From gaming to music and e-commerce, all major industries have now started experimenting with the metaverse and laying out experiences, products and services compatible with 3D virtual worlds.
But, let’s face it, for most of us this is a lot of new tech to pack in.
That’s why starting a conversation about the metaverse with your friends, family or co-workers can seem a little daunting. After all, there are plenty of new concepts and buzzwords to digest.
So, to help you get started here are the most important metaverse terms you should know when talking about the metaverse.
The Metaverse Glossary: Key Words and Concepts Explained
The metaverse is still somewhat of a vague term that, rather than describing a specific type of technology, can be best understood as a broader idea of how we will interact with technology in the near future.
Simply put, a metaverse is a set of shared 3D virtual environments where people can engage in day-to-day activities like working, socializing and having fun as they would in the real world.
This is made possible thanks to a combination of technology like virtual and augmented reality, and artificial intelligence. Extended Reality is a term commonly associated with virtual worlds. Users can enter the metaverse with a digital avatar, and they’re able to fully immerse themselves in the virtual world through sight, sound and touch.
While the term has been around for three decades, it’s only now gaining widespread attention as more tech and cultural trends converge to create the metaverse. By overlapping all of several digital evolutions (like VR and crypto), we’re walking towards the rise of the first fully realized metaverse. Meta, Microsoft and Tencent are just some of the tech giants leading the metaverse race.
The expectation is that the metaverse will become a full-on evolution of the internet we have today - Web 2.0 - into Web 3.0, complete with several highly functioning, interconnected and decentralized virtual spaces. Each will have their own economies, communities, infrastructures and areas of interest.
The metaverse has been predicted to have the potential to become a multi-trillion dollar economy. “Within the next decade, the metaverse will reach one billion people, host hundreds of billions of dollars of digital commerce and support jobs for millions of creators and developers,” said Nicola Mendelsohn, Vice President of Global Business Group at Meta.
An avatar is a digital character that represents you in a computer-generated world, like the metaverse. Avatars can be static or animated and many of us will already have some experience with them. Think of the 2D image you use on your Instagram profile or a 3D character in your favorite game. What is the difference?
- Traditional avatars in Web 2.0 are icons that represent a user in a social media or forum profile. They are static and do not interact with their environment.
- Immersive avatars are interactive and act as an extension of the users. They can talk, dance, move and perform a range of activities in the metaverse.
In recent years, a number of brands have begun incorporating digital avatars into their campaigns. We’re also now seeing the rise of virtual influencers, which are avatars capable of representing brands and interacting with audiences in a more compelling way.
Also commonly written as VR, virtual reality is an immersive experience within an environment completely generated through computer technology. Users can be fully immersed in these simulated realities with the help of dedicated VR headsets, haptic touch and even environmental feedback, which enables a 360º view in a virtual world where people can move in and interact with.
Augmented Reality (AR) overlays digitally-generated images onto the real world. Users can make use of a device like their mobile phone or table to overlay graphics and sounds onto their real life environments. Some examples of AR technology at use include Instagram filters, Snapchat’s lenses and Pokémon Go.
Extended reality (or XR) is an umbrella term for computer-generated environments that merge the physical and virtual worlds or create an entirely virtual experience for users.
XR lies at the intersection of three technologies: virtual reality (VR), augmented reality (AR) and mixed reality (MR). By bringing all of this together, XR can uncover a broad new spectrum of opportunities across real and virtual-based environments like the metaverse.
A virtual world is a simulated version of the real world or an entirely new environment created through computer rendering technology. Virtual worlds are meant to be inhabited and allow the interaction of its users through avatars (personified representations of the user within the digital environment). Tied to the concept of the metaverse, virtual worlds have several characteristics: they’re boundless, persistent, decentralized and immersive. A virtual world will have its own economy (with a native marketplace) and a host of experiences for its users to engage in.
The Web 3.0 represents the evolution of the current Web 2.0 and builds upon concepts like decentralization, openness, data protection and greater user utility.
We’re currently seeing the emergence of the next generation internet architecture that makes its participants the sole owners of the web, breaking away from tech giants and other corporations. If with Web 2.0 users generated the content, in Web 3.0 users generate the platform, create content and capture the value from it.
