Is there trouble in cyberspace, or is the metaverse a brave new world for tech? Musaddik Ahmed takes another look at the metaverse, and the promises of blockchain for telecoms and digital ownership.
In an earlier article
on this blog, we explored how a “new internet” is emerging, discussing how Facebook’s foray into virtual and augmented reality with the metaverse might transform the internet from what it is today.
Concerns have been raised that this new internet could be dystopian, granting Mark Zuckerberg ever greater surveillance abilities. This piece offers an alternative vision of a “new internet”; a vision grounded in digital assets and blockchain technology.
What is a blockchain?
Blockchain technology was invented in 2008 by the pseudonymous Satoshi Nakamoto
. It is the underlying technology of Bitcoin
, combining digital signatures, consensus algorithms and hash functions to create a distributed ledger where entries can be verified without reliance on any central entity.
To make a transaction, for example, Alice must sign with her keys to transfer 10 bitcoins to Bob. The blockchain will verify the transaction according to the consensus algorithm (e.g. Alice must have 10 bitcoins).
Computers on a blockchain network all compete to solve a one-way hash function; the first to solve the hash function is awarded newly minted bitcoins. Since the hash function is one-way, it can be checked instantly once it is solved, and all the computers are incentivised to move onto the next block because new bitcoins await. Each block contains a group of transactions, the hash of the previous block and a nonce
(a randomly generated number which adjusts the difficulty of the hash function such that a new block is mined every 10 minutes).
By incorporating the hash of the previous block, each new “block” is “chained” to all previous ones – thus, a “blockchain.”
Bitcoin allows for instant, cheap and censorship-free payments across the globe, verified by the internet without any central authority. And what bitcoin did for financial transactions, Ethereum has done for virtual machines
Data in Ethereum blocks are Turing-complete
, so anything that can be programmed can be stored – and verified as valid – by the Ethereum blockchain. This innovation has permitted the emergence of digital assets, embodied by the rise of NFTs
NFTs, or non-fungible tokens, are unique items stored on a blockchain that act as a digital certificate of ownership. Since Ethereum is a public blockchain, anyone can verify that the NFT in question is in fact owned by an individual’s wallet address. Thus, Ethereum permits “ownership” on the internet, validated by a decentralised network of computers, as opposed to a government body.
Blockchain and the “new internet”
The ability to make wholly digital transactions, combined with a sense of ownership in the digital realm, is what ushers in the promise of a “new internet”.
Tim Berners-Lee, the godfather of the internet, once described his vision of the future of the internet as: “I have a dream for the Web [in which computers] become capable of analysing all the data on the Web – the content, links, and transactions between people and computers”. It is only through blockchain that transactions
are now native to the internet and can be seamlessly analysed
for building a “web” of machine insight.
Moreover, Berners-Lee, who never patented his work, has created an NFT of the original source code of the internet, which has sold for a cool £3.9 million
. Thus, the founder of the internet acknowledges blockchain and it clearly has a significant role to play in any “new internet.”
Zuckerberg’s failed blockchain
Meanwhile, Mark Zuckerberg is well aware that the “new internet” will go beyond VR. As he explained in a recent interview
, “it is a temptation to assume that all the metaverse work is just… VR and AR… it’s actually not true.” Zuckerberg goes on to emphasise that the metaverse is actually going to be about “your identity and your digital goods.”
But recognising that the new internet will be about digital ownership does not mean Zuckerberg will control it. Before rebranding Facebook to Meta, he launched an ambitious project called Libra
– a cryptocurrency grounded in a permissioned blockchain that would facilitate instant global digital payments for its network of 2 billion users in a cheap, more convenient fashion than the private keys and wallet interfaces of permissionless cryptocurrencies.
However, this plan was foiled by Congress
, who declared the project a threat to monetary sovereignty. Thus, Zuckerberg wasn’t granted any dystopian powers. Instead, Libra has been spurring central banks into a keen investigation of cryptocurrencies, with an eye to launching their own.
How can a digital object have value?
For most, a stark question remains: why on earth do these digital tokens have any value, let alone a market capitalisation of $2 trillion
and strong interest from the biggest corporations in the world? The answer, quite simply, is social consensus.
The immortalised economist, Thomas Schelling, explained the emergence of value through the notion of “focal points
” (or Schelling points) – things people choose by default in the absence of communication. That is, value arises in abstract objects through a tacit, unspoken agreement that the thing is valuable.
And as children grow up in an increasingly digital society, the items they value might be digital ones – just look at the billions made by Fortnite
selling purely cosmetic items. However, value is an inherently subjective thing. It is not just that rock bands and baggy jeans have ceased to be popular, but items that once held great value, like cowrie shells
and wampum beads
, are now disregarded at beaches. And just as things lose their mystical value, other things gain it. Whether digital objects retain their value, then, is dependent on whether social consensus continues to gather around digital focal points.
Blockchain and telecoms
Once we accept that digital objects can and will have value, the ever-growing importance of digital presence becomes clear. The shifting nature of what people value requires companies to continually adapt to keep pace with changing consumer needs. This is why VISA has bought an NFT
, Twitter has introduced NFT verification
, and Facebook has completely rebranded to Meta.
And whilst the “Web3
” vision remains speculative, a wider blockchain revolution seems an inevitability. From 5G and IoT enablement to BSS/OSS optimisation, blockchain evangelists envision the new technology invigorating the telecoms industry
with new network capabilities, new revenue streams and new consumer demands. Prime amongst these is a change in the way that people pay, and this will be explored in the next part of this series on blockchain.
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