector, business-grade AR smart devices – such as the Google Glass Enterprise Edition and Microsoft HoloLens product lines – launched at around the same time as Pokémon Go facilitated the adoption of consumer augmented reality solutions.

Overall, while users can join virtual worlds by using something as simple as a low-grade laptop, smartphone, or tablet and a stable internet connection, VR and AR technology can enhance metaverses by offering residents a more immersive experience. For that reason, they are expected to play major roles in future virtual worlds.

Present Day: Tech Giants Compete With Decentralized Projects' in the Metaverse Race

In the last few years, the hype around metaverses has increased tremendously. At the same time, the development of the space has sped up, with the rise of decentralized technology becoming a major catalyst in this field.

Besides smart contracts, dApps, DAOs, and DeFi (and, of course, cryptocurrencies themselves), non-fungible tokens have become one of the key innovations in history to date in the crypto space. Most importantly, as more people realize the benefits of true and easily verifiable ownership over digital art, memorabilia, identity, and other assets, metaverse and blockchain gaming projects have supercharged NFTs with an increased number of use-cases.

By converting most in-game items into NFTs on the blockchain, developers can empower players with the ability to own all their assets – and even move them to another platform or chain – in the game. Furthermore, implementing native digital assets and the Play-to-Earn (P2E) model allowed teams to create full-fledged economies around their solutions. As a result, users can not only buy and sell weapons, armor, characters, virtual land, and other items, but also earn them by actively participating in the ecosystem.

Some GameFi projects took this even further by combining the Play-to-Earn model and NFTs with popular DeFi activities (e.g., yield farming and staking) to expand the earning opportunities for users and make their platforms more sustainable in the long run.

As the technology, models, and infrastructure were already available for building, decentralized metaverse projects leveraged Play-to-Earn's popularity as well as the hype around virtual worlds to create their digital realms even before the announcements of tech giants in this field. In fact, Decentraland is a first-mover here, with the team launching its metaverse to the public in February 2020. Another popular solution, the Sandbox, released its first multiplayer alpha season in November 2021.

As opposed to the solutions of large enterprises, projects like the Sandbox and Decentraland leverage decentralization and permissionless tech to create their virtual worlds in which the community is in charge of governance instead of a centralized company. This is likely a factor contributing to their rising popularity, and it is expected to play a key role in future metaverse designs.

However, enterprise players outside crypto couldn't leave this unanswered, as the metaverse is a ludicrous market where it would be too big a mistake to miss out on.

Furthermore, as the COVID-19 pandemic and lockdowns have made in-person interaction much harder than before, people are increasingly turning to digital technology to communicate with others, do their jobs, handle their finances, as well as many other things concerning everyday life. For that reason, it provided an excellent use case for metaverses to host the virtual version of real-world events and activities, such as concerts, workshops, and conferences.

While many already had such plans, the pandemic, the technological innovation in VR, AR, and crypto, as well as the launch and rising popularity of decentralized digital realms sped up metaverse development, with multiple tech giants, large gaming publishers, and major brands joining the space.

Some of the key highlights in metaverse history include:

  • Meta: Probably the highest-profile player in the metaverse space is Meta (just think about how the news of its rebranding fueled so much hype around virtual worlds). While we don't yet know the company's exact plans for its upcoming digital realm (only just a vague concept), it has established a good infrastructure in the last few years that could serve as its framework. In addition to its billions of social media users, Meta owns Oculus that manufactures VR devices, which could come in handy to enhance user experience in the metaverse. In December 2021, the firm released Horizon Worlds (formerly known as Facebook Horizon), a free 3D online virtual reality game for Oculus Rift S and Oculus Quest 2 where players can build, connect, interact, and discover together.
  • Microsoft: Microsoft was one of the first tech giants to respond to Meta's virtual world plans. At the moment, we know that the firm's first metaverse offering will be Microsoft Mesh, a 3D collaboration and communication platform. Expected to be released this year, Mesh's primary focus will be the business application of the digital realm. However, the recent acquisition of Activision Blizzard could open up more possibilities for the company in the field of virtual worlds.
  • Epic Games: Earlier, we have already discussed Fortnite and how creator Epic Games has been expanding the game with metaverse-like elements since its launch to achieve a more immersive and interactive experience for players. With multi-millions of attendees on virtual concerts, a massive user base, and $1 billion of recent funding, Epic is ready to develop a full-fledged metaverse around Fortnite that would include VR and AR support as well as the ability for anyone to create 3D content.
  • Tencent: As the world's largest video game vendor that owns numerous IPs as well as the instant messaging and social media solutions Tencent QQ, WeChat, and, Tencent has an abundance of resources for creating its upcoming metaverse. Recently, the company doubled down on such plans by entering into acquisition talks with the gaming-focused smartphone and accessory manufacturer Black Shark that would reportedly prioritize AR and VR headset making (if Tencent purchases the company).
  • Google: Google is also a contender in the metaverse race. While we don't know any exact details, the tech company will focus mainly on connecting the physical and digital worlds via augmented reality, leveraging its solid foundation in this field, including the Google Glass smart glass and the holographic conference solution Project Starline.

Currently, while multiple metaverses have launched already, we are still in the early years, with high-profile players entering the sector only recently. That said, we expect development in this field to speed up significantly in the next few months.

The Core Principles of Metaverse Development

As numerous participants have entered the metaverse space to create their own virtual worlds, it's essential to explore some of the core principles impacting user experience in the digital realm.

We have collected the most important design elements of metaverses in the below table, comparing two opposing approaches creators can follow to build virtual worlds:

Centralized ApproachDecentralized Approach
GovernanceCentralized: The company is in full charge of the metaverse's governance, setting its own policies and rules, and it is responsible for enforcing them.Decentralized: Instead of a company or the project's core development team, the community governs the metaverse by proposing, discussing, and voting on changes and upgrades via the virtual world's native governance token.
Network designPermissioned: Similar to social media, the majority of metaverses will be open for anyone to access (likely with some geographical restrictions). However, the centralized approach will involve a permissioned network design, which means the company will either utilize its own servers or a permissioned blockchain where it has restrictions in place for validators.Permissionless: In addition to being open for anyone to access, users are free to become validators in the permissionless blockchain network the project utilizes to operate its metaverse.
Asset ownershipCompany-centric: With this approach, while virtual world residents can freely buy and utilize (and potentially sell) in-game assets, they don't have legal ownership over these items. Furthermore, most or all sales take place in the publisher's marketplace without the ability for users to move their digital property to another platform.User-centric: All or most in-game assets in the metaverse are present in the form of NFTs that offer real ownership for their holders. In this case, players are free to use their items in the virtual world or trade them via both the official marketplace and secondary markets.
InteroperabilityRestricted: Interoperability is a key aspect in the case of metaverses, as it can help the project attract more players, reduce friction, and improve user experience. However, it will likely be limited with the centralized approach, as the company managing the ecosystem will only connect its platform with verified partner solutions.Enhanced: While native interoperability is not among the strongest features of blockchains, it has become much easier to connect decentralized applications with other dApps than a few years ago. As a result, decentralized metaverses can build bridges with other community-governed virtual realms, DeFi services, NFT marketplaces, and many other crypto solutions to expand their ecosystems with more features and functionalities.
PrivacyLess private: While they have to adhere to regulatory laws in this field, data privacy has been a key issue among tech giants. In addition to infamous events like Facebook's Cambridge Analytica scandal, technology companies often sell customer information to advertisers for a profit. For that reason, the metaverses operated by these firms are expected to be less private than their decentralized counterparts.More private: In most cases, community-governed projects store customer information on decentralized data storage solutions, which significantly decreases the risk of a single point of failure and enhances security against cyber attacks.
Supported devicesVaries: To enter the metaverse, users need a compatible device. This can range from a low-end smartphone or laptop with an internet connection to the most advanced VR and AR devices. However, while virtual and augmented reality provides a more immersive experience, only a very small part of the global population owns such hardware.

Of course, projects can take a hybrid approach, in which they combine both decentralized and centralized elements to create their virtual worlds.

Metaverse to Become a Major Tech Trend in 2022 and Beyond

Despite the metaverse's history dating back to the 1990s and its early applications several years ago, the metaverse has become a key trend in the cryptocurrency, gaming, and technology industries only recently.

But now, as numerous tech giants, industry-leading corporate players, and decentralized projects are building their own metaverses, it's safe to say that the concept of immersive and interactive virtual worlds is set to become one of the most important tech trends of the decade.

The question now is: which design approach – centralized or decentralized – will achieve the most success among metaverses?

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