The Metaverse, Matthew Ball (9/10)

Rating: 9/10

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🤔 Pre-Read Exercise: What Do I Know About This Topic/Book?

• While most people became familiar with "the metaverse" over the last few years, I feel like I've understood the concept since childhood due to my MMORPGs (massively multiplayer online role-playing games) gaming experiences. I was, for example, extremely addicted to Runescape growing up!
• Driven by my historic addiction, when "the metaverse" began to get thrown around more liberally in mainstream media, it caught my attention, and I began to take notice. This coincided with my foray into social tokens, community tokens, DAOs, NFTs, etc., and I've been part of the broader "web3" ever since.
• Inevitably, the "metaverse" has therefore been something I've heard a lot about, read a lot about, but never reaaaaallly managed to get a comprehensive, holistic understanding of.
• Matthew Ball, the author of this book, has appeared on many of the podcasts I regularly listen to, including Conversations with Tyler and Empire. I've become increasingly familiar with his grounded takes on the "metaverse" trend and this new book!

🚀 The Book in 3 Sentences

1. A comprehensive and holistic introduction to and primer on "the metaverse" from an experienced venture capitalist's perspective.
2. The book helps define what the metaverse is, what is required to build the metaverse, and how the metaverse will impact our lives and the broader business/economic landscape.
3. Quite a simple and accessible read, written in plain English. You don't need to be technical or a genius to understand the narrative.

🎨 Impressions

My last ~12 months in crypto have led me to be incredibly skeptical of most “metaverse”-based fantasies. Personally, every “metaverse” I’ve encountered has fallen short of the childhood experiences I had playing Runescape, for example.

This book, however, pleasantly surprised me, and I think it’s a very worthy read for anyone looking to learn more about the history of technology, what drives technological innovation, the capital markets, and the direction we’re heading in terms of spending more and more time (and doing more and more business) in virtual worlds.

I thought the book was written very efficiently and rarely found myself getting bored or feeling like the author diverged from his key narrative. On this, the book is very well structured and is clearly divided into 3 major sections, each of which is divided nicely into a number of well-defined chapters.

Each time the author talks about the technology, he brings it back to a business/capital markets perspective which, as a VC myself, I found very useful and insightful.

🔍 How I Discovered It

• My friend Vishal recommended I read it and shared a presentation the author had given at his company's annual summit.

🥰 Who Would Like It?

Anyone who's tech/web3/crypto-curious, interested in the future of tech, how the metaverse value will be distributed and accrued to companies, and which firms are innovating in this space.  

☘️ How the Book Changed Me

I'm more skeptical of anyone building metaverse-based stuff than ever before, but I'm now equipped with a better set of questions and a more inquisitive mind when it comes to the subject!

💬 My Top Quotes

• A massively scaled and interoperable network of real-time rendered 3D virtual worlds that can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of data, such as identity, history, entitlements, objects, communications, and payments.

📒 Summary + Notes

Part 1: What is the Metaverse?

Chapter 1: A brief history of the future

Chapter 2: Confusion and uncertainty

Chapter 3: A definition (finally)

Chapter 4: The next internet

Part 2: Building the Metaverse

Chapter 5: Networking

Chapter 6: Computing

Chapter 7: Virtual world engines

Chapter 8: Interoperability

Chapter 9: Hardware

Chapter 10: Payment rails

Chapter 11: Blockchains

Part 3: How the Metaverse will revolutionise everything

Chapter 12: When will the metaverse arrive?

Chapter 13: Meta-businesses

Chapter 14: Metaverse winners and losers

Chapter 15: Metatarsal existence

Introduction

Prior to Roblox’s IPO filings in October 2020, “Metaverse” appeared only 5 times in SEC filings. In 2021, it was mentioned >260 times. That same year, Bloomberg catalogued >1,000 stories containing the word Metaverse. The prior decade had only 7.

The dramatic response to the Metaverse reflects the growing belief that it is the next great computing and networking platform, similar in scope to the transition from the personal computer and fixed-line internet of the 1990s to the era of mobile and cloud computing we live in today.

