Introduction
The metaverse has been one of the most hyped technologies of recent years, and it is generally believed that it will be the future of digital interaction, virtual economies, and decentralized ownership. The tech giants such as Meta, Microsoft, Apple, and Google have already invested more than 60 billion U.S. dollars in the development of this virtual world and Web3 enthusiasts consider the metaverse as the further development of the Internet.
Nevertheless, despite all the hype, the metaverse has its drawbacks, for instance, low rates of user engagement, vague potentials, and underpinning value proposition. Is the metaverse really the next big thing or has it turned out to be just another technological bubble that is going to burst at one point?
The Hype: What We Were Promised
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A Persistent and Fully Immersive
Virtual World The metaverse was conceived as a permanent interconnected and immersive 3D world in which people could work, socialize, and shop in virtual reality (VR) and augmented reality (AR). Meta (previously Facebook) visualized the metaverse as the further evolution of the social network, where people would meet as avatars in digital environments instead of using traditional social media platforms.
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Digital ownership in the form of NFTs and Blockchain
The metaverse was promoted by the advocates of Web3 as a decentralized network of virtual worlds developed on blockchain technology. It was expected that NFTs would act as proof of ownership of the virtual land, digital assets, and in-game items and give the users real ownership of their digital assets.
Platforms like Decentraland and The Sandbox hit the roof with NFT land prices with investors buying virtual real estate hoping that it would become the next digital economy.
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The future of work and collaboration
Companies like Microsoft, Meta, and Nvidia argued that remote work and digital collaboration would occur in the metaverse. Thus, instead of video conferencing applications like Zoom, people would meet in virtual reality-based workspaces.
Meta’s Horizon Workrooms and Microsoft’s Mesh for Teams were supposed to change the way that businesses conduct their meetings, allowing employees to meet from anywhere in the world.
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A multi-trillion-dollar economy
Investment firms and analysts predicted that the metaverse could generate up to trillions of dollars by 2030. Many companies developed metaverse strategies; lest they be left behind in the next gold rush.
Major brands like Nike, Adidas, Gucci, and Balenciaga also joined in, selling virtual sneakers and fashion items within digital worlds.
The Reality: What Happened This Time Around
As it turns out, the metaverse has not been able to meet the expectations that were set for it. Here’s what’s actually happening:
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Low Rates of User Engagement and Participation.
Most metaverse platforms have not been able to attract the general population. Even well-funded projects such as Decentraland and The Sandbox have less than 1,000 daily active users, even though the projects have raised millions of dollars.
Meta’s Horizon Worlds has also done poorly, and the company has had to change its strategy and focus more on the enterprise.
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The decline of NFTs and virtual land prices.
The 2022 NFT market crash revealed the speculative nature of digital assets. Many metaverse projects based on NFTs also experienced a crash in the value of their virtual land as investors realized that there was no demand for such digital properties.
Walmart, Disney, and Microsoft have quietly pulled back their metaverse plans to focus on AI and other technology that is coming up.
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VR and AR are still niche technologies.
For the metaverse to be fully immersive, there must be a widespread use of VR and AR. However, high costs, cluttered hardware, and sparse content have limited mass adoption. Meta’s Quest headsets and Apple’s Vision Pro are very good but they are not yet proximity devices. Unless the AR/VR technology improves on the aspects of price, weight, and accessibility, the metaverse will not see much progress.
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Interoperability is Missing.
A real metaverse has to be interoperable, which means that the user should be able to take their assets and identity across platforms.
Today, metaverse projects are not connected; there is no unified standard. Your NFT avatar from The Sandbox will not be usable in Horizon Worlds, and your Decentraland items will not be usable in Fortnite or Roblox. Without cooperation, the idea of a single interconnected metaverse cannot be achieved.
Despite the failures, the metaverse is still developing. The following are the likely changes to be seen in the future:
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Virtual Worlds Powered by AI.
AI and machine learning will be an essential component in the development of the metaverse in the future. Companies are now using AI-powered avatars, generative AI for world-building, and real-time AI assistants to create more realistic and engaging virtual environments.
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The enterprise metaverse will drive growth.
Consumers may have abandoned the metaverse, but businesses are embracing it. For training, remote collaboration, and simulations in healthcare, engineering, and military, VR is being used by companies.
Example: Walmart is using VR training simulations for its employees. BMW and Ford are using the digital twin of the factory to enhance production. Surgeons are preparing for intricate surgeries in VR simulation.
3. The role of Web3 and Blockchain in the metaverse.
Although the NFT mania has slowed down, blockchain still has a place in the metaverse especially for digital identity and seamless ownership of assets. But, centralized platforms (Meta, Apple, Microsoft) are going to be much more prominent than decentralized blockchain-based metaverses.
The metaverse has lost its hype, but its core ideas are still under development. The consumer metaverse (gaming and social VR) is still small and needs better hardware. The enterprise metaverse (VR training, remote collaboration) is finally seeing real adoption. It is most likely that the future will be a combination of AI, Mixed Reality (MR), and Web3, but in a more realistic and less revolutionary way. The metaverse is not dead; it is just growing up.
The real question is: Are we ready for what comes next?
