7 Things the C-suite Needs to Understand About the Metaverse

There’s no shame in being utterly clueless when it comes to understanding the metaverse. Only a small minority ‘get it’. That’s why Eugene Yiga has compiled a list of seven need-to-know snippets about the next evolution of the internet

A 1995 video from the Today Show features three news anchors confused about what the ‘@’ symbol means. It’s pretty funny when you realise how clueless everyone was about the internet thirty years ago until you realise that most of us are equally clueless about the metaverse right now. Today. In 2023.

“In my interactions with folks all over the world, 99.9% of people are confused,” says Domhnaill Hernon, Global Lead of the Metaverse Lab at EY. “So I’ll try, in simple terms, to give you a sense of what the metaverse is.”

The metaverse is a virtual world where people can interact with each other and digital objects. But even though it might seem like just a video game, it’s about more than entertainment. It’s a place where people can work, socialise, and even shop in a more immersive and interactive way.

“We interact with web pages many times every day,” Hernon says. “It’s a flat interface with images and text. Videos are also 2D, and that works well. But consider how we interact with each other in the physical world. There’s no comparison between those two experiences or interfaces.” In the metaverse, he contends, “we can look at each other at eye level and have a conversation where you feel that there’s a different connection between people operating in this 3D way.”

In other words, we can think of the metaverse as the evolution of the internet to become more like how we interact with real people offline. It is a social space that Hernon sees as being “focused on community, collaboration, and co-creation”. But even though it might seem simple when explained that way, there’s still some confusion to clear up.

Assured Intelligence has compiled a no-nonsense list of seven things all C-suite executives should know about the metaverse.

1: The metaverse doesn’t depend on virtual reality

All this talk about how the metaverse will enable us to interact the way we do in the real world may evoke a vision that we’ll all be walking around with virtual reality (VR) headsets to be fully immersed. But that doesn’t have to be the case. Instead, it can also deliver augmented reality (AR), where we see digital objects overlayed on objects in the physical world. Still confused? Think Pokémon Go.

“The vast majority of metaverse environments today are actually built on the web as it is right now, and you explore them through a 2D screen,” Hernon says. “It’s more like an online game environment. In fact, for many younger folks playing online games, that’s their version of the metaverse. So there are all these different ways you can experience it.”

2: The metaverse isn’t the same as Web3

Web3 is the next generation of the internet. First came Web1 (the early days of the ‘static web’ with simple HTML pages that didn’t change much) and then Web2 (the ‘social web’ that saw the rise of interactive and dynamic web applications that gave us a chance to be creators instead of just consumers). Web3 aims to create an open, transparent, and democratic version of the internet where users control their data and digital assets more. The metaverse is simply one application of Web3, albeit arguably one of its most promising areas for adoption and growth.

“They are two fundamentally very different things, but they often get confused,” Hernon says. “People bring elements of Web3 into the metaverse when we would argue that this isn’t technically correct. If you don’t understand the differences between them, how you create products or go to market or engage your consumers or customers could be way off.”

3: The metaverse doesn’t need cryptocurrency

Given that the metaverse is built on top of Web3 infrastructure and powered by decentralised technologies such as blockchain, it’s natural to think that it only works with cryptocurrency. But this is another myth. The fact is you don’t need a crypto wallet or crypto funds.

“In most of the online games that the younger generation plays today, you can use your credit card to interact with the environment,” Hernon says. You can purchase NFTs [non-fungible tokens] and skins [customised clothing or accessories] for your digital avatar, “and that’s all done with typical currency mechanisms today,” he explains, meaning money. Normal money.

4: NFTs are not just cute GIFs

You’re not alone if you still don’t understand the fuss about NFTs or, for that matter, have a foggiest about what an NFT is. As much as we can talk about how the metaverse will shift the way we do business, interact with others, and create value in the future, the fact that people are paying millions of dollars for digital files seems more than a bit excessive.

“A lot of people think NFTs don’t make sense because they’re just pictures of cats,” Hernon says. “But in fact, they are a new form of digital permission. It’s like the equivalent of a web page or email in the early days of the internet and will completely transform how people interact and create value.”

So, what exactly are NFTs? Essentially, they are digital assets that are unique and indivisible (that’s where the non-fungible part comes in) as opposed to something like a €1 coin that can be easily exchanged for another of the exact same value. Of course, this adds an element of scarcity. Moreover, each NFT has a unique identifier stored on the blockchain to provide a permanent record of ownership and authenticity.

