The first cryptocurrency was created over a decade ago. We still don’t know what to call the universe that originated from it.
Blockchain explains how the technology works: transactions are grouped into blocks, then linked together creating a long chain of provable history. Distributed ledger technology (DLT) has fallen out of favor, but it attempted to define what blockchains do: create a decentralized record owned by a wide variety of entities. Cryptocurrency was the first intended application (bitcoin) of a blockchain. Web3 signifies the technology as the next phase of the internet. But what is the “metaverse”? Why did a science fiction term get appropriated by what started as money enabled by cryptography?
To a cynic, the “metaverse” is a buzz word. A meaningless narrative pushed forward by venture capitalists. There is validity to this point of view: the metaverse is mostly an empty space filled with hopes and dreams. But it’s also a space only possible because of breakthroughs in mathematics. And if you believe as Wittgenstein did that “our universe is as big as our language”, then new words like metaverse may be a genuine attempt to expand the limits of our understanding.
The word metaverse was first introduced in the 1992 sci-fi novel Snow Crash by Neal Stephenson: “He’s in a computer-generated universe that his computer is drawing onto his goggles and pumping into his earphones. In the lingo, this imaginary place is known as the Metaverse.”
Today’s metaverse is far from the immersive virtual reality imagined by Stephenson. Dog tokens and ape pictures are only a rudimentary form of what is possible, but it hints at something bigger. Instead of a hyper-immersive simulation optimized to emulate physical sensations, we are getting a place with shared, objective rules for scarcity, which perhaps unexpectedly, feels very tangible.
In its cryptography-powered form, the word metaverse seems to mean a place that is somehow both digital and solid.
In the physical universe, there is one set of universal laws (physics) everyone must follow and there exists objective stuff (matter). As social animals, these properties are reinforced by the fact that we occupy the universe with other people who share the same general perception of reality. The more widely this reality is experienced among our fleshy peers, the more tangible, legitimate, and solid the universe will feel.
I define the metaverse as having two properties:
Immutable laws like the laws of physics in the “real” universe. In other words, there are no sources of omnipotent power.
A limited substance acting as digital matter. In other words, the metaverse contains objective, convertible scarcity.
If we were to build a simulated universe right now, doing it together would be the only way to get started. Ethereum has, by far, coordinated the most diverse and enduring set of computers and minds around a single shared state of virtual reality containing both immutable laws and digital matter.
Most online platforms have centralized sources of power, which can easily change the foundational rules of their systems. Ethereum creates a system in which power is intended to be widely distributed and rules are enforced by cryptography. Unilaterally changing a decentralized protocol is hard. Until proven otherwise, there exist no omnipotent powers capable of changing the laws of the physical universe – and the metaverse should reflect this property.
If this premise of the metaverse is to be believed, then the Ethereum protocol is the metaverse, and ETH is its matter.
As a hard-to-define technology, analogies from biology, history, economics, and politics are commonly used when trying to explain blockchains. Blockchains are like emergent organisms. Blockchains are a technological breakthrough on the same scale as the printing press and ledger during the Renaissance. Blockchains enable digital nations with their own laws, citizens, and economic systems.
The intention here is to explore Ethereum as an engine to create a simulated universe, which can contain or connect to a multitude of other simulated universes, which in its entirety, create the metaverse.
In the digital world, a constrained amount of digital material became possible in 2009 when the Bitcoin network’s proof-of-work consensus mechanism created provable digital scarcity – hard points – but scarcity is not enough to create a metaverse. You must be able to convert one form of scarcity or tangible, objective, “hard” substance into another. And you must be able to convert it within the rules of the universe (something Bitcoin can’t do.)
In Ethereum, the fundamental rules of the system are expressed in the consensus and execution layers. In simplified, abstracted, and non-technical terms, the laws of consensus determine truth on the blockchain: what happened and when. The laws of execution determine how things can change: what is allowed to become true in the future. Each change in the state of Ethereum is measured in blocks, which can be viewed as the constant tick of accumulated events moving time forward in the metaverse. Together, consensus, execution, and blocks create the Ethereum Virtual Machine, a distributed global computer capable of creating and connecting to additional virtual machines.
