The term metaverse first appeared in Neal Stephenson’s novel Snow Crash 20 years ago. But the term was relatively unknown until Facebook changed its corporate name to Meta in 2021. Since then, the metaverse has become a key area of focus for startups, venture capitalists, and enthusiasts, with many analysts projecting that it will become a multi-trillion dollar market.
A great way to understand the metaverse is to look at the value chain and infrastructure that make it all possible. According to renowned author and entrepreneur Jon Radoff, this value chain consists of seven layers that form the underlying infrastructure.
Let’s unpack these seven layers and discover how they’re helping build the metaverse.
Jon Radoff’s seven metaverse layers provide an excellent framework for understanding how the metaverse works and how it will evolve.
What is the Metaverse?
The metaverse is the next generation of the internet, where creators can build immersive experiences and better connect with others. Rather than watching content on a screen, participants can be present in places with the ability to interact with emergent content. And many metaverse properties are already available with today’s technologies.
Of course, the metaverse isn’t describing a single platform. For instance, Decentraland is a 3D virtual reality platform where players can own and develop land, build digital avatars, and attend virtual events. Meanwhile, Facebook’s metaverse enables people to make presentations and interactively design products with colleagues from the comfort of their own homes.
Layer 1: Infrastructure
The infrastructure layer connects devices to a network to facilitate the content and experiences underpinning the metaverse. For example, 5G networks are dramatically improving bandwidth and reducing network latency, paving the way to better metaverse experiences, such as more responsive real-time virtual reality sessions with friends.
In addition to network connectivity, innovations in the semiconductor and GPU industries could pave the way for more fluid and realistic experiences. Furthermore, greater processing power could also help unlock new artificial intelligence capabilities and pave the way for more immersive and realistic experiences from a software perspective.
Layer 2: Human Interface
The way that we interact with the metaverse continues to evolve. For example, smartphones have grown to become always-on computers with embedded AI technology and access to edge computing resources. But, even the latest smartphones are just scratching the surface of what’s coming next in human interfaces to the metaverse.
Meta’s Quest virtual reality headsets create an immersive experience, while Google smart glasses augment our everyday reality. The next stages of these products could incorporate biosensors and even neural interfaces. With these technologies in place, we will have an unprecedented connection to the metaverse.
Layer 3: Decentralization
Many metaverse capabilities hinge on the concept of decentralization. In particular, blockchain technology enables anyone to exchange value on their own terms without relying on third parties or infrastructure. In addition, they enable the kinds of microtransactions that underpin many gaming and metaverse experiences.
At the same time, edge computing will move computing power from centralized data centers to consumer devices. A great example is the InterPlanetary File System (IPFS), which creates a decentralized network to host content without needing a centralized server. Instead, it distributes pieces of data on every computer using its
Layer 4: Spatial Computing
Spatial computing is eroding the barrier between the physical and digital worlds. For example, virtual reality brings the digital world to the physical senses, whereas augmented reality adds digital components to the physical world. These techniques require advanced geospatial mapping and other technologies that are just starting to emerge.
Unity and Unreal Engine have become vital development tools to build these experiences with software. In addition, artificial intelligence is already generating high-fidelity experiences. For instance, OpenAI’s Dall-E is capable of generating artistic images while its GPT-3 has already been used to write basic movie scripts and novels.
Layer 5: Creator Economy
Web 2.0 is characterized by walled gardens, where social media giants control content creation and distribution. However, the metaverse and Web3 will put control back into the hands of creators by decentralizing distribution and encouraging interaction. The result is a more diverse and vibrant creator economy with emergent properties.
Jon Radoff sees creator economies emerging in three stages:
- Pioneer Era – Creators build everything from scratch, limiting the market to those with the technical expertise and knowledge.
- Engineering Era – Teams start to form and build tools and workflows to make it easier to create content. Frameworks eventually lower the barrier to entry.
- Creator Era – The barriers to entry become low enough that the general public can begin creating content with minimal knowledge or expertise needed as a prerequisite.
Layer 6: Discovery
The metaverse represents a new world for users to explore, making discovery essential to a great experience. In today’s Web 2.0 world, most people discover mobile apps through App Stores or websites through search engines. However, these Web 2.0 models of discovery could change dramatically with the rise of the metaverse in the Web3 world.
Jon Radoff points to two significant trends:
- Community-driven Content – Community-driven content will become the most cost-effective means of discovery. With the rise of non-fungible tokens (NFTs), exchanging content in the metaverse will become easier across platforms.
- Real-time Presence – Rather than focusing on what people like, the metaverse will focus on what they’re doing. After all, the greatest value often comes from interactions, shared experiences, and relationships with others.
Layer 7: Experience
Most people think of the metaverse as a 3D space, but that’s just one of many possible implementations of the concept. The metaverse attempts to dematerialise physical space, distance, and objects to make scarce experiences more abundant. For instance, games allow anyone to drive a racecar, play basketball with all-stars, or have countless other adventures.
In the same way, the metaverse makes live events, shopping, or social interactions more accessible, regardless of physical location. And in the process, any participant can become a content creator and amplifier rather than just a consumer. Jon Radoff calls this the “content-community complex,” and it’s what sets the metaverse apart from conventional media.
The Bottom Line
The metaverse has gone from fiction to reality in just a few years. Building on faster networks, more powerful processors, and blockchain concepts, creators are building more immersive ways for people to interact with each other and generate emergent experiences. And at the core, the seven layers of the metaverse help illustrate where opportunities lie.
If you buy and sell cryptocurrencies or other digital assets, ZenLedger can help you aggregate transactions across wallets and exchanges, compute your capital gains or losses, and populate the tax forms you need each year. Sign up today for free!