Interface News: "Metaverse" is just a passing cloud, Web3 is the real innovation

Author: Huang Peijian, Jiemian News

Before and after Facebook changed its name to Meta, the term "metaverse" has been widely discussed, sparking countless debates in both the United States and China. What exactly is the "metaverse"? Opinions vary widely. It has turned into a word game and has become an excellent vehicle for stock market speculation.

There’s a joke that reflects the Chinese penchant for forced comparisons: China had the "metaverse" hundreds of years ago. In 1271, Kublai Khan named the empire "Great Yuan," with the two characters derived from the "I Ching," meaning "Great is the Qian Yuan." "Qian Yuan" refers to heaven or the universe, and in Mongolian, "Tengri" means heaven.

This example is, of course, a joke, but it perfectly reflects a kind of misinformation. Regardless of what new terms or concepts emerge in Europe and America, many people like to elaborate based on their Chinese translations, as if they have already grasped the essence of the matter. Little do they know that this understanding based on Chinese is actually misguided and can only lead one into the quagmire of concepts.

From Digi to Web, from Techno to Cyber, from Crypto to Meta, from Token to NFT… As wave after wave of new tech terms wash ashore, the vocabulary passed down from our ancestors is no longer sufficient; we can only rely on transliteration or use English directly.

For those eager to learn new knowledge, the best approach is to return to English, search for the English definitions of new concepts, and understand their meanings in the English context. Once you enter the English world, you will find that many debates and misunderstandings in the Chinese discourse evaporate in an instant.

Tracing the Roots of Meta and Cyber

When new technologies provide new imaginative spaces for human society, science fiction novels become the best future guides and dictionaries for coining terms. The roots of words like Cyber and Meta come from the Cyberpunk genre in science fiction.

For example, the term Cyberspace has a history of 40 years, with many Chinese translations such as information space, cyber space, and spiritual connection space, referring to the illusory realm within computers and digital networks. Canadian science fiction writer William Gibson first coined this term in his 1982 short story "Burning Chrome," combining the roots of cybernetics and space. It was popularized in his later famous novel "Neuromancer." In Spanish, Cyber can be traced back to ancient Greece, and through this root, various new terms have been created, such as Cyberpunk and Cybersecurity, which are awkwardly translated into Chinese as 赛博朋克 and 网络安全.

The currently popular Metaverse has a meaning similar to Cyberspace. In the 1992 science fiction novel "Snow Crash," Neal Stephenson coined the term Metaverse, which is a combination of Meta (beyond, as in Metaphysics) and universe. Domestic publications once translated it as "超元域." Following the wave of promotion initiated by Facebook, it has been hyped up to "元宇宙."

In simple terms, Cyberspace and Metaverse refer to immersive virtual realities, similar to the Oasis in the movie "Ready Player One."

Because these terms borrow concepts from science fiction, Cyber and Meta evoke in English readers visions of a Cyberpunk-like future, akin to the dystopian world of "The Matrix." The attempt to link the metaverse to the Yuan Dynasty further confirms that the Chinese mindset is one of time travel rather than science fiction.

Due to its immense foresight into the future, "Snow Crash" has become a bible for many American tech elites. Ronnie Abovitz, founder of AR star company Magic Leap, even invited Stephenson to serve as the company's chief futurist. Avi Bar-Zeev, one of the founders of Keyhole, which created Google Earth, claimed that Google Earth was designed based on the virtual earth program in "Snow Crash," while J Allard, vice president at Microsoft during the development of Xbox and Xbox Live, provided a copy of "Snow Crash" to every member of the development team. Michael Abrash, who long served as chief scientist at Oculus, also left Microsoft to join Carmack's id Software and participated in the development of games like "Quake," driven by the influence of "Snow Crash," leading the revolution in 3D imaging technology.

One can imagine, will Facebook's renaming to Meta make American tech elites envious, jealous, or resentful? If Alibaba renamed itself "The Smiling, Proud Wanderer" and Tencent renamed itself "The Three-Body Problem," would fans of these classics spread the news or scoff at it?

The Metaverse is a facade; Web3 is the driving force

Although the metaverse is the focus of attention, it is ultimately just a big basket that cannot and need not be tied to any specific product, technology, or business model. Broadly speaking, all digital technologies from computers, the internet, and smartphones to future innovations can be said to be heading toward the metaverse. In this light, those who are currently promoting the "metaverse" are either confused or have other motives, such as speculating on a particular stock concept or seeking more attention and resource investment for themselves.

Is it true that there are no real breakthroughs in digital technology today? Indeed, there are; a new wave is surging from the distant horizon, but a more suitable term to encapsulate this wave of innovation is another word—Web3.0.

Some may say, isn't this just coining another concept? What's so novel about it?

If a person from the Republic of China were to time travel to today, they would surely be amazed by the towering skyscrapers, the novel attire of people, and the magical device stuck to people's hands—the smartphone. This world, witnessed firsthand, if described as the metaverse, clearly differs from a century ago not in appearance and surface but in those invisible forces, such as economic systems, incentive mechanisms, and social relationships. All of this can be summarized by Web3.

Since there is Web 3.0, there must have been versions 1.0 and 2.0 before it. Indeed, if Web1 was the rough internet of the 1990s, then Web2 is the mobile internet dominated by giants, while Web3 represents a spiral ascent, returning to the original spirit of the internet—a more balanced internet where everyone participates and benefits.

