dr. Xinxin Fan is the head of cryptography at IoTeXa startup that strengthens the future machine economy with blockchain and IoT.
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The metaverse has attracted a lot of attention from business leaders working in a variety of fields, with organizations of all sizes entering the metaverse in different ways. Citi recently said this augmented reality concept could be a worthwhile opportunity up to $13 trillion by 2030. By continuously and immersively combining the physical and virtual worlds, the metaverse will become the next iteration of the Internet, known as Web3.
Such an open version of the metaverse would likely be owned by internet communities, instrumented by crypto tokens, and controlled by community-led entities known as decentralized autonomous organizations (DAOs). The open metaverse allows people to significantly expand their social interactions, including entertainment, commerce, advertising, education, social media, manufacturing, virtual communities, and enterprises in general.
An open metaverse application is orchestrated by blockchains and built on an evolving suite of highly composable technologies that encompass key services such as identity, computation, communication, storage and asset exchange. In particular, data generated in the physical and virtual worlds can be used to build data-rich metaverse applications, creating more authentic and natural user experiences.
In practice, achieving a seamless convergence of our physical and digital lives in the metaverse has presented major challenges for technology leaders. What are the two main technical aspects of connecting the physical world and the metaverse?
Transfer Trusted Data
A data-rich metaverse application is built on on-chain data that is directly accessible from blockchains and off-chain data obtained from the physical world. While the decentralized blockchain network secures the on-chain data, the off-chain data is usually provided by third-party services or collected by IoT devices in the physical world. As a result, the reliability of off-chain data becomes crucial for building data-rich metaverse applications.
Blockchain Oracles Provide: a practical solution for feeding off-chain data to the metaverse. By querying the APIs exposed by third-party services and IoT platform providers, a decentralized oracle network can retrieve a wide variety of real-world data, including digital asset prices, lending rates, climate reports, traffic status, and more. Since third-party services and IoT platform providers act as data aggregators, the reliability of the data relies on those centralized services.
With regard to IoT data, blockchain oracles can also directly resort to a group of community-driven, globally distributed smart devices instead of querying a centralized IoT platform. As the architectural complexity of blockchain oracles increases, such an approach eliminates the need for trusted data intermediaries and places trust in IoT devices†
Provided that IoT devices are equipped with state-of-the-art secure hardware and built according to the industry’s best IoT security practices, a reliable data collection process can be well guaranteed. A decentralized Oracle network can then feed the trusted IoT data to the specific metaverse application.
The metaverse and real-life utility
If you think that bringing trusted data from the physical world to the metaverse will enable developers to create data-rich applications, programming the material world from the metaverse will give free rein to everyone’s imagination. The robust blockchain and cryptocurrency techniques such as DeFi, NFTs and DAOs enable developers to build metaverse applications that can incentivize real-world entities to perform specific tasks in a transparent and reliable manner.
Cryptocurrencies coupled with well-designed token economies provide strong financial incentives for entities in the physical world participating in metaverse applications. They ensure faster growth of the user base of an application and sustainable development of ecosystems. In addition, the token rewards that users receive by participating in the metaverse applications can be further invested in a wide variety of DeFi products to earn passive income.
In addition, real-world assets and data have recently become one of the most important the most promising tokenized NFTs. Those NFTs represent a new way to manage assets and data in the physical world. Finally, DAOs have the great potential to revolutionize governance for the metaverse applications by distributing decision-making power among all participants and minimizing administrative overhead.
Building Your Open Metaverse Strategy
The open metaverse unlocks a whole new realm of opportunities to interact with Internet communities and is expected to drive innovation in business models and create new services in the coming years.
The open metaverse is still in early development and it is difficult to create a comprehensive business strategy in such a dynamic space. For now, business leaders can start exploring this new, rapidly changing digital landscape by considering the following key business questions.
• Business model: Organizations should carefully evaluate the impact of building a community-driven, open metaverse application on their existing business models. The application must align well with their business objectives.
• Technology ready: Organizations need to understand the technology for building metaverse applications and determine whether existing software, hardware, and other decentralized components can meet their technical requirements related to security, privacy, and usability.
• Ecosystem Partnership: Organizations should clearly identify the potential partners and collaborators based on the analysis of the required technologies and gradually establish business relationships with other ecosystem participants.
• User Engagement: The organizations must determine the best approach (e.g., DeFi, NFTs, DAOs, or their combination) to encourage community members to join their open metaverse applications and achieve long-term sustainable business growth through new digital services and experiences.
• Market feedback: The organizations must build a minimum of viable products (MVPs) for their open metaverse applications with a reasonable initial investment and quickly test whether such applications are capable of achieving their business goals.
The above approach should help business leaders build their open metaverse strategy effectively without incurring significant costs and risks.
Look into the future
The infrastructure and applications of the open metaverse continue to evolve at a dizzying pace and interactively and cyclically towards the ultimate goal of a fully-fledged, universal economic system that provides a fair economy for all participants in the value chain.
The open metaverse is a rather complex system. Many technical challenges remain to be solved to build a smarter, more reliable and data-rich open metaverse. Let’s work together to make its vision a reality.
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