This book’s core purpose is to offer a clear, comprehensive, and authoritative definition of the Metaverse. It aims to help readers understand what’s required to realize the Metaverse, why entire generations will eventually move to and live inside it, and how it will forever alter our daily lives, our work, and how we think. In my view, the collective value of these changes will be in the tens of trillions of dollars.

Part 1: What is the Metaverse?

Chapter 1: A Brief History of the Future

In popular media (books and movies by the likes of Stephenson, Gibson, the Wachowskis, Dick, Bradbury, and Weinbaum), the Metaverse has been presented as a dystopian synthetic world. There is no reason, however, to assume that such an outcome is inevitable or even likely.

French philosopher and cultural theorist Jean Baudrillard, who coined the term “hyperreality” in 1981. He described hyperreality as a state in which reality and simulations were so seamlessly integrated that they were indistinguishable. Though many find this idea frightening, Baudrillard argued that what mattered was where individuals would derive more meaning and value—and speculated it would be in the simulated world.

More instructive than historically popular media content are the many efforts to build virtual worlds over the past several decades. History not only shows a multi-decade progression towards the Metaverse, but also reveals more about its nature. These would-be Metaverses have not been centered on subjugation or profiteering, but on collaboration, creativity, and self-expression.

The multi-decade history of social virtual worlds, from MUDs, Web World, and Activeworlds to Second Life, Minecraft, Fortnite, and Roblox, helps explain why the ideas of the Metaverse have recently shifted from science fiction and patents to the forefront of consumer and enterprise technology. We are now at the point when these experiences can appeal to hundreds of millions and their bounds are more about the human imagination than technical limitation.

The Coming Fight to Control the Metaverse (and You)

The historical trajectory of technological development of “proto-Metaverse” worlds will continue in the decades to come, bringing more realism, diversity of experiences, participants, cultural influence, and value to virtual worlds. A Stephenson-imagined version of the Metaverse will be realized.

There will be many wars for supremacy in and over this Metaverse. They will be fought between tech giants and insurgent start-ups through hardware, technical standards, and tools, as well as content, digital wallets, and virtual identities. This fight will be motivated by more than just revenue potential or the need to survive the “pivot to Metaverse.”

“This Metaverse is going to be far more pervasive and powerful than anything else. If one central company gains control of this, they will become more powerful than any government and be a God on Earth.” It is easy to find such a statement hyperbolic. The provenance of the internet, however, suggests that it may not be.

Today’s internet was built over several decades and through a variety of consortiums and informal working groups composed of government research labs, universities, and independent technologists and institutions. These mostly not-for-profit collectives typically focused on establishing open standards that would help them share information from one server to another, and in doing so make it easier to collaborate on future technologies, projects, and ideas.

The benefits of this approach were far-ranging – anyone with an internet connection could build a website (at no cost), no user or developer needed to be disintermediated, it was easier and cheaper to hire and world with outside vendors, integrated third-party software and apps, and repurpose code.

Importantly, none of this prevented businesses from making a profit on the internet, deploying a paywall, or building proprietary technology. Rather, the “openness” of the internet enabled more companies to be built, in more areas, reaching more users, and achieving greater profits, while also preventing pre-internet giants (and, crucially, telecom companies) from controlling it. Openness is also why the internet is largely considered to have democratized information, and why the majority of the most valuable public companies in the world today were founded (or were reborn) in the internet era.

When the United States sued Microsoft in 1998 for alleged antitrust violations, it centered its case on Microsoft’s decision to bundle Internet Explorer, the company’s proprietary web browser, with the Windows operating system (OS). Yet if a corporation had created the internet, is it conceivable that it would have even allowed a competing browser? If so, would it have allowed users to do whatever they wanted on these browsers, or access (and modify) whichever sites they chose?

A “corporate internet” is the current expectation for the Metaverse. The internet’s nonprofit nature and early history stem from the fact that government research labs and universities were effectively the only institutions with the computational talent, resources, and ambitions to build a “network of networks,” and few in the for-profit sector understood its commercial potential. None of this is true when it comes to the Metaverse. Instead, it is being pioneered and built by private businesses, for the explicit purpose of commerce, data collection, advertising, and the sale of virtual products.