Within the Ethereum Virtual Machine, smart contracts allow us to manipulate matter (ETH) and build enduring structures. Smart contracts are how new worlds get built.
Initial coin offerings (ICOs), decentralized finance (DeFi), non-fungible tokens (NFTs), and nearly all other meaningful activity involving blockchains has happened in Ethereum. Collectively, these waves of usage can be seen as small steps in the evolution of the digital substance known as ether or ETH. ICOs naively converted ETH into new tokens. DeFi laid down the foundations for how ETH could be converted into other digital substances without ever needing to leave the Ethereum Virtual Machine. NFTs explore how ETH can be changed into unique forms of scarcity. Each wave made the metaverse more solid, more richly textured.
The next wave of the metaverse is already moving beyond the financial realm as we begin exploring how non-transferable “soulbound” tokens, decentralized societies, and privacy preserving ZK identities can allow us to rethink who we are and how we express our connection to others.
When we speak, our voice changes the arrangement of matter in the air. When we think, our brain generates chemical and electrical activity changing the state of matter in our synapses. The state of matter in the physical world changes as we move, interact, and think.
Transactions or on-chain actions are how we as humans interact with the metaverse. Our transactions in the blockchain are like our actions in the physical universe: it’s how we move and change the state of the world.
In financial terms, each transaction incurs a fee which must be paid for in ETH. Matter is valuable and for simplicity’s sake, we often think of it as money. Money is easily measured and conceptualized using a familiar frame of reference, but just as physical matter can be much more than money, digital matter can be much more than digital money.
In metaverse terms, each transaction only happens when ETH is converted into an action. This digital matter can be converted to pure action (sending ETH between people), a different type of matter (fungible and non-fungible tokens) or creating new rules (launching smart contracts). If the state of matter did not change, then the metaverse does not record a change.
In the metaverse, ETH is matter and action is energy.
Ethereum is being built to last centuries and we are now at only the most nascent stages of the experiment.
To consider the full potential of the metaverse, we must stretch our imaginations beyond the span of our lifetimes. If we make it far enough as a species and civilization, we can assume there will be breakthroughs in quantum computing, cryptography, and artificial intelligence – all of which would turn our current metaverse into something only recognizable in science fiction.
We may reach the point where we can create hyper-immersive artificial universes and populate them with conscious artificial intelligence. We can imagine a multitude of universes, worlds, and dimensions all connected to each other and all populated with different varieties of conscious beings.
For us to reach this sci-fi future, the first priority is survival, which is increasingly called into question by the crumbling of our social norms, institutions, and environment. As our social cohesion and planet continue unraveling, Ethereum offers a new tool in which we can design experiments around coordination and learn new ways to collectively organize ourselves. Besides the fact people may simply enjoy hopping in and out of multiple digital realities using alternative digital identities, a simulated universe opens up new frontiers for exploring our humanity.
An experimental world within the metaverse could contain scarce resources that emulate, for example, fish in a lake, a forest, or clean air. As provably scarce resources, they could be tied to financial value in the “real” world. How much will people compete or cooperate for these valuable resources? What parameters make people compete until the resource is depleted? Are there certain rules we can put in place to maximize the chances participants will collectively sustain or even regenerate the scarce resources of their environment? Can we reorient financial incentives toward the public good?
By building virtual versions of our connections and environments from scratch, we can question how we organize ourselves, then design experiments to test our assumptions with live participants and real scarcity. We can take the lessons learned from our digital worlds and apply them to our physical reality.
Ethereum is not the answer to all the world’s problems. Neither is the metaverse. They are tools to help us better understand and organize ourselves. They may also be fun.
By starting from the very foundation of the universe, it is possible to rethink nearly everything. The creation of scarcity from mathematical principles is a vital step, but it is only the first, small step. As we explore the world with these new tools, we will undoubtedly reconsider our most enduring beliefs and assumptions. This messy period will have unintended consequences, but chaos also creates opportunity for rebirth and renewal.
We do not know how the metaverse will change us or where it will take us, but along the way, it will almost certainly make us more self-aware and maybe that’s what it takes to get us to a future we all want.
This is version 2 of ETH is Matter. Version 1 is here: