📖
Web3 Encyclopedia
  • Welcome aboard!
  • Source
  • 😀Evolution from Web 1.0 to Web 3.0
    • Web 1.0 Web 2.0 Web 3.0
    • Key Features
    • Current Limitations
    • Future of Web 3.0
    • Learn: What Is Web3?
    • Learn: Will Every Brand Have a Web3 Strategy?
    • Learn: Big Ideas in 2023
    • Learn: The Web3 Paradox: Why Scaling Usage Alone Won't Lead to Mass Adoption?
    • Learn: Is Web3 A Marketing Buzz or Tech Revolution?
    • Learn: What is the relationship between blockchain and Web3?
    • Learn:Empowering Women in Web 3.0: The Role and Contributions of Women in Blockchain, DeFi, and dApp
    • Learn: Web 3.0 and the Future of E-Commerce
    • Learn: 12 ways ecosystem projects can attract more developers
    • Learn: How Web3 is Impacting Education?
    • Learn: Web3 And The Future Of Digital Advertising
    • Learn: Web3’s impact on personalization, trust and engagement
    • Learn: Web3-Powered Identity Management -- Unlocking the Benefits of Decentralization
    • Learn: Why Web2 companies fail in Web3 while others made it?
    • Learn: To Identify or Not in a Web3 World?
    • 🤫[Insider Series] McKinsey x Web3
    • TL;DR 👀
  • 💲Blockchain Fundamentals
    • Why is Blockchain So Popular?
    • Introduction to Blockchain
    • Blockchain Misconceptions
    • Blockchain vs Bitcoin, Database, Cloud
    • Consensus Mechanism
    • Public and Private Keys
    • Hash Functions and Cryptography
    • Sharding
    • Types of Blockchains: PoW, PoS and Private
    • Understanding Cryptocurrency
    • Coins vs Tokens
    • Blockchain Trilemma
    • Legality
    • Learn : Google’s Cloud Based Blockchain Node Service
    • Learn: How Blockchain, Digital assets, and Web3 Unlock Financial Inclusion Globally
    • Learn: Will Chinese-Made Crypto Soar Higher?
    • Learn: What Does MiCA Mean for Crypto in Europe?
    • Learn: Unraveling the Intricacies of Blockchain Forensics and Asset Tracking
    • Learn: Promising blockchain use cases in healthcare industry
    • Learn: The Role of Blockchain in Authenticating and Provenance Art
    • Learn: Blockchain-Based Digital Identity: Benefits, Risks, and Implementation Challenges
    • Learn: The Future of Energy Supply Chains
    • Learn: Revolutionizing smart contracts and cryptocurrency
    • Learn: Nigeria goes blockchain
    • Learn: A Game Changer for Online Gaming?
    • Learn: Is blockchain technology ready for high-storage applications?
    • Learn: Will Blockchain Technology Mark a Turning Point in Fraud Prevention?
    • Learn: Why ZK-rollups need data availability?
    • Learn: How will generative AI disrupt blockchain?
    • Learn: A New Blockchain for Generative AI?
    • TL;DR 👀
  • 🏟️Web3 Utilities
    • Decentralized Applications (dApps)
    • Cross-chain Bridges
    • DAO
    • Artificial Intelligence
    • Learn: Is Community-building Essential for Web3 Startups?
    • Learn: ‘Decentralization Theater’
    • Learn: Crypto and AI- A yay or nay combination?
    • Learn: Dissecting the DAO
    • Learn: What is motivating Lido DAO to rise?
    • Learn: How to Turn Your Community Into a DAO?
    • Learn: The Key to Decentralized Decision Making
    • Learn: How Web 3.0 can disrupt the supply chain industry?
    • TL;DR 👀
  • 🪙Bitcoin
    • What is Bitcoin
    • Bitcoin's Blockchain Technology
    • UTXO Model and Transaction Fees
    • Bitcoin Mining and Mempool
    • Learn: What is bitcoin mining?
    • What are Hard Forks and Soft Forks
    • What is SegWit and the Lightning Network
    • Bitcoin Ecosystem
    • Can Bitcoin be Destroyed? Game Theory and Network Attacks
    • Learn: Crypto token supplies explained
    • Learn: What is crypto tax-loss harvesting, and how does it work?
    • Learn: Can Crypto Go Green? How to Invest in Eco-Friendly Cryptocurrencies
    • Learn: Why Did FTX Collapse? Here’s What to Know.
    • Learn: How Sam Bankman-Fried swindled $8 billion in customer money?
    • Learn: How much is Bitcoin worth today?
    • Learn: The Costs of Running a Bitcoin Node In Nigeria
    • Learn: Has 2022 Left Any Crypto Positives?
    • Learn: How Crypto Exchanges Can Be Free of Risk?
    • Learn: Greed, Lies and FTX: Is Crypto a Force for Good or Evil?
    • Learn: Is Crypto a Cultural Movement?
    • Learn: What are the consequences of crypto’s ongoing regulatory process?
    • Learn: Beyond the Crash and Embracing NFTs?
    • Learn: Understanding crypto bag holders and their mindset
    • Learn: Inscriptions: Just A Fad, Or A Real Threat To Bitcoin Becoming Decentralized Money?
