Sep 21, 2023
The metaverse or 3D internet, powered by underlying technologies like augmented reality (AR), virtual reality (VR), and blockchain, creates a digital universe that elevates experiences in the real world. As the metaverse transforms how individuals live, work, and play, nations and their governments are taking note of its potential. It is set to transform societal norms by creating immersive social interactions, a burgeoning virtual economy, and revolutionizing education and the traditional workspace. However, as the 3D internet grows, nations will grapple with its implications, forming new governance structures, economic policies for virtual assets, enhanced cybersecurity measures, and investments in digital infrastructure. Despite these obstacles, the metaverse promises to reshape our global interactions, presenting opportunities for societies worldwide.
Economic implications of the metaverse
The metaverse's development and adoption can lead to the emergence of new industries, job opportunities, and revenue streams, reshaping the global economy. The economic potential of the metaverse is evident from Second Life, a 3D virtual platform that generated a GDP of $650 million in 2021, ranking it higher than nine sovereign markets, as published by JP Morgan.
Here are a few industries that the metaverse has created:
Virtual real estate: Just as in the physical world, space in the 3D internet is becoming a valuable commodity. Virtual real estate markets are emerging, where users can buy, sell, and rent digital land. Metaverse environments like The Sandbox and Decentraland have already sold digital parcels of land for millions. This economic potential of virtual land creates opportunities for real estate developers, investors, architects, and designers who can design and sell virtual spaces. As of 2022, land worth $1.9 billion had been transacted across the top ten virtual world platforms since their inception, as reported by Forbes.
Digital fashion and goods: In the metaverse, users want to customize their avatars to express themselves and showcase their identity. This desire to display personality has led to the rise of digital fashion, where designers like Louis Vuitton and Gucci have created virtual clothing and accessories for purchase through a direct-to-avatar sales model. Similarly, virtual goods, from furniture to art, can also be sold in metaverse marketplaces. In 2021, the global virtual goods market reached an impressive $67.5 billion in revenue, with a projected CAGR of over 20.2% from 2022 to 2028, as published in a report by Credence Research. The Asia Pacific, especially countries like China, plays a pivotal role, reflecting a significant demand for these virtual commodities.
Virtual tourism: The 3D internet can allow individuals to explore digital replicas of real-world locations or entirely new virtual worlds without geographic constraints, opening up revenue streams for the travel industry. McKinsey reported that the metaverse presents a $20 billion opportunity for the travel industry. To capitalize on this opportunity, governments and the travel industry can offer virtual tourists an immersive travel experience, from recreating damaged historical landmarks for visitations to exploring inaccessible locations in high definition.
The metaverse offers diverse revenue streams for both businesses and governments. Every transaction, whether a purchase, sale, or rent, can incur transaction fees, benefiting platform providers. As this virtual economy expands, governments may consider taxing virtual assets and transactions, further increasing revenues.
Apart from creating revenue streams, the metaverse, with its immersive and digital realms, generates significant job opportunities across various industries, targeting individuals skilled with the technical expertise to build the 3D internet. For example, Meta (formerly Facebook) has already created 10,000 jobs across the EU, specifically for the metaverse, highlighting the potential for job growth in this emerging domain. This surge in employment is a testament to the metaverse's economic potential, from industries like virtual real estate to digital fashion and beyond.
Governance and regulation in the metaverse
The metaverse presents a unique challenge that incurs the need for robust governance and regulation. While it offers opportunities for innovation, collaboration, and economic growth, it also raises concerns about user rights, security, and ethical considerations.
Here are a few challenges nations face in the metaverse:
Jurisdictional issues: The 3D internet transcends geographical boundaries, making it challenging for nations to determine jurisdiction over virtual spaces. For instance, a virtual event or transaction could involve participants from multiple countries, leading to questions about which nation's laws apply.
