Making a Better Metaverse
In this Q&A, Erich Joachimsthaler, Ph.D., author of “The Interaction Field” and CEO of Vivaldi, discusses the current state of the metaverse, opportunities for businesses, and how we can get to the real future of Web 3.0.
Q: Who is the metaverse working for currently?
A: The metaverse right now works for scammers, criminals, bandits – people who are a bit unsavory, and perhaps for speculators or traders who have a lot of money to speculate or celebrities who buy a Bored Ape as a status symbol.
These new technologies have created a Wild West. The evolving question is — how does this create value to the consumer or society at large? How can a company or a brand then do good business? People who are not trying to speculate or scam somebody.
Q: Right now a lot of consumer brands are experimenting with the metaverse — what are the options for services or B2B companies? Is there a way they can engage at the present?
A: One simple way that companies currently participate is to say if we do it here [in the real world], we should also be over there [in the metaverse]. Sort of like the old version of Second Life.
JP Morgan, for example, has Chase branch offices, and they recreated a branch office in the metaverse using the platform Decentraland. Or Gucci says if you like Gucci loafers in the real world and want to express yourself in the metaverse, maybe your avatar will have the same Gucci loafer, and you’ll pay a lot of money for it. Or there are advertising companies that say, hey, in the real world we do advertising on 5th Avenue because a lot of consumers walk by, so we’ll create a giant billboard in the metaverse.
That’s where a lot of conversation is right now, which is not really constructive. People have started to build some things, but not a lot of activity is taking place — yet.
B2B companies will benefit from what’s called the industrial metaverse, which has recently been extensively discussed at the World Economic Forum at Davos.
Q: What do you think the inflection point will have to be, or what will have to happen technologically, to get us from where we are now, with marketing and entertainment leading the charge, to a future where businesses are better utilizing this new world?
A: There are a number of things that have to happen. The metaverse and Web 3.0 — it’s extremely slow. If you remember dial-up internet and AOL, where the screen would slowly fill up, that’s actually what’s happening with Web 3.0.
Another very important thing is the regulatory and legal framework. There are big problems right now – if you buy an NFT that is tied to a digital asset, the legal framework is not clear if you bought the copyright of something or merely the fair use. Legally with fair use, you can use it, but you don’t own it. The original owner still owns it. There’s no law right now.
In order to make the metaverse work for the rest of us, the speed and regulatory framework have to evolve fairly rapidly.
Q: There’s an idea that the decentralization that comes with Web 3.0 will give individuals more control over their personal data — what is the benefit of that for large companies or business services?
A: In Web 3, I have my identity on the blockchain, it’s encrypted and everything I put there stays there. I could have a digital wallet, an SSI [self-sovereign identity], and if I own that data, it’s spread across many computers: decentralized. It’s valuable because my data can be shared and aggregated and everybody can learn from the data. It isn’t just owned by one company.
I could create an NFT out of my data and every time I share it or provide access, I earn a token. I could connect my exercise routines, my eating habits, sleeping behavior, and then could use that data and buy health insurance. If I’m healthy, I could use it to get a reduction in insurance.
Right now, the value is exploited by companies that capture data, like Facebook and Google, via annoying advertising. In the future, decentralization will democratize things. I can create a value out of my data and trade or gift it. It creates value to companies because they can create better products and services based on the data. As I wrote in my book, it’s about winners share all, not winners take all. In the future the consumer becomes a lot more powerful.
Q: In Web 2, we’ve been in an era of deep “personalization” or something that’s been sold to us as “personalization,” and maybe what’s being advocated for in the future is a level of aggregation that allows for better overall products, even if they seem less “personalized”?
A: Personalization right now isn’t really personalization. Today it is about a limited context such as past purchases. It’s almost lost its original intent. Web 3 promises that it becomes real personalization — because I’m in charge of serving myself. Companies will only attract customers and business if they can truly understand the context and daily life of consumers. As I’ve said many times before, if content is king, context is King Kong.
Q: Do you see health tech or health care as being the industry that could benefit the most or most quickly from these new developments?
A: Health care is a big one because it’s extremely fragmented. One doctor in a hospital doesn’t know what another doctor in the same hospital on a different floor is doing. Never mind a doctor across the country. There’s an incredible fragmentation. With the aggregation of data, people start benefiting from each other.
Q: You’ve made the prediction that the cryptocurrency boom may end in a bust — do you foresee cryptocurrency reaching a level of stabilization, or serving as a testing ground for the blockchain, or something else?
A: Crypto is a financial instrument and that means it attracts criminals, scammers and speculators – in a good way and a bad way. Those practices will have to clear themselves out with the regulatory and legal frameworks. I think what will be left is an infrastructure that is far more efficient and effective than what we have now, which is a few banks controlling the banking system. In the metaverse, it’s permissionless; there are no intermediaries which charge you a fee for transfers. Money will be able to travel from me to you without any friction. That really creates consumer benefit. I’m bullish on crypto, and bearish on crypto as a speculative tool.
Q: Is there some inherent value to being the “first” in these new spaces?
A: The standard recommendation by consultants and ad agencies is that you need to be participating and experimenting, and I think that’s a bit of a self-serving recommendation. Ad agencies tell you that so they can help you do that. I don’t necessarily think that’s the right recommendation.
At Vivaldi, we think differently. You have to figure out how to create real and meaningful value to consumers and create a competitive advantage for your company and brand. It’s better to start with: “Who is my customer? What is my product or service? How do we create value?” and then make decisions from that vantage point. Thinking about your business and framing it from your business perspective is a more thoughtful and practical approach to participating, rather than buying a lot of real estate on Decentraland just to have a presence there or hoping consumers will eventually come. Being first isn’t really the value, it’s being first in providing a meaningful benefit for consumers, that should be the value.
GLOSSARY:
The metaverse: A 3D immersive environment that exists both physically and virtually, built on Web 3.0 technologies.
Web 3.0: The third generation of the internet, which utilizes blockchain technology, operating in a decentralized way and a host of other technologies.
Blockchain: A list of securely linked records distributed digitally over a peer-to-peer network and publicly displayed as a ledger of timestamped transactions.
NFT: A non-fungible token, i.e. a unique digital element that exists as part of the Ethereum blockchain.
Cryptocurrency: A digital or virtual form of currency secured by cryptography, distributed in a decentralized method.