“When it comes to assets collected as NFTs, leveraging blockchain technology allows you to do interesting things at speed and scale,” Hernon says. “For example, I might create a virtual version of my sports jacket and enter it into one of these metaverse environments. You might like what I’m wearing as a skin on my avatar and want to buy it. I can then easily issue an NFT that gives you the rights I’ve predetermined so you can take my virtual fashion creation. I will get the royalties back automatically, including on all the secondary and tertiary resales. It will all be completely tracked on the blockchain.”

5: Web3 is not a giant Ponzi scheme

Of course, one can’t talk about blockchain, cryptocurrency, and NFTs without haunting reminders of the spectacular collapse of FTX, as well as the constant market volatility and fear that is at least partly to blame for the recent collapse of Silicon Valley Bank. So is all this talk about Web3 and the metaverse legit? Or is it only a matter of time before the house of cards comes crashing down, similarly to the dot.com boom and bust of the early 2000s?

“If we’re being honest, there’s a lot of hype out there in the market around Web3 and the metaverse,” Hernon admits. “Sometimes, when there’s a lot of hype, good things happen, and bad things happen. But even though there’s a notion that this is all a Ponzi scheme, I would argue that this is just not the case at all. There are great opportunities in the marketplace.”

Indeed, it’s clear from the early days of the internet that many organisations failed to pick up on the speed of adoption and just how revolutionary the technology would be. Hernon believes that we’re going through something similar and equally significant when it comes to the future of the online space.

“In the early days of the internet, people thought they wouldn’t need email because they already had fax machines,” he says. “Now we use email every day all over the world. It was the same with websites. People just could not believe it [because] it was so fantastical at that moment in time. But those in the know (at the time) could predict the future and knew that the technology would drive change. And the people that made those early-stage investments to get into this environment are the ones that did well.” Oh, to be an early investor in Google…

6: The metaverse doesn’t have to be decentralised

Nowadays, much of the internet is centralised. This means it is run by big organisations that control and profit from our data. But many people, especially younger individuals that form part of Gen Z, want to take power away from those large corporations. It’s about owning and controlling their digital lives and perhaps even profiting from the time they spend online through tools like Gener8.

“You can choose whether your metaverse is open or closed” Domhnaill Hernon

“In simple terms, decentralisation means giving power back to the people so you can control your own decisions, monetise your attention, and choose how you want to interact with the internet,” Hernon says. “But it’s not the case that the metaverse must be decentralised. Most metaverse environments built today are centralised in nature, and only a small number are decentralised. So it’s important to understand that you can choose whether your metaverse is open or closed. If you think otherwise, you’ll miss the opportunity to create value in this world.”

Still, there’s a big debate about finding the ideal balance between centralisation (which allows big entities to track us) and decentralisation (which increases security but increases privacy that enables bad actors to hide). Indeed, the privacy issue is something we’ve all become particularly lax about when we habitually click to accept cookies to make the pop-up disappear.

For example, if people must wear headsets to access the metaverse, what’s to stop the companies from using cameras inside the glasses to monitor a user’s eye movements and somehow use that data to target them with ads?

“The nature of Web3 is recovering a little bit of control of our data,” says Cai Felip, co-founder and CEO of Union Avatars, a company that offers tools to help users manage their digital identities. “Over time, especially with social networks [like] Facebook, we’ve been forced to expose our names on everything, and you assume they will track where you click. With Web3, we can make it more opt-in so that you can let them track you.”

7: The metaverse will require new levels of security

As exciting as the metaverse might be, it raises cybersecurity concerns. Indeed, it’s almost guaranteed that the metaverse will create new opportunities for cyber criminals to exploit vulnerabilities in the system, steal personal data, and commit fraud, much like they’ve done through phishing and spam. That’s why we have to take a slow and steady approach. The idea of moving fast and breaking things, as seems to be the case with generative AI right now, could have more significant implications for the future.

“For a long time, I’ve been seeing a lot of really expensive press releases on [blockchain and the metaverse], but there’s no follow-up,” says Alex Puig, founder and CTO of Caelum Labs, a company on a mission to create better organisations using decentralised technologies. “And that scares me a lot. It’s like people are jumping onto things because of FOMO [fear of missing out], and nobody’s stopping to think about the ethical problems this will bring to people.”

Bad experiences in the metaverse, from bullying and harassment to outright assault and abuse, might damage the brands concerned. That’s why the idea of having ‘proof of humanity’ in the form of digital credentials to avoid people faking their identities and scamming others through bots has been raised.

“There’s a recent study that said that 40% of people are good, 20% of people are bad, and the other 40% are in-between,” Puig says. “So it’s about building incentives and educating people.”

A whole new world

Ultimately, the metaverse’s survival depends on how it’s built. That means we all have to take responsibility for the worlds we create and how we interact, especially when sharing sensitive personal and financial information. Only then can we fully embrace the potential of these new technologies while keeping our digital lives safe and secure.