The metaverse used to be all that anyone could talk about.
Web searches for the term jumped 7200% in 2022, and investments during the first half of the year had nearly tripled from 2021. Months later, it became clear that many grandiose proclamations would fall sorely short of their promises, and public interest has since waned.
But despite these setbacks, many companies have not been deterred from continuing to explore the potential of the metaverse. Why?
In a white paper that the Development Bank of Singapore (DBS) published last year, we argued that the metaverse will never truly fade away, because the concept itself has an inherent appeal driven by something fundamental in human psychology: the promise of escapism, catharsis, achievement and more, with less or no risk. There may also come a time when our virtual worlds are developed enough to take on lives of their own, lending them a consequentiality that stands parallel to that of the physical world.
The metaverse is, in our view, inevitable.
With this in mind, there is no reason why the metaverse, if done right, can’t still live up to its promise — it just might not look exactly like what was first sold to the market.
Taking an ‘inside-out’ approach
At its peak, researchers estimated the metaverse could become as much as an $11 trillion opportunity by the end of this decade.
Eager to become first-movers, companies entered the space with a hasty “outside-in” mindset, retrofitting their existing business models into the metaverse. This approach, however, quickly fell short, as was the case with a number of social media-driven metaverses.
To truly build a human-centered metaverse, we need to instead adopt an “inside-out” way of thinking — in effect, creating value-added experiences that are only possible within the metaverse context.
By its design, not every real-world fixture or experience will have its own “digital twin” — after all, the metaverse was never meant to be a replica or replacement of our earthly lives, but instead to enrich it with experiences we previously didn’t think possible.
The difficulty now lies in making these innovative applications a reality given the relative infancy of the underlying tech, which is estimated to only be possible by 2040. Here, businesses that offer the “picks and shovels” of the metaverse — the mechanisms that enable its seamless functioning — have a crucial role to play.
Read more from our opinion section: It’s way too soon for a marriage of AI and Web3
Banks could become indispensable to the maturity of the metaverse, given how they have traditionally been skilled at driving asset intermediation. This is especially salient as we move from disparate, privately-owned virtual spaces to an open and interoperable multiverse of metaverses.
And with the metaverse still a virtual “Wild West,” formalized services could drive better governance, risk management and regulatory compliance, addressing concerns around money laundering and fraud. Companies keen to enter the space would also be empowered to tap on banks’ support to develop robust inside-out strategies, complete with sound tokenomics and custody mechanisms.
Building with intention
Even as the underlying tech progresses, how can we make the space conducive for all? This endeavor won’t happen on its own. Despite its relative infancy, bad actors have already found ways to exploit the metaverse for unsavory deeds.
How do we facilitate its continued development while keeping these same ills at bay?
For governments and businesses, this means asking the types of complex questions that stress test the balance between providing directed experiences and allowing for community-driven ones. On the flip side, society must navigate the push-and-pull of self-governance or entrusting responsibility to the powers that be.
As continued investments within the space would dictate, the metaverse is still very much alive — and to give up on it this early would be to miss out on the early advantages of a new technological era.
Far from the Big Tech players that sought short-term monetization gains via an outside-in approach, we must now channel a greater sense of meaning and responsibility — driven collectively by all stakeholders — as we build these new worlds for the generations ahead.
Perhaps this frames it well – let’s make the metaverse work not for one, nor for some, but for as much of humanity as we can, and if possible, for all.
Chee Kin leads the team which manages the legal and regulatory risk of DBS across legal entities, segments and geographies. His primary expertise lies in financial services regulation; however, he is currently focusing on the impact of digitisation and the evolution of frameworks that will be necessary to cope with digitisation and data. Chee Kin was first introduced to the world of computer games in 1984 and has been an avid gamer since, tracking the progression of games from 2D to 3D, MMORPGs, and more recently, the metaverse.
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