From Free Models to "Friction" in the Network

Whether in China or the U.S., today's internet is an era of oligopoly; on one side, there are FANG, and on the other, BAT or TMD. No matter how the abbreviations change, one can probably count all the giants on two hands. The root cause of all this lies in the "free" model.

Long before Chris Anderson wrote "Free" (note, another easily mistranslated term), he could not have anticipated that this model would ultimately not be a commercial innovation but rather a spell from which people find it hard to escape.

To be precise, the Freemium business model is free + premium, a mix of free and paid, or "free value-added business model": by providing users with free content or subsidized prices, it achieves two goals: (1) selling another, more profitable product to users; (2) selling user data to third parties (such as advertisers).

The three common models are: 1) Forever free: There is no paid service. For example, Google and Facebook, as well as Tencent and Baidu, profit from advertising. 2) Membership paid: There are basic functions that are "forever free," but users can choose to pay for value-added services (such as higher-level features or greater user permissions). For example, various paid news, video, and music apps. 3) Limited free: Free for a limited time or limited features. For example, offering a 30-day trial period.

It can be said that the Freemium model basically occupies the mainstream of today's internet. But where is the free lunch? When everything is free, people can only offer their personal data, especially behavioral and consumption data, for the giants to transform through big data, artificial intelligence, etc., and sell it to other commercial companies.

The key to unraveling this conundrum is to break the habit of free, but this is easier said than done. Current paid content, paid music, and paid videos have only taken a small step forward due to convenient payment methods. To overturn the entire oligopoly structure, there is still a long way to go.

Gas Fees, Transaction Costs, and the Adventure of New Rules

Apart from internet fees (monthly Wi-Fi and 5G packages have basically eliminated people's cost concerns), today, people hardly worry about costs when using various online services. In other words, the previous generation of internet protocols (like http) did not add cost elements to the network, while the new generation of technologies represented by blockchain has embedded the concepts of fees and costs from the very beginning.

Taking Ethereum as an example, today's Gas prices often exceed a base fee of 200 gwei. There are several terms here that would require another article to explain. Simply put, on Ethereum, various transactions require fees. This transaction is generally translated as "事务" in computer literature. Every on-chain action you take on Ethereum, such as sending a payment, participating in a digital collectible auction, petting a digital pet, or depositing money in an on-chain bank, requires Gas and incurs costs, excluding the target fees.

Some may ask, isn't requiring fees a regression? Not so simple; once actions have costs, various abuses will be suppressed, such as spam, aggressive marketing, and of course, reckless complaints and flooding. If you want to do the same on Ethereum, you will eventually go bankrupt due to Gas fees.

Nobel laureate Ronald Coase proposed a key concept in "The Nature of the Firm"—transaction costs (coincidentally, the original English term is transaction cost), which refers to the time and monetary costs incurred in completing a transaction, such as searching for transactions, bargaining, decision-making, and supervising transaction execution.

The introduction of Gas fees on Ethereum and many other blockchains has also changed the incentive and constraint conditions of the entire ecosystem. Of course, Gas fees are just one aspect of blockchain's innovation regarding transaction costs, and there are various new projects attempting to change the rules of the game and constraints to make the entire network ecosystem healthier and avoid the dominance of giants.

For example, in terms of storage, current Web2 storage services, such as Amazon Cloud/AWS, Google Cloud, and Alibaba Cloud, charge based on time, while the emerging Arweave protocol allows users to pay once for permanent data storage.

The largest experimental field for innovations in economic models, game mechanisms, etc., generally comes from the gaming sector. A wave of blockchain games represented by Axie Infinity has caught the attention of traditional gamers. Reports indicate that in many regions of Southeast Asia, Axie has become more than just a pastime; through daily gaming, players are more like workers, earning a basic living income for their families.

People generally describe Axie with P2E (Play to Earn); in the traditional gaming industry, the common model is called F2P (Free to Play), where players play for free but need to recharge for a better gaming experience, ultimately making money for the game companies. In blockchain games, players must first spend money (for example, in Axie Infinity, players need to purchase at least 3 Axies to start playing, which may cost hundreds of dollars) to enter the game, and once they acquire game assets, these assets exist in the form of NFTs and can be freely transferred without restrictions from game developers. Moreover, Axie Infinity showcases a successful use case of combining NFTs with DeFi, presenting a trend of game financialization.

From an economic game perspective, in traditional games, most players invest money to gain enjoyment, while game developers and publishers profit. In the P2E model, game characters and items exist in the form of NFTs, allowing players to control ownership. The ultimate goal of successful blockchain games is often to achieve DAO governance, enabling the community (player guilds) to participate in project governance, voting, and profit distribution.

Can blockchain games like Axie and certain DeFi projects actually allow all participants to make money?! Is this an uncollapsed Ponzi scheme, or have humans truly found a perpetual motion machine for wealth? Everything is still being explored and tested, waiting for time to verify. In this wave of innovation, countless projects are experimenting with new economic systems, game strategies, and community rules every day.

Beneath the hardware imagination brought by the metaverse, countless new economic models are surging beneath the surface; Web3 is a more suitable term to encapsulate this wave.