Digital identity and privacy: As users interact within the metaverse, they leave behind digital footprints, including sensitive data like user location, eye movements, and voice patterns. Protecting user data and ensuring privacy becomes important, especially when personal and financial information is at stake. Data collection in the metaverse also raises issues regarding limited user control over personal data, which is why entities operating in the metaverse must obtain user consent before any data is collected.
Digital citizenship: As users spend more time in virtual spaces, the concept of digital citizenship emerges, raising questions about the rights and responsibilities of virtual inhabitants. Do users have the same rights in the 3D internet as in the physical world? Issues like freedom of expression, the right to privacy, and protection against discrimination are all raised. Furthermore, if a user's rights are violated in the metaverse, what options do they have, and which legal system addresses this? The debate highlights the need for a framework that ensures users' rights are upheld while also considering the unique nature of virtual interactions.
Education and skill development
With its immersive and interactive capabilities, the metaverse holds transformative education and skill development potential for individuals. Breaking down geographical barriers and offering rich, experiential learning environments can reshape how the education industry shares knowledge and how learners hone skills.
Here are a few ways the metaverse is transforming education and learning:
Accessibility: The metaverse is rapidly transforming education, democratizing access to quality resources. As per Statista Market Insights, the metaverse education market is on track to reach $1.9 billion in 2023, with a projected growth of $24 billion by 2030. This growth highlights the 3D internet’s potential to bridge educational disparities globally by making learning accessible geographically and financially, breaking down complex concepts better for students, and engaging individuals with disabilities through a leveled playing field.
Immersive learning: Immersive experiences can complement traditional teaching methods to heighten engagement, retention, and learning outcomes while reducing dropout rates. For instance, educators can enhance history lessons through virtual tours of ancient civilizations, and science classes can benefit from interactive 3D models, making learning more engaging.
Personalized learning: The metaverse offers a unique platform for adaptive learning tailored to individual preferences, pace, and environment. Augmented and mixed reality (AR and MR) can help individuals engage with 3D content in their home spaces and settings. Another level of personalization can come from showcasing information relevant to a learner based on their geographic location, like 3D replicas of local biodiversity.
Collaboration: Virtual classrooms can foster global collaboration through metaverse games and virtual meetings as avatars. These near-to-reality interactions help students worldwide connect and work together on projects, promoting cross-cultural understanding and teamwork.
Pohang University of Science and Technology (POSTECH) in South Korea is pioneering the integration of the metaverse into its educational framework. The university is transitioning into a ‘metaversity’ with plans to digitize its classrooms within the 3D internet and offer courses in cyberspace. POSTECH invests $300,000 annually in student equipment and program development to support this initiative. Additionally, they have allocated $500,000 specifically for creating metaverse classrooms. One of the drivers of this endeavor is to make learning accessible in applied fields that are tougher to access in the real world, from aerospace to nanotechnology.
The metaverse’s rise promises economic opportunities for nations, from virtual real estate to digital fashion, offering new revenue streams for businesses and job prospects for individuals. The 3D internet also breaks barriers in education, promoting immersive learning and global collaboration and a powerful tool for nations to transform skill development. However, this digital frontier also presents challenges in governance, with concerns over jurisdiction, digital identity, and ethics. Countries can leverage the metaverse’s full potential and overcome constraints by navigating the space responsibly and ensuring the metaverse benefits society.
If you’re a government body looking to enhance operations through digital channels, we can help build and scale your presence in the metaverse. Get in touch with us!
Sep 21, 2023
LandVault is the largest metaverse builder with over 100 million square feet of virtual real estate, more than 120 full-time creators, and nearly 300 completed projects. We’ve been helping brands build and grow in gaming environments since 2017 and the metaverse since 2021.
LandVault’s platform-agnostic proprietary technology and creative powerhouse builds and delivers tailored, data-driven, and optimized business solutions and insights. We help clients launch, optimize, and monetize metaverse experiences.
LandVault’s mission is to accelerate the metaverse economy through technology with a vision of a fairer wealth distribution across the web.