What’s more, the Metaverse is emerging at a time when the largest vertical and horizontal tech platforms have already established enormous influence over our lives, as well as the technologies and business models of the modern economy. They benefit from network effects, have greater advantages via ML/AI with growing datasets, and their primary business models (advertising and software sales) are also scale-driven.

To secure their user and developer bases while also expanding into new areas and blocking potential competitors, the tech giants have spent the past decade closing their ecosystems. They’ve done this by forcibly bundling together their many services, preventing users and developers from easily exporting their own data, shutting down various partner programs, and stymying (if not outright blocking) for-profit and even open standards which might threaten their hegemony.

It is here that fears of a Metaverse dystopia seem fair, rather than alarmist. The very idea of the Metaverse means an ever-growing share of our lives, labor, leisure, time, wealth, happiness, and relationships will be spent inside virtual worlds, rather than just extended or aided through digital devices and software. It will be a parallel plane of existence for millions, if not billions, of people, that sits atop our digital and physical economies, and unites both. As a result, the companies that control these virtual worlds and their virtual atoms will likely be more dominant than those who lead in today’s digital economy.

Chapter 2: Confusion and uncertainty

There is no consensus definition of the Metaverse. Industry leaders (Microsoft, Facebook, Epic Games, Tencent, Alibaba, ByteDance, Netflix, etc.) all define it differently, often according to their existing competitive advantages.

Observers debate whether the Metaverse must be VR, AR, owned by more than one company, or whether it’s just a decentralized version of today’s internet.

Confusion as a Necessary Feature of Disruption

The largest companies in the world, Facebook, Google, Microsoft, IBM, etc. all totally missed out on or mis-timed various technological revolutions, e.g. mobile. Even once the technology behind the revolution was understood, people didn’t accurately envision what this would mean for society in terms of “the average day in the life”.

Whether you’re a Metaverse believer, skeptic, or somewhere in between, you should become comfortable with the fact that it is too early to know exactly what a “day in the life” might look and feel like when the Metaverse arrives. But the inability to precisely predict how we’ll use it, and how it will change our daily life, is not a flaw. Rather, it is a prerequisite for the Metaverse’s disruptive force. The only way to prepare for what is coming is to focus on the specific technologies and features that together comprise it. Put another way, we have to define the Metaverse.

Chapter 3: A definition (finally)

A massively scaled and interoperable network of real-time rendered 3D virtual worlds that can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of data, such as identity, history, entitlements, objects, communications, and payments.

Virtual Worlds

Virtual worlds refer to any computer-generated simulated environment. These environments can be in immersive 3D, 3D, 2.5D (also known as isometric 3D), 2D, layered atop the “real world” via augmented reality, or purely text-based.

3D

“3D” is a critical specification for the Metaverse – without it, we might as well be describing the current internet. But 3D is necessary not just because it signals something new. Metaverse theorists argue that 3D environments are required in order to make possible the transition of human culture and labor from the physical world to the digital one.

A “3D internet” might finally disrupt industries that have largely resisted digital disruption, for example, education – which has continued to rise in popularity and cost, even though the experience remains mostly unchanged.

Many imagine that the improvements to 3D virtual worlds and simulations, as well as VR and AR headsets, will fundamentally reshape our pedagogical practices. Students from around the world will be able to strap into a virtual classroom, sit alongside their peers while making eye contact with their teacher, then shrink down to blood cells which travel through a human circulatory system, after which these previously 15-micrometer-tall students re-enlarge and dissect a virtual cat.

Note: while the Metaverse should be understood as a 3D experience, this does not mean that everything inside the Metaverse will be in 3D. Many people will play 2D games inside the Metaverse, or use the Metaverse to access software and applications that they then experience using mobile-era devices and interfaces.

Real-Time Rendered

Rendering is the process of generating a 2D or 3D object or environment using a computer program. The goal of the program is to “solve” an equation made up of many different inputs, data, and rules that determine what should be rendered (i.e., visualized) and when, and by using various computing resources, such as a graphics processing unit (or GPU) and central processing unit (CPU).

Interoperable Network

Central to most visions of the Metaverse is the user’s ability to take her virtual “content,” such as an avatar or a backpack, from one virtual world to another, where it might also be changed, sold, or remixed with other goods. In addition, the Metaverse should make it so that wherever a user goes or whatever they choose to do, their achievements, history, and even finances are recognized across multitudes of virtual worlds, as well as the real one.

The process of standardization is complicated, messy, and long. It is really a business and human problem masquerading as a technological one. Standards, unlike the laws of physics, are established through consensus, not discovery.

Pointing to these challenges, some argue that it is unlikely that “the Metaverse” will ever happen. Instead, there will be many competing networks of virtual worlds. But this is not an unfamiliar position. From the 1970s through to the early 1990s, there was also constant debate as to whether a common internetworking standard would be established (this period is known as the “Protocol Wars”). Most expected the world and its networks would be fragmented across a handful of proprietary networking stacks that spoke only to select outside networks and only for specific purposes.

In hindsight, the value of a single integrated internet is obvious. Without it, 20% of the world economy would not be “digital” today (nor much of the remainder digitally powered). And while not every company has benefited from openness and interoperability, most businesses and users have. Accordingly, the driving force behind interoperability is unlikely to be a given visionary voice or newly introduced technology, but instead will be economics. And the means of leveraging economics to the greatest degree will be common standards that will enhance the Metaverse economy by attracting more users and more developers, which will lead to better experiences, which in turn will be cheaper to make and more profitable to operate, thereby driving greater investment. It isn’t necessary for all parties to embrace common standards, so long as economic gravity is allowed to do its work. Those who do will grow and those who don’t will face constraints.

Massively Scaled

The Metaverse, like the internet, must have a massively scaled number of virtual worlds if it is to be “the Metaverse. In combination, the “meta” and “verse” is intended to be a unifying layer that sits above and across all individual, computer generated “universes,” as well as the real world, just as the universe contains, by some estimates, 70 quintillion planets.

Within the Metaverse, there might be “metagalaxies,” a collection of virtual worlds that all operate under a single authority and that are clearly connected by a visual layer. Under this definition, Roblox would be a Metagalaxy, while Adopt Me! would be a virtual world. Why? Because Roblox is a network of millions of different virtual worlds, one of which is Adopt Me! Individual virtual worlds might themselves have specific sub-regions, just as networks on the internet have their own sub-networks, and the earth has continents, often comprising many nations, which can be further divided into states and provinces, each containing cities, counties, and so on.

Persistence

The challenge of persistence in virtual worlds can be a bit difficult to grasp because we don’t encounter this problem in the real world. If you cut down a physical tree, it is gone irrespective of whether you personally remember cutting it down, and no matter how many other trees and activities Mother Earth is tracking. With a virtual tree, your device and the server which manages it must actively decide whether to retain this information, render it, and share it with others. And if these computers choose to do so, there are additional questions of detail—is the tree just “gone,” or is it now felled on the ground? Should players see which side it was chopped from, or just that it was generically cut? And does it “biodegrade”? If so, how—generically, or in response to its local environments? The more information that persists, the greater the computational needs and the less memory and power that is available for other activities.

The amount of data that must be read, written, synchronized (more on this below), and rendered to create and sustain this experience is not just unprecedented—it is far beyond anything possible today.

However, the literal version of Stephenson’s Metaverse may not even be desirable. He imagined individuals waking up in the Metaverse inside their virtual homes, then walking or taking a train to a virtual bar. While skeuomorphism often has utility, “The Street” as a single unifying layer for everything in the virtual world likely does not. Most participants in the Metaverse would rather teleport from destination to destination.

Synchronous

We don’t want virtual worlds in the Metaverse to merely persist or respond to us in real time. We also want them to be shared experiences. For this to work, every participant in a virtual world must have an internet connection capable of transmitting large volumes of data in a given time (“high bandwidth”), as well as a low latency (“fast”) and continuous‡ (sustained and uninterrupted) connection to a virtual world’s server (both to and from).