    • Learn: How Bitcoin Ordinals Can Change the Future Of Mining?
    • Learn: What is a supernet?
    • Learn: Bitcoin Miners Celebrate 10 Years Since First ASIC, What Changed Since Then?
    • Learn: Bill Vs. CBDC – Why This US Congressman Wants To Block The Fed From Issuing A Digital Dollar?
    • Learn: Why Bitcoin Will Blow People’s Minds In 2025?
    • Learn: How the Howey Test Sheds Light on Cryptocurrency's Regulatory Gray Area
    • Learn: Cryptocurrency vs AI: A Complex Debate
    • Learn: Where the U.S. Government Went Wrong in Regulating Crypto?
    • Learn: The Nostr Privacy Paradox
    • Learn: Do algorithmic stablecoins have a future as centralized coins are under scrutiny?
    • Learn: Is Bitcoin Set To Revolutionize The Financial World With Its Superior Purchasing Power?
    • Learn: What is Shibarium, and what does it mean for Shiba Inu?
    • Learn: What is a crypto dusting attack?
    • Learn: Is the Adoption of Central Bank Digital Currencies (CBDCs) the Future?
    • Learn: How Artificial Intelligence Could Revolutionize Crypto?
    • Learn: What’s next for EU’s crypto industry as European Parliament passes MiCA?
    • Learn: Why the EU Has MiCA and the U.S. Has Securities Law Confusion?
    • Learn: Six New Projects Looking to Mitigate Bitcoin Mining’s Energy Footprint
    • Learn: Who on Crypto Twitter chose not to pay for a blue checkmark?
    • Learn: What is the wash-sale rule in Crypto?
    • Learn: What is Pepecoin and can it flip memecoins Dogecoin and Shiba Inu?
    • Learn: Can you recover stolen Bitcoin from crypto scams?
    • Learn: What the ‘anti-mining bill’ means for the crypto industry in Texas?
    • Learn: Does the US have a crypto ‘tax loophole’ problem?
    • Learn: How users can stay protected?
    • Learn: How Crypto Revolutionize Cheaper and Faster Transactions?
    • Learn: Can NFTs and CFDs be BFFs?
    • Learn: A PR expert’s tips for memecoin projects
    • Learn: Why politicians aren't convinced about the Digital Euro?
    • Learn: How A 90-Year Old TA Theory Predicted The Sudden Bitcoin Boom?
    • Learn: Social Trading Platforms and CFDs: A New Paradigm in Investment
    • Learn: How could the Chinese economic crisis impact Bitcoin and crypto?
    • Learn: How do they compare: Bitcoin IRA vs. traditional IRA?
    • Learn: Why Tokenized Assets Are Safer During a Banking Crisis?
    • TL;DR 👀
  • 🛢️Ethereum
    • Bitcoin vs Ethereum
    • What can Ethereum do?
    • What is Ether (ETH)?
    • What's Unique About ETH?
    • What are Smart Contracts?
    • Energy Consumption?
    • Ethereum Virtual Machine (EVM)
    • Pros & Cons of Smart Contracts
    • Decentralized Applications (dApps)
    • Ethereum Token Standards (ERC-20, ERC-721 and ERC-1155)
    • Evolution of Ethereum
    • How to Get Your First Ethereum
    • Learn: Next Ethereum Upgrade — Shanghai Upgrade
    • Learn: Tipping Scale for Crypto Adoption: Usability vs. Accessibility
    • Learn: Major Publicly Traded U.S. Bitcoin Miner Files For Chapter 11 – Impact On The Market?
    • Learn: 5 altcoin projects that made a real difference in 2022
    • Learn: How Tether Can Be a More Stable Stablecoin?
    • Learn: Are the Ethereum Killers Still Deadly?
    • Learn: What Ethereum Tech Trends Are Weathering the Bear Market?
    • Learn: How Ethereum’s token burns are making it a deflationary cryptocurrency?
    • Learn: A few things to know about Ethereum's Shanghai Upgrade
    • Learn: The Role of Enterprise Ethereum
    • Learn: Understanding Layer 2 Scaling Solutions for the Ethereum Network
    • Learn: The Battle of Giants: Bitcoin vs Ethereum
    • Learn: Cryptography, Smart Contracts and Distributed Networks
    • Learn: The Memecoin Grift and How It Threatens Ethereum Culture
    • Learn: What Is Ethereum’s ‘Data Availability' Problem, and Why Does It Matter?
    • TL;DR 👀
  • 👛Wallet
    • What is a Blockchain Wallet?
    • Hardware / Software Wallet
    • How to Get Your First Cryptocurrency
    • Setting up Metamask Wallet
    • Learn: How to connect the Avalanche network to MetaMask?
    • Learn: How to pass on your crypto when you die?
    • Learn: What are hierarchical deterministic (HD) crypto wallets?
    • Learn: Pros and Cons of Digital Wallets
    • Learn : How Web 3.0 Wallets Are Redefining Digital Asset Security?
    • Learn: Open source: Buzzword or real security for crypto wallets?
    • TL;DR 👀
  • 🌕New & Rising Protocols
    • Binance
    • NEAR
    • Solana
    • Fantom
    • Polygon
    • Cardano
    • Polkadot
    • Cosmos
    • Harmony
    • Cronos
    • Optimism
    • Terra
