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The Permissionless Metaverse
The future metaverse — at least the one we ought to hope for — is built upon decentralization.
The future metaverse — at least the one we ought to hope for — is built upon decentralization.
In this article I’m going to explain why decentralization is so important to the health of the metaverse. Even if you’re the type of person who tunes out with any mention of blockchains, bear with me — I think you’ll get excited about the future I’ll share with you. Decentralization includes blockchains, but includes a lot more than crypto.
This article is a follow-up to The Metaverse Value-Chain, where I detail the seven technology layers that are building the future. You can read this article without it, but you will gain a broader appreciation for the market if you read it next.
Blockchains coordinate financial transactions on a distributed ledger, without the permission or control of a central authority. If you investigate blockchain projects, you’ll constantly run into “decentralization” everywhere you turn.
But decentralization is not exclusively a blockchain concept. Here’s how Wikipedia defines the term:
Decentralization is the process by which the activities of an organization, particularly those regarding planning and decision making, are distributed or delegated away from a central, authoritative location or group.
A fundamental property of decentralization is that it allows for permissionless participation.
For example, you don’t need permission to participate in Open Source — just download the code from github, fork it, and modify as you see fit. Or simply benefit from the work of others: incorporate Open Source code into your own project, and you’re good to go as long as you comply with the licensing structure they’ve established (typically the highly-permissive MIT License, which is generally compatible with commercial applications).
PC software development is still essentially permissionless: you don’t need to ask Microsoft or Apple for permission if you want to build a piece of software for their operating systems. Both Microsoft and Apple have their own stores (the Windows Store and the Mac App Store) that do require permission — and they’re each doing their best to get more users onto them, by bundling the stores into the operating system and (perhaps justifiably) striking the fear of malware into the hearts of users. Nevertheless, these stores are optional and one hopes this will remain the case into the future.
Contrast that with virtually every other new platform that’s emerged over the last decade: iOS, Oculus, Roblox, Xbox, Playstation, and the Nintendo Switch are all examples of platforms where the owner has total control over who is allowed to participate and the rents they extract for the privilege to do so.
Android is quasi-permissionless. Unlike PC or Mac, where people are accustomed to installing software outside of stores, on Android devices people are habituated to obtaining all of their software through whatever store is preinstalled by their manufacturer. The most popular store for Android is Google Play. You’re able to develop software for Android that doesn’t require it; Fortnite does exactly that. Other device manufacturers, notably the Samsung Galaxy Store, have their own alternative stores.
The greatest bastion of permissionless software development remains the World Wide Web, in that you don’t need to ask anyone if it is okay to create a website or web application — and all the choices of software tools, hosting providers, monetization methods are up to you. However, most websites now depend on a number of centralized platforms: the most common being Facebook for login/identity, and a cloud-services provider for hosting (Amazon Web Services, Azure or Google Cloud). The more developers use these platforms, the more convenience they gain in exchange for giving up a certain amount of control. That said, even in these circumstances the Web remains an ecosystem where different service providers compete for your business.
And that’s the essence of one of the advantages of permissionless ecosystems: competition. Competitive markets provide the most alternatives for both consumers and developers. The barriers to entry are economic and habitual, rather than determined by monopoly providers who pick the winners.
Permission is a Tax on Innovation
Before the advent of the iPhone, there were earlier mobile phone platforms with games. The owners of these platforms often charged a 50% revenue share and had slow, bureaucratic processes to gain approval for distribution. Navigating the system at all was more about who you knew at AT&T or Nokia than how good your idea
As a result, many games and many game studios were drained of the resources they needed to grow, failing before they ever had a chance.
When Apple launched the App Store on the iPhone, it dramatically democratized access to the mobile market: no longer did you need to find and negotiate with the right business development executives, and Apple fixed the fee at 30%. Most other platforms adopted an identical fee structure. This was more permissive than what existed in the past.
Although 30% is an improvement in one aspect of a developer’s income statement, the true unit economics have actually gotten worse: add at least 20% of the revenue for a game being continuously burnt on advertising expenses to aid customer discovery (partly because the app stores don’t do a wonderful job of discovery on their own). Apps that fail to accurately forecast the lifetime value of their customers might spend in excess of 100% or wait an extremely long time to recoup.
Although the permission-based platforms today started had originally democratized access, they are now riddled with hidden expenses. They’re also tightly controlled by platform owners, and frequently block certain forms of innovation — like alternative discovery systems such as improved marketplaces and storefronts.
This is a problem not only for mobile but for every type of technology that exists or will exist in the future: game consoles to virtual-reality to smartglasses.
The more discovery costs and the more rents extracted by permission-requiring platforms, the less cash is left over for creators to reinvest in their games and new experiences. That’s why I call permission a tax on innovation. Let’s not have a world governed by technology monopolies: if permission is always required, then creators will suffer. If creators suffer, then all of us will have fewer options.
Permissionless != Unmoderated Dystopia
Some people look at permissionless environments and worry that it results in a cesspool of entirely unmoderated content. They point to the disasters of social media experiments like Parler and Gab as examples of what can go wrong when a website owner shirks any duty to moderate content: when tolerance is unlimited, it is frequently the most intolerant who reign. Similarly, people look at newer applications such as Bitclout (essentially a decentralized Twitter that creates a social-currency for each member) and note the growing number of grifters and pornstars who have taken up residence there.
Just because the development ecosystem is permissionless does not mean that the applications created are devoid of moderation by necessity. Developers can choose to create applications that contain whatever moderation is appropriate for their own communities, because the application floats above the underlying permissionless technology. Even in decentralized applications such as Bitclout, they could add their own moderation layer on top of the uncensorable blockchain that stores its messages; other websites that become nodes on the decentralized Bitclout network could offer competing forms of moderation that tailor their interests to particular communities.
Permissionless != Interoperability Hell
Thought experiment: imagine a future in which there’s a decentralized version of World of Warcraft and a decentralized version of League of Legends. Does that mean you’ll be able to earn loot from a raid boss in the former and gain an in-game benefit in the latter?
Of course not. This is one of the silliest red-herrings in the decentralization conversation that creeps up around blockchain gaming. For the same reason that decentralized applications can determine their own forms of moderation, it will be entirely up to each game and each metaverse experience to determine what is allowed within their theme parks. In cryptovoxels, maybe it’ll be completely unconstrained; in games with a particular game design or aesthetic, it will continue to be tightly controlled. In those environments that choose high control, it will be a feature, not a bug.
What permissionless does mean is that if you want to make the next World of Warcraft or the next League of Legends, you won’t need to ask anyone’s permission to start working on your big idea.
Lessons from PC Gaming
Predictions for the death of the PC gaming market have been made numerous times. Many expected that the simpler, more controlled experience on consoles would prevail over the complexity of the PC gaming experience. Yet the opposite has happened. Although they’re still a large and attractive market, consoles are struggling relative to PC gaming.
Although mobile has shown the most growth over the last decade — largely due to the exponential increase in smartphone ownership — PC gaming continues to do well relative to consoles. PC gaming is expected to grow another 25% by 2024. A large contributor to this growth is that it remains the most decentralized and permissionless platform for game development that exists.
The other side of the permissionless coin is sovereignty. In today’s world, the platforms are sovereign because they determine who is allowed to participate. Like feudal lords of yore, they charge a tax for the privilege.
A truly permissionless metaverse is one with:
Self-sovereign identity: Customers are sovereign over their own identity, assets and data. Technologies like web3 wallets may be used as identifiers in place of Facebook login, and zero-knowledge proofs could allow applications to confirm important data about an individual without requiring actual data to be disclosed.
Creators are sovereign over their own creations. While it is fine to build inside theme parks owned by others — it is even more important to preserve the ability for creators to build their own theme parks, games and metaverse experiences that are entirely independent. Independent games and metaverse experiences belong to the people who make them.
In the metaverse, communities will become stronger, more authentic and more important than ever before.
