Virtual Societies: How The Metaverse Evolves Our Definition Of Blockchain

By Alex Kwok

We evolve with technology

The Trend of Evolution

We evolve with technology — meaning cultural evolution is tied to technological evolution. The smartphone fundamentally changed how cultures defined conversations, relationships, and entertainment. Similarly, blockchain is evolving how cultures define money, community, and governance. The changing collective views surrounding this industry not only apply to Bitcoin but the technology underlying it — blockchain. Nic Carter, Co-Founder of coin metrics, highlighted that technological developments, practical realities, and real-world events have shaped collective views on what Bitcoin is. Using a subjective interpretation of the white paper literature, this article aims to establish how advances in technological capabilities have changed how blockchain is defined.

Birth

The first generation of cryptocurrencies solved a simple problem — money could not be transferred without a central intermediary. Bitcoin, Litecoin, Dogecoin, Ripple, Dash, Monero, and other payment-focused cryptocurrencies were revolutionary, given that a virtual asset and information about ownership could be simultaneously moved and stored through a decentralized payment system maintained by people around the world. From 2008–2014, the white paper literature was generally consistent in defining blockchain:

“Blockchain as a means to exchange assets peer-to-peer without a centralized intermediary.”

While some payment-focused cryptocurrencies differed at the protocol and privacy level, their core purpose was the same peer-to-peer payments without a central intermediary.

Adaptation

“It is not the strongest of species that survives, nor the most intelligent, but the one most responsive to change” — Darwin.

However, like all first iterations of technology, they had issues. Adaptability, scalability, and responsiveness to change are a shortlist of features that were absent in first-generation chains. But more importantly, first-generation blockchains did not consider the stories that underlie transactions — terms and conditions, also called contracts.

In societies and economies, formal and informal contracts are essential for social and economic stability — and more importantly — trust between parties. We see contracts everywhere in our everyday life. Informal contracts such as the social norms that determine appropriate peer group behaviour. Or formal contracts such as the terms and conditions that everyone skips when we sign up for a new online service. These contracts have one thing in common — requirements and conditions.

Second-generation blockchains introduced smart contracts — customized and codified requirements and conditions. This technological advancement allowed blockchains to become more adaptable and responsive to users’ needs. Previous definitions of blockchain were expanded to include conditional transactions:

“Blockchain as a means to conditionally exchange assets peer-to-peer.”

But who writes these contracts? The second generation also introduced blockchains to programming languages — a means to write customized smart contracts and applications. Human creativity could now be expressed using the power of blockchain. Developers had the freedom to build their own applications with their own arbitrary rules for ownership, transaction format, and business model.

Although blockchain’s vary with respect to scalability, privacy, and speed, they share one thing in common a shared ledger that tracks and transfers digital property ownership. Programming languages and smart contracts enabled the definition of digital property to be expanded.

Digital property didn't only apply to digital currencies like bitcoin, but virtual art, in-game purchases, voting rights, reward points, or representations of physical assets. Peer-to-peer marketplaces, exchanges, and applications enabled the trading and earning of these assets. Marketplaces, exchanges, and applications are essential digital highways that bridge users who don’t know each other — but are tied together through the trust in code that blockchain enables. Thus, the definition of blockchain was expanded to include a means to earn and trade assets.

“Blockchain as a means to conditionally earn and trade assets in peer-to-peer marketplaces, exchanges, and applications.

Virtual Economies and Communities

Now, we are in the metaverse generation — where the definition of digital property ownership has been expanded to 3D virtual land. Virtual land, combined with the added experience of virtual reality, dramatically changes the interactions between users and the creative freedom of developers. Metaverse platforms give creators the infrastructure to develop ecosystems of 3D virtual worlds — where creators can create themed experiences for users to explore.

Just like the internet is an ecosystem of websites, the metaverse is an ecosystem of 3D virtual worlds. It is also helpful to think of the metaverse as a “theme park” — where you can have distinct themes to represent different brands and experiences.

What makes the metaverse layer different from previous generations is the potential for online communities, economies, and cultures.

The distinction between economies and marketplaces is critical. A marketplace is a single, isolated location where assets can be traded. While an economy is a collection of interrelated locations where assets can be traded. For example, a food court is a marketplace — a single, isolated location. But when you build stores, movie theatres, and theme parks around a food court — it becomes an economy.

The metaverse is similar in that it enabled collections of interrelated virtual locations where assets can be traded. Creators can build complementary themed experiences adjacent to each other. Similar to how Disneyland has many adjacent worlds representing their brands, the metaverse can have many adjacent virtual worlds representing different user experiences. And more importantly, the users within the metaverse have mobility within these virtual worlds — an essential function in a mature economy.

Communities and cultures can also form within these virtual experiences. Existing online communities on Twitter and discord have already been using metaverse as a means to extend and augment the virtual experience.

Thus, the definition of blockchain evolved to include economies and communities:

“Blockchain as a means to earn and trade assets conditionally in peer-to-peer virtual economies and communities.

The advent of the metaverse enables synergies between virtual economies, community, digital property rights, and mobility. — something not seen in previous generation blockchains. But how could this benefit users?

Virtual Societies

Introducing communities to blockchain ecosystems could bring an interesting element of trust and reputation that could change interactions between users. Historically, trust is a core ingredient in mature societies. Law, money, kinship, and religions form a system of trust that allows people who do not know each other to interact and trade within a society. Blockchain is also a system of trust consisting of smart contracts (laws), cryptocurrencies (money), kinship (community), and economies (religions). The question then becomes — how will the metaverse change our definition of society?

Conclusions

The evolution of blockchain follows a trend — an expansion of how we define virtual assets and how they are earned and traded. Virtual communities, cultures, and economies that host the exchange of virtual assets appear to be the contribution of the metaverse. The core ingredients of the metaverse appear similar to mature societies — money (digital assets), laws (smart contracts), religions (economies), and kinship (community). This begs the question — is the metaverse a virtual society?

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Quantitative Research Fintech start-up focused on Blockchain