    • Who Will Win the L1 Wars?
    • Learn: New Layer 1 Blockchains Are Expanding the DeFi Ecosystem But No Eth Killers Yet
    • Learn: Is an Increased Focus on Layer-2 Scaling and ZK Technology Justified?
    • Learn: What Are the Stakes in the SEC vs. Ripple Case?
    • Learn: What is The Graph, and how does it work?
    • TL;DR 👀
  • 📈Decentralized Finance (DeFi)
    • CEX vs DEX
    • CeFi vs DeFi
    • Algorithmic Stablecoins
    • Airdrop
    • Liquidity Pool
    • Impermanent Loss
    • Swapping
    • Wrapped Token
    • Arbitrage Opportunities
    • Staking
    • Yield Farming
    • Total Value Locked (TVL)
    • Gas Fees
    • Lending & Borrowing
    • Useful Tools
    • Activity: Uniswap & Pancake Swap
    • Learn: Automated Market Makers (AMMs) in DeFi
    • Learn: Crypto Moving towards ESG: What Is Regenerative Finance (ReFi)
    • Learn: What Is dYdX? Understanding the Decentralized Crypto Exchange
    • Learn: It's A Wrap - DeFi in 2022
    • Learn: Why DeFi should expect more hacks this year?
    • Learn: The Security Challenges of DeFi
    • Learn: The Promising Future of Decentralized Social Media on Web 3.0
    • Learn: Can CBDCs, Tokenized Deposits, Stablecoins and DeFi Coexist?
    • Learn: The Increasing Popularity of DeFi and Its Potential to Disrupt Traditional Finance
    • Learn: The future of DeFi is ReFi
    • Learn: DeFi aggregation
    • TL;DR 👀
  • 🙈Non-Fungible Token (NFT)
    • What are NFTs?
    • Case Study
    • Storage
    • Who are the Players?
    • NFT Marketplace
    • NFT Useful Resources
    • Activity: Mint Your Own NFT
    • Learn: How You Can Prevent Hackers From Stealing Your NFTs?
    • Learn: What Is an NFT Floor Price?
    • Learn: Should Bored Ape buyers be legally entitled to refunds?
    • Learn: China’s view of NFTs different from rest of the world’s
    • Learn: NFTs IRL: How Digital Collectibles Are Forging Offline Experiences
    • Learn: How NFT Brands Can Cut Through The Noise
    • Learn: How Web3 disrupts the music sector?
    • Learn: Unlockable content in NFTs
    • Learn: Why Meta Matters in NFTs?
    • Learn: Should NFT Marketplaces Become Centralized?
    • Learn: Hermès vs. MetaBirkins: The NFT Case That Could Have Major Trademark and Artistic Consequence
    • Learn: What are phygital NFTs, and how do they work?
    • Learn: What is NFT ticketing and how does it work?
    • Learn: Why Solana NFT marketplace is seeing less active users?
    • Learn: NFTs and Intellectual Property
    • Learn: How AI Is Changing Artistic Creation and Challenging IP Laws?
    • Learn: The Future of NFTs: Exploring Dynamic NFTs and Their Versatile Use Cases
    • Learn: NFTs in the event and ticketing industry
    • Learn: What is NFT rarity, and how to calculate it?
    • Learn: What happens to your NFTs when you die?
    • Learn: Dogecoin-Like Spike in Milady NFTs After Elon Musk’s Tweet, But Will It Last?
    • Learn: What are NFT royalties, and how do they work?
    • Learn: How developers aim to store crypto inside NFTs?
    • Learn: Generative Art NFTs: What Are They & Why Are They So Popular?
    • TL;DR 👀
  • 💗Metaverse
    • What is the Metaverse?
    • Metaverse Economy
    • Metaverse Companies
    • GameFi
    • Learn: Are We in the Metaverse Yet?
    • Learn: Can the Metaverse exist without blockchain?
    • Learn: Can the Metaverse Facilitate Sustainable Growth of Defi Systems?
    • Learn: What is the role of biometrics in the metaverse?
    • Learn: Can metaverse be the future court?
    • Learn: Metaverse Fashion Is on the Rise, but for Whom?
    • Learn: Sustainability in the Metaverse: Challenges and Opportunities
    • Learn: How To Build A Responsible Metaverse?
    • Learn: What is a VTuber, and how do you become one?
    • Learn: How proof-of-identity provides human experiences?
    • Learn: The “Metaverse” Next Frontier for Business: Impact And Challenges
    • Learn: The 5 Biggest Misconceptions About The Metaverse
    • Learn: Why culture and ownership are critical to the metaverse?
    • TL;DR 👀
  • 👾Career in Web3 (coming soon)
    • Developers
    • Moderators
    • Community Managers
    • UI/ UX Designers
    • Digital Fashion Designers
  • 🌱Sustainability (Coming Soon)
    • Industry Effort
    • Co-author
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On this page
  • Does the Metaverse need to be on a blockchain?
  • Why do we need a new internet?
  • Why would blockchain fix the internet?
  • Blockchain challenges in delivering the Metaverse
  • So, is blockchain ready to take on the Metaverse journey?
  1. Metaverse