Web 3.0 has been associated with the rise of technological advancements like the blockchain, NFTs, decentralized autonomous organizations (DAOs) and the metaverse, ushering in a new form of the internet based on peer-to-peer transactions, transparency and data democracy.
Make sure to check out our Web 3.0 guide for a closer look at this technological advancement.
A blockchain is a platform that enables a shared record of information that is maintained and updated by a network of computers instead of a central authority. A blockchain can also be described as distributed ledger technology (DLT). This distributed ledger uses cryptography to confirm, carry out and secure transactions.
The very nature of a blockchain is that it is virtually immune to hacking and tampering since all copies of data are stored across all the network and not a single place. Another advantage comes from the fact that simultaneous (peer-to-peer) sharing and updating of records enables much faster and effective processes.
Blockchain is the technology that underpins cryptocurrencies.
An NFT, or non-fungible token, is a type of digital certificate that helps authenticate and establish the ownership of any given virtual asset. As a digital token of information, an NFT lives on a blockchain and the data of each NFT can be tied to digital files like images, music, collectibles, avatars, and more. NFTs are unique and non-interchangeable (“non-fungible).
This form of technology has been gaining popularity and real-world wealth for sellers ever since the major boom seen at the beginning of 2021, in particular in the digital art world. NFTs are also gaining popularity for their integrated value in metaverse projects, where many brands like Nike, Samsung, McDonald’s and Gucci are now investing in.
Many see NFTs as the pathway to having true ownership over digital assets.
Also described as a digital wallet, a metaverse wallet allows users to hold and make transactions with cryptocurrency. In most digital environments, a wallet will be essential to not only manage crypto but also track the history of metaverse transactions in a safe and transparent environment. Examples of metaverse wallets include MetaMask, Coinbase Wallet and Alpha Wallet. Want to know more? Our introduction to metaverse wallets walks you through the details.
An NFT Marketplace is a decentralized platform where metaverse users can buy, sell, and exchange NFTs. Top NFT marketplaces include OpenSea, Rarible and Nifty Gateway, and most of such platforms are built on the Ethereum or Solana blockchains.
Earlier, we established that the metaverse can be seen as a virtual world where avatars (representing the identity of users) enter activities similar to the real world. Inside the metaverse, avatars work, socialize, travel, attend events, play games and can have many adventures.
Trading is also key to making the metaverse become a viable technology.
Metaverse projects like Sensorium Galaxy allow users to tokenize their digital assets (avatars, dances, original creations) and to freely trade them in the metaverse’s marketplace in exchange for the platform’s currency - SENSO. As the marketplace is built on a blockchain ecosystem they enable a decentralized experience in the metaverse
The creator economy in the metaverse refers to the people and brands who create original content and sell it in a marketplace. Content creators are set to be a major engine of virtual worlds, adding ever evolving content and experiences for other users to engage with. There are many opportunities tied to the metaverse’s creator economy: selling NFTs of goods like virtual clothing, making soundtracks for other users, collaborating with brands for advertising campaigns, designing products and services, hosting events, and much more. The creator economy in the metaverse is predicted to balloon into a billion dollar industry.
DAO stands for Decentralized Autonomous Organization, which is a type of digital organization that is run on the blockchain through the use of smart contracts. These contracts dictate the rules of a DAO, how governance unfolds and how decisions are executed. Many metaverse projects have DAOs as a way of letting users have voting rights and take control over the direction of the project, making the metaverse a more engaging and community-driven experience.
Play-to-earn (also known as P2E) games are an innovative spin on the traditional gaming industry as they allow players to earn in-game cryptocurrencies by winning battles and competitions, completing quests, and renting or selling their assets (as NFTs). Moreover, some of the most popular P2E games will typically allow you to exchange your assets and cryptocurrency for fiat money, making it a profitable hobby to have.
Play-to-earn games are an important part of the metaverse for the model of rewarding players for their time and investment in a virtual environment and allowing them to have real ownership over their in-game assets, which is also the foundation of the metaverse.
A successful example of a P2E title is Axie Infinity, in which users collect and breed cute digital creatures to explore the game’s world.