Synchronous online experiences are perhaps the greatest constraint facing the Metaverse today—and the one that is hardest to solve. Simply put, the internet was not designed for synchronous shared experiences. It was designed, instead, to allow for the sharing of static copies of messages and files from one party to another (namely research labs and universities that accessed them one at a time).

Although many consider the Metaverse to be reliant upon innovations in devices, such as VR headsets, game engines (such as Unreal), or platforms like Roblox, networking capabilities will define—and constrain—much of what’s possible, when, and for whom.

As we’ll review in later chapters, there are no simple, inexpensive, or quick solutions. We will need new cabling infrastructure, wireless standards, hardware equipment, and potentially even overhauls to foundational elements of the Internet Protocol Suite, such as the Border Gateway Protocol.

Unlimited Users and Individual Presence

“Concurrency is one of the foundational problems for the Metaverse, and for a fundamental reason: it leads to exponential increases in how much data must be processed, rendered, and synchronized per unit of time. The Metaverse will only become “the Metaverse” if it can support a large number of users experiencing the same event, at the same time, and in the same place, without making substantial concessions in user functionality, world interactivity, persistence, rendering quality, and so on.

However, we are far from being able to replicate the density and flexibility of the “real world.” And it is likely to remain impossible for some time. During Facebook’s 2021 Metaverse keynote, John Carmack, the former and now consulting CTO of Oculus VR (which Facebook bought in 2014 to kickstart its Metaverse transformation) mused that, “If someone had asked me in the year 2000, ‘could you build the metaverse if you had one hundred times the processing power you have on your system today . . .’ I would have said yes.” Yet 21 years later, and with the backing of one of the world’s most valuable and Metaverse-focused companies, he believed the Metaverse remained at least five to ten years away and there would be “serious optimization” tradeoffs in realizing this vision—even though there were now billions of computers that were a hundred times more powerful than the hundreds of millions of PCs operating at the turn of the century.

What’s Missing from This Definition

Reminder, here’s the definition:

A massively scaled and interoperable network of real-time rendered 3D virtual worlds that can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of data, such as identity, history, entitlements, objects, communications, and payments.

Note: it’s missing “decentralisation,” “Web3,” and “blockchain,” which have each become untangled with each other, and with the term “Metaverse.”

Web3 refers to a somewhat vaguely defined future version of the internet built around independent developers and users, rather than aggregator platforms (Google, Apple, Microsoft, Amazon, Meta). It’s a more decentralized version of today’s internet that many believe is best enabled by blockchains.

Web3 does not directly require any 3D, real-time rendered, or synchronous experiences, while the Metaverse does not require decentralization, distributed databases, blockchains, or a relative shift of online power or value from platforms to users.

Regardless, Web3 principles are likely critical to establishing a thriving Metaverse:

• we need competition, not monopolies (like the real world, SMEs will construct and drive most of the benefits)
• we need trust, not centralised database and server models (otherwise, virtual plots of land or other assets, like artwork,could be reclaimed at any point without cause or redress). This is particularly relevant for developers, who must build virtual stores, businesses, and brands, despite the inability to guarantee they’ll be allowed to operate in the future.

Yet another question is whether centralized server models can ever support a nearly infinite, persistent, world-scale Metaverse. Some believe that the only way to provide the computing resources needed for the Metaverse is through a decentralized network of individually owned—and compensated—servers and devices.

Chapter 4: The Next Internet

The Metaverse represents a technological revolution, i.e. mainframe era -> PC era -> mobile internet era. Understanding the Metaverse as the “next-generation internet” helps explain much more than its potential for disruption. Like the internet, there will not be a “Facebook internet” or Google internet”. Instead, companies operate independently, with different technical stacks, but share common standards and protocols.

Rather than one company succeed in building or co-opting the Metaverse, it’s more likely that the Metaverse will be produced through the partial integration of many competing virtual world platforms and technologies. This process will take time. It will also be imperfect, inexhaustible, and face significant technical limitations as a result. But it is the future we should hope for and work towards.

Moreover, the Metaverse will not replace or fundamentally alter the internet’s underlying architecture or protocol suite. Instead, it will evolve to build on top of it in a way that will feel distinctive.