Learn: Can the Metaverse exist without blockchain?

PreviousLearn: Are We in the Metaverse Yet?NextLearn: Can the Metaverse Facilitate Sustainable Growth of Defi Systems?

Last updated 2 years ago

Does the Metaverse need to be on a blockchain?

Blockchain-based solutions have seen financial, legal, and , albeit at a relatively small scale over the last few years. However, whether the blockchain infrastructure layer will be a must-have for the growth of the Metaverse narrative remains unanswered.

The answer to that question depends on how we define the Metaverse. Some definitions of the Metaverse focus only on its experiential elements. often makes us imagine wearing a and going through an immersive experience in a virtual world.

This is not all wrong, but it is an incomplete definition of a Metaverse. The Metaverse is expected to be a futuristic version of the internet. That is a great vision, but why do we need a new internet? The answer to that lies in the answer to another question — do we need blockchain for the Metaverse?

Why do we need a new internet?

Our current internet is inadequate. Incentives are skewed toward a limited set of stakeholders, creators get exploited and users have very little control over their data. Can the new version of the internet change that?

The internet has been built and evangelized through applications like Google, Meta (previously Facebook), Instagram and Amazon. These applications deploy several techniques to grab users’ attention, and monetize that when they have it. Despite creating monetizable value through these apps, users get a very tiny slice of the value accruing to them.

Even when users who have created value receive very little money, the applications that grabbed the users’ attention have generated wealth for themselves and their shareholders — several trillion dollars. The internet must be more inclusive for this to change.

This is not because of the applications, themselves, but because they were bred in a capitalist ecosystem. Here, the winners take all the value and the wealth. It is okay for this to happen with the new internet, as long as “winners” has a more inclusive definition.

The other key challenge with the current internet is the exploitation of content creators. The internet has left us overfed with content. Yet even high-quality content creators seldom get paid their due. The platforms and intermediaries that offer web-shelf space to these content creators make most of the money. This needs to change; the internet must be more creator-friendly.

Apart from skewed incentive mechanisms, the current internet also takes user data for granted. Internet users have very little control over their data and their network. Why would a user need to start from scratch to build their network when they move from Facebook to Twitter? This needs to change and the Metaverse is the change.

