The metaverse, a virtual reality space where users can interact in a simulated environment, has its complexities. Centralized versions often restrict economic activities due to the intricacies of creating marketplaces, while decentralized versions face issues with transaction costs and scalability.
Marketplaces are notoriously difficult to implement well, when developers have to start from scratch, which is one of the main reasons why most centralized metaverses limit economic activity so much.
On the other hand transactions have a cost in decentralized metaverses, and most blockchains have bandwidth issues at scale, something their centralized counterparts have solved for the most part.
In a way, the metaverse is not entirely new. From SimCity, first released in 1989(1), to Second Life, released in 2003(2), there clearly always was a market for people who wanted to live life in fictitious worlds with different, often simpler, rules than society had to offer.
In their report titled “Value creation in the Metaverse,” consulting company McKinsey identified 10 layers of the metaverse.(3)
The same report by McKinsey suggests that the metaverse industry could create up to $5 trillion in revenue by 2030. Citi’s report on the same topic reported metaverse revenue to be between $8 and $13 trillion by 2030.(4)
Despite these hurdles, the metaverse holds significant potential. Reports suggest that by 2030, it could generate trillions in revenue, highlighting the immense opportunities this digital universe may offer in the future.
1 See Wikipedia for a history of the game: SimCity
2 The history of that game can be found here: Second Life
3 Download the report here: Value creation in the Metaverse
4 See Citi’s report here: Metaverse and Money