Right now, it is a pain to move communities between social applications because each platform owns your social graph when you’re within their walls. In a world in which you are sovereign over your identity and social graph, you and your friends will move frictionlessly between different experiences.
Roblox is a microcosm of what this might look like. Although Roblox owns the social graph of Roblox players, individual games and experiences inside Roblox do not. If a group of friends wants to move to a different game, they declare their intention and switch over — it is as easy as looking at where your friends are actively playing. The benefit to games is that they are more discoverable and easier for groups of players to get into.
What if this portability extended to the entire Internet? Perhaps you’ll never again need to rebuild your social graph in each new platform, game or environment you travel to. This is probably an unwelcome notion to the likes of Facebook, but it’s a world most of us would prefer.
Anything that reduces the power, control and economic monopolization of some part of the Internet away from central authorities is a step down the road of decentralization. Here are some of the forces that will help:
Open Source: will remain an important force in the permissionless metaverse: code that is freely available for inclusion into a project makes it possible for a creator to focus on their own uniqueness rather than reinventing the wheel.
Open standards for Web-based VR/XR and Web-based binary applications: OpenXR, WebAssembly, etc.
Permissionless Operating Systems: if you need to ask the owner of the operating system for permission to ship a product on it, then you’re paying an innovation tax. Linux, Windows and Mac OS remain the main options here (and to a lesser extent, Android).
Cross Platform Builds: let’s face it — many of the permission-based operating systems and theme parks will remain popular. I own an iPhone, a Playstation, an Xbox, Nintendo Switch, an Oculus and play in plenty of closed online worlds. I love them all, but anything that makes it easier to target multiple platforms so that you aren’t stuck with one of them will be important in navigating our way to a metaverse that’s truly decentralized. Some of the software that will help creators target multiple platforms include 3D engines like Unity or Unreal — or the creator-centric live services we’re creating at Beamable. Each increases the options you have around delivery platforms.
Distributed Computing: cloud computing was just round one. Over time, far more computing will be pushed to the edge — the far edge —and even into your home. Some computation will be farmed out to networks of computers, not unlike how you can now be paid in cryptocurrency for making your computer available to work on protein folding to help cure disease.
Peer-to-peer: fewer servers means less permission (and less project complexity). Many projects — including games and metaverse experiences — can be built with designs that don’t require a server somewhere in the cloud. For example, deterministic simulation and consensus-based victory systems can allow games such as real-time strategy (RTS), multiplayer online battle arenas (MOBA) and tower defense to coordinate without servers.
Microservices: an architecture that reduces risk and complexity by moving from from large, monolithic backends towards smaller service units that are containerized in the cloud and scale automagically. Microservices enable a higher degree of decentralization by making it easier to port applications between cloud service providers or distribute across multiple datacenters. Some microservices will ease the transition towards truly distributed backends without servers.
Smart Contracts: allow for automated resolution of certain transactions on blockchains. Already, this has enabled the creation of non-fungible tokens (NFTs), decentralized asset exchanges and decentralized financial applications. Another example is decentralized autonomous organizations (DAOs), a new type of entity that allow voting and governance without the traditional structure of a corporation. We’re already seeing the emergence of metaverses and games in which their ownership and destiny is held by the players.
Towards a Decentralized Metaverse
The benefit of a decentralized metaverse is that you will be in charge of it: whether you’re a creator who wants to own the product of your work — or an explorer who wants to discover the best experiences while controlling your own data — then this is the future we’re heading towards.
Will you join me on the voyage?
If you enjoyed this article, here are a couple others I’ve written that you may find helpful:
Web3, Interoperability and the Metaverse discusses one of the major areas of innovation (Web3) that will bring about a permissionless metaverse.
Network Effects in the Metaverse goes into greater detail on the business models and mathematics that support the opportunity for an open, decentralized and permissionless metaverse.
The Metaverse Value Chain: the seven layers of value-creation from which we’re constructing the metaverse.
Game Economics, Part 2: Digital Collectibles and NFTs: clears up a lot of misunderstandings people have about NFTs, one of the key technologies within the decentralized ecosystem, and how they will apply to games.