Challenges facing the adoption of Web3 and the metaverse

Trade Talks, a newsletter published by Nasdaq, produced this Q& A with Merav Ozair, blockchain expert and fintech professor at Rutgers Business School. In it, Professor Ozair explains the differences between Web3 and the metaverse and how soon they will be integrated into our daily lives. She also talks about the biggest challenges standing in the way of adoption.

Could you give us a quick rundown of what Web3 and the metaverse are, and what their similarities and differences are? 

 

People use the terms metaverse and Web3 interchangeably, as if they mean the same thing. They are not the same, although they do relate and can complement each other.

 

Broadly speaking, Web3 is the evolution of Web2, the internet that exists today, from a centralized internet owned and controlled by centralized companies, to a decentralized peer-to-peer internet, where no one entity can claim control.

 

Web3 is a concept for the next generation of the internet. It is the evolution of how users are able to control and own their creations and online content, digital assets and online identities. Unlike Web2, where centralized companies, which provide the service, control and own all of our data, Web3 users can create content while owning, controlling and monetizing them through the implementation of blockchain technology.  

The metaverse is how virtual spaces will merge and integrate into our lives that we will be able to interact with seamlessly. It's not yet a concrete reality. The vision of it is a 3D immersive world where we will spend time socializing, working, entertaining, learning and more. It is the combination of virtual reality (VR), augmented reality (AR), mixed reality (MR), gaming, cryptocurrencies, social media and much more.

 

In other words, the metaverse is a new way for people to use the internet by transforming it from 2D to 3D. Instead of browsing and interacting with web content on 2D screens on computers or phones, these would be transformed into three-dimensional objects, where users could walk around inside the webpage and interact with other users’ avatars.

 

The metaverse can be either centralized, owned by a centralized company like Meta, or decentralized. If users’ ownership is prioritized, then it is important that the implementation of the metaverse be a decentralized one. This can be achieved by the set of rules and guidelines Web3 provides, which is how the two different concepts can come together.

Where did these concepts start and what do they offer for the future?

The term “Metaverse” was coined by Neal Stephenson in his 1992 science fiction book, Snow Crash, where he presented a kind of virtual reality where every virtual interaction could have a direct impact on the physical world. It offers a future of infinite possibilities, and without any boundaries on – who you can be; what you can do, and who you can interact with. 

Computer scientist Gavin Wood, who is one of the co-founders of Ethereum and founder of blockchain infrastructure company Parity Technologies, coined the term “Web 3.0” in 2014. The phrase was later shortened to “Web3.” 

Web3 is a decentralized and a more democratic version of the current internet, offering a future where users can own, control and monetize their own content and data – enabling the creation of new income streams. 

How realistic are these concepts and how soon do you think they will be integrated into our daily lives? 

 

Don’t be afraid to dare to dream. So many science fiction scenarios from the 70’s and 80’s have become a reality. Think about teleconferencing – this was considered science fiction in "Back to the Future" but today, that’s just Zoom or Microsoft Teams. In “Star Trek” and "Dick Tracy," characters talk with each other via wrist band, which we can do now with an Apple Watch.

 

Everything we once imagined has become part of our reality and everyday culture. The metaverse will become our new reality as well, and blockchain technology will be its enabler.

 

Bill Gates, co-founder of Microsoft, believes that we will be working in the metaverse within five years. Whether this prediction is realistic or not depends on the advancement of several technologies, and in particular, the hardware – it should not only be seamless and comfortable to use, but also cost effective. These necessary technology advancements will eventually occur, but it might take longer than five years, unless Bill Gates knows about a product that is under development.

Blockchain technology and Web3 are also related. Web3 is an alternative vision of the web, where the services that we use are not hosted by a single service provider company, but are purely algorithmic and theoretically can be hosted by everybody, from anywhere. It’s a peer-to-peer system, where all participants contribute a small slice of the ultimate service.

In a sense, a public (or decentralized) blockchain, such as Bitcoin, Ethereum or Algorand, is utilizing this version of the internet. The foundation of a peer-to-peer system already exists; no doubt that it needs to evolve, especially in terms of scalability and security, but its implementation is quite feasible.

What are the biggest challenges standing in the way of the adoption of Web3 and the metaverse? 

 

The challenges are both in the hardware and in the software.

Currently, if you would like to interact in a 3D experience like the metaverse, you need to use cumbersome virtual reality headsets, which are both uncomfortable and costly. If we expect to work in the metaverse, as Bill Gates suggests, and spend long hours in it, then the hardware should be seamless, user friendly and affordable.

 

As for software, more work needs to be done in terms of security, scalability and interoperability. Interoperability is of a particular importance, because without it, we will not be able to interact with or transfer assets, including our avatar, between different virtual spaces. Creating a new avatar for each space is not practical and it is not how we are used to interact in the physical world. We expect to have the same mobility and transferability in the virtual world as we have in our physical experience. Imagine buying a pair of shoes in one metaverse store and being unable to wear them to your metaverse office at work the next day. That’s inconceivable for real life, so why would we put up with it in the metaverse?

What are some of the major news headlines you are following? 

 

I am very interested in the advancements of these technologies and understanding how they will get us closer to the future we envision.

 

For example, I was quite intrigued by an announcement from Vitalik Buterin, Ethereum’s co-founder, that he is developing a non-fungible token (NFT) that, once given to the owner, can never be sold or transferred, dubbed Soulbound Tokens. The purpose of these tokens is that they could be used to deliver documents or other items that users wouldn’t want to or shouldn’t ever transfer ownership of.

 

The applications of this type of token are very important, not only in delivering sensitive documents, but primarily in their use in the metaverse. With these tokens, you can protect the control and ownership of your avatar – your digital identity should not be controlled or owned by anyone else but you. Security of your digital identity in the metaverse is imperative for the technology to become mainstream.