We also recognize that the internet is a bundle of many different “things.” To interact with the internet, the average person typically uses a web browser or app (software), which they access through a device that can itself connect to “the internet” using various chipsets, all of which communicate using various standards and common protocols, which are transmitted through physical networks. Each of these areas collectively enable internet experiences. No one company could drive end-to-end improvements in the internet—even if they operated the entire Internet Protocol Suite.

Why Video Games Are Driving the Next Internet

In the mainframe, PC, and mobile internet eras, entertainment and gaming were largely one of the last segments of the global economy to embrace the internet, with the “Streaming Wars” only really beginning in 2019.

Gaming, however, a $180B leisure industry, seems poised to alter the $95T world economy. The key is to consider the role of constraints in all technical development – when PCs, mobile, and the internet emerged, complex Metaverse world were not possible.

Now, however, companies typically focused on powering video game consoles and PCs are some of the most powerful technology companies in human history. Nvidia is now one of the ten largest public companies in the world.

One advantage that’s often overlooked is the fact that game developers, publishers, and platforms have had to fight and work around the internet’s networking architecture for decades and thus have unique expertise as we shift to the Metaverse. Online games have required synchronous and continuous networking connections since the late 1990s, with Xbox, PlayStation, and Steam supporting real-time audio chat across most of their titles since the mid-2000s. Making this work has required predictive AI that takes over for a player during a network drop before handing back control, custom software to unnoticeably “roll back” gameplay in the event that one player suddenly receives information before another, and creating gameplay that aligned with, rather than ignored, the technical challenges likely to affect most players.

This design orientation leads to the final advantage games companies possess: the ability to create a place someone would actually want to spend time in. Daniel Ek, the co-founder and CEO of Spotify, has argued that the dominant business model of the internet era has been breaking down anything made of atoms into bits—what was once a physical alarm clock on a nightstand is now an application inside the smartphone on a nightstand, or just data stored on a smart speaker nearby.8 In a simplified sense, the Metaverse era can be thought of as involving the use of bits to produce 3D alarm clocks made of virtual atoms. Those with the most experience in virtual atoms—decades of it—are game developers. They know how to make not just a clock, but a room, a building, and a village populated by happy players. If humanity is ever to move to a “massively scaled interoperable network of real-time rendered 3D virtual worlds,” that skill is going to take us there.

Part 2: Building the Metaverse

Chapter 5: Networking

In the same sense that “if a tree falls in a first and no one is around ti hear it, does it make a sound?”, even if the Metaverse is “fully realized,” it will not really exist. It, alongside each of its trees, their many leaves, and the forests they’re situated in, will just be data stored in a seemingly infinite network of servers.

Bandwidth

We are extremely far away from a situation where we have the Bandwidth to support a true Metaverse. Even our most sophisticated digital worlds, like Roblox, Fortnite, etc. have various tricks and hacks to make users feel like they’re interacting live and seamlessly, but their scales are far less than the true Metaverse and they have so many bugs!

Latency

You can think of “bandwidth” as the number of lanes on the highway, and “latency” as the speed limit. Latency is the greatest networking obstacle on the way to the Metaverse. Part of the issue is that few services and applications need ultra-low-latency delivery today, which in turn makes it harder for any network operator or technology company focused on real-time delivery. The good news here is that as the Metaverse grows, investment in lower latency internet infrastructure will increase. However, the fight to conquer latency doesn’t just stretch our pocketbooks; it comes up against the laws of physics (speed of light).

Chapter 6: Computing

Sending enough data and in a timely fashion is just one part of the process of operating a synchronized virtual world. The data must also be understood, code must be run, inputs assessed, logic performed, environments rendered, and so on. This is the job of central processing units (CPUs) and graphics processing units (GPUs), broadly described as “compute.

Roblox now supports up to 200 players in its relatively lower-fidelity worlds, with up to 700 players possible in beta testing. However, we remain far from the point at which the only constraint is creative. The Metaverse will involve hundreds of thousands participating in a shared simulation and with as many custom virtual items as they like; full motion capture; the ability to richly modify a virtual world (rather than pick from a dozen or so options) with full persistence; and rendering that world not just in 1080p (typically considered “high definition”), but 4K or even 8K. Even the most powerful devices on earth struggle to do this in real time because every single asset, texture, and resolution increase or added frame and player means an additional draw on scarce computing resources.