Why would blockchain fix the internet?

The internet handles several million data transactions per second. is in its technological infancy compared to the current iteration of the internet. Yet, blockchain is not just an infrastructure layer; it is an economic layer too. These economic features of the blockchain can potentially address the challenges of the internet.

In a blockchain-based world, of a metaverse (the new internet) platform allows more inclusive incentives. These metaverse applications can be inclusive from a shareholding (governance token) and user incentivization (utility token) perspective.

Active participants in the metaverse ecosystems often hold . For instance, participants in a gaming metaverse earn their utility tokens by playing and creating games. Participants in an art metaverse earn tokens by creating art and being ambassadors of art by writing useful reviews.

The Metaverse allows participants to earn as users and creators of the platforms. As long as participants in these ecosystems keep creating value, they are incentivized. As these participants generate more value in an ecosystem, they accrue credentials and become influencers.

The fundamental ethos is that users own their credibility and network, not the platforms.

NFTs not only offer users the ability to create, buy and sell Metaverse assets but also allows them to accumulate ecosystem credentials in the form of “soul-bound tokens.” Soul-bound tokens behave like credit scores in financial services and as Metaverse users accumulate more, they tend to accrue more value faster.

Blockchain challenges in delivering the Metaverse

The Metaverse of the future sounds great, but is it all just hype? Serious technological, experiential and economic model headwinds need to be addressed for the Metaverse narrative to come true.

Apart from the scalability challenges, there are major interoperability issues across blockchains. This is particularly related to bridges used to transfer value from one blockchain to another.

These blockchain infrastructure layer challenges keep returning to haunt the ecosystem. One of the more recent issues is creating a sustainable economic model of the Metaverse. While GameFi has been leveraged as a growth hack to attract users, a scalable token model is yet to be identified.

To date, there have been many failed economic models that have informed and inspired new models and economic approaches. Yet, innovators in this space are at least a cycle away from identifying a sustainable model.

The last headwind is that of user experience. VR hardware and the Web3 onboarding user experience need to be more seamless to attract hardcore gamers, creators and users into the Metaverse.

So, is blockchain ready to take on the Metaverse journey?

In essence, the ideal metaverse must be on blockchain rails, which mandates inclusive incentives centered around creators and users while still offering immersive and seamless virtual experiences.

The Metaverse is not just about the experiential elements; it is also about the economic aspects. The financial incentives must be centered around the real value creators. Those who create content, and regularly interact and transact on the platform are the ones who are creating value.

While the economic model possibilities are exciting, and several hopeful glimpses of these possibilities have emerged, there are significant technical challenges to overcome. The deficiencies in user experiences need to be addressed too.

In the short term, a few scalable Web2 versions of the Metaverse would embrace the Web2 ethos of incentivizing participants. As blockchain matures, more hybrid models would emerge, where Web2 elements bring scalability and user experience, and blockchain takes care of incentivization. A fully scalable on-chain Metaverse may seem utopian now, but it would be the ideal way to build the future internet.

Yet, if an influencer in one metaverse wants to create a profile on another ecosystem, they should be able to carry their friends and network along with them. Ecosystem credentials such as “XP” (experience points) in a gaming platform should not get carried along as they are ecosystem specific.

The other fundamental design construct of the Metaverse is . NFTs offer value permanence. When a gamer buys an in-game asset in a Web2 game, they offer a revenue opportunity to the game studio. They don’t own the asset. That changes in the blockchain world.

Blockchain suffers from . Even the best chains with meaningful user bases can handle only about 50,000 transactions per second. The internet has millions of data interactions per second in emails, tweets, posts, Google searches, messages and more.

This comparison assumes that data interactions in a metaverse must be on-chain. As get better at addressing scalability challenges, the economic features will rightly take the limelight to create new Metaverse-based models for the future.

Many cyber attacks on Web3 platforms have occurred through these bridges. The Ronin bridge attack and Solana wormhole bridge attack are examples. but it is equally a vulnerability that needs to be addressed.

This article was first appeared in Cointelegraph, by

💗
gaming
social applications
The word Metaverse
virtual reality (VR) headset
The blockchain infrastructure
the tokenomics
utility tokens
Web3
nonfungible tokens (NFTs)
scalability, interoperability and security challenges
cryptographic techniques (like zero-knowledge Rollups)
Interoperability is an ample opportunity within Web3
Arunkumar Krishnakumar