Two Sides of the Same Problem

Raja Koduri, Intel’s SVP and general manager of its Accelerated Computing and Graphics Group, said “indeed, the metaverse may be the next major platform in computing after the world wide web and mobile . . . [but] truly persistent and immersive computing, at scale and accessible by billions of humans in real time, will require even more: a 1,000-times increase in computational efficiency from today’s state of the art.

There are varying perspectives on how best to achieve this.

One argument is that as much “work” as possible should be performed in remote, industrial-grade data centers rather than in consumer devices. That most of the work involved in a virtual world happens on each user’s device is wasteful because it means many devices are performing the same work at the same time in support of the same experience. In contrast, the super-powerful server operated by the virtual world’s “owner” is just tracking user inputs, relaying them when necessary, then refereeing process conflicts when they occur. It doesn’t even need to render anything!

The current reliance on personal devices creates other limitations, too. Consumers can experience only what their own device can manage. This, in turn, means that the overall complexity of a virtual world ends up partly limited by the lowest end device that can access it.

Shifting as much processing and rendering to industrial-grade data centers seems both more efficient and essential to building the Metaverse. There are already companies and services pointing in this direction. Google Stadia and Amazon Luna, for example, process all video gameplay in remote data centers, then push the entire rendered experience to a user’s device as a video stream.

Proponents of this approach often highlight the logic of powering our homes via power grids and industrial power plants, not private generators. The cloud-based model allows consumers to stop buying consumer-grade, infrequently upgraded, and retailer-marked-up computers and instead rent access to enterprise-grade equipment that is more cost-efficient per unit of processing power and more easily updated.

For all the ostensible logic of this approach, remote rendering is not the consensus solution among game publishers today. The debate is not whether remote data centers can offer better experiences than consumer-owned ones. They obviously can. Rather, it’s that networks get in the way and will likely continue to do so.

For remote-rendered experiences to be delivered, many gigabytes per hour will need to be sent in real time. But as you know, we’re still struggling to send a few megabytes per hour on a timely basis. Furthermore, remote compute has yet to prove itself to be more efficient for rendering.

For the foreseeable future, improvements in local compute will continue to outpace improvements in network bandwidth, latency, and reliability—seems likely to hold. Although many believe that Moore’s Law, which was coined in 1965 and states that the number of transistors in a dense integrated circuit doubles about every two years, is now slowing down, CPU and GPU processing power continues to grow at a rapid pace. In addition, consumers today frequently replace their primary computing device, resulting in enormous improvements for end-user compute every two to three years.

Dreams of Decentralized Computing

The insatiable need for more processing power—ideally, located as close as possible to the user but, at the very least, in nearby industrial server farms—invariably leads to a third option: decentralized computing. With so many powerful and often inactive devices in the homes and hands of consumers, near other homes and hands, it feels inevitable that we’d develop systems to share in their mostly idle processing power.

Although the technology to split GPUs and share non–data center CPUs is nascent, some believe that blockchains provide both the technological mechanism for decentralized computing as well as its economic model. The idea is that owners of underutilized CPUs and GPUs would be “paid” in some cryptocurrency for the use of their processing capabilities. There might even be a live auction for access to these resources, either those with “jobs” bidding for access or those with capacity bidding on jobs.

Could such a marketplace provide some of the massive amounts of processing capacity that will be required by the Metaverse?#x2021; Imagine, as you navigate immersive spaces, your account continuously bidding out the necessary computing tasks to mobile devices held but unused by people near you, perhaps people walking down the street next to you, to render or animate the experiences you encounter. Later, when you’re not using your own devices, you would be earning tokens as they return the favor (more on this in Chapter 11). Proponents of this crypto-exchange concept see it as an inevitable feature of all future microchips. Every computer, no matter how small, would be designed to be auctioning off any spare cycles at all times. Billions of dynamically arrayed processors will power the deep compute cycles of even the largest industrial customers and provide the ultimate and infinite computing mesh that enables the Metaverse.