Web 3.0 and the Metaverse: Unrivalled Potential or Pipe Dream?
Bankless Times Senior Editor, Amala Pillai sits down with crypto investment fund ARK 36’s Executive Director Mikkel Mørch and Head of Market Research, Marcin Milosierny, to break down the potential of Web 3.0 and the Metaverse.
Would you maybe have a good analogy to explain what Web 3.0 is to someone who's really unfamiliar?
Web 1.0 is like the big bulky mobile phones that came out in the 80s and were mostly used by the military. Web 2.0 is more like Motorola Razr, which had internet access but Web 2.0 is still controlled by big companies. Web 3.0 is like the very first iPhone— it has the revolutionary potential but doesn’t work the way we want it to yet.
Web 3.0 will make use of decentralized ledger technology. It will be the internet of builders owned by builders with these cryptocurrencies and blockchain technologies. Crypto will definitely be an integral part of it.
How far are we from Mainstream adoption of Web 3.0?
It's not there yet, but it's coming. Web 3.0 is something that not only interprets what it is you put into the internet but actually understands what it is you're trying to convey and not just through text, it could also be through voice or other media.
And that of course means that whatever you consume, will be more tailored to you than what we've seen earlier. I believe we are at that tipping point in the evolution of the web. And I guess that's what some people call 3.0.
But really, I would say that we are still at the early stages when it comes to applications that exist. Some say that Siri is an example of early-stage Web 3.0. I tend to agree. Web 3.0 combines big data, machine learning, and decentralized ledger technology. So it is a leap forward that's for sure.
Decentralized protocols such as blockchain, and the automated technologies around that, and for example, smart contracts, are a leap forward.
They can be used to make efficient microtransactions. And in small countries, where banks are not easily found or used, they can be used easily and without censorship or the need to store data files.
How likely will Web 3.0 —presumably run by developers— be able to compete with the quality currently offered by big tech?
Great question and that’s probably something Amazon got asked a lot 20 years ago with regards to competing with the likes of Barnes and Nobles, for example, or any brick and mortar store. No one bets on that, at that point. But the crypto community has already managed to build so much and it’s only been around for a decade. It’s already a $3 trillion industry.
I think what we really see is a combination here of peer production in the sense of tech development units that are more decentralized.
It’s also a matter of trust. Because there is no ability to cheat through the blockchain, we can set up decentralized peer production units that actually work with great effect.
For the first time in world history, we don't need to know each other to have the social trust to co-develop because we have blockchain as the trust element. 3.0 and other projects related to blockchain will increasingly be developed by people who don't necessarily know each other. That is a huge leap.
A lot of people are confused between Web 3.0 and the metaverse, how are they different?
The Metaverse can be an important part of Web 3.0 but I think that the focal points are different. The metaverse is an all-encompassing term for augmented reality or basically transferring part or all of our lives into the digital sphere.
A world that is interconnected with our real physical world— that for example, allows you to own a plot of land or have an interview like this but in a digital reality.
There is no one metaverse, there are different metaverses being developed by different companies, for example, Decentraland and Axie Infinity are some of the popular ones at the moment. Meta (Facebook) is trying to build one and Disney just recently announced it was going to build its own metaverse too. So when it comes to these decentralized metaverses built by independent developers, they use their own tokens as the native currency of that particular metaverse.
That’s basically what they have in common— the use of cryptocurrencies as the native currency.
How heavily will Bitcoin feature in Web 3.0 and the Metaverse?
The native tokens of individual metaverses are mostly built on the Ethereum protocol so Bitcoin will not be the likely currency of choice for any but it might be the currency of choice of Web 3.0
Yeah, and don't forget, Bitcoin is more a store of value. In the traditional world where people hold money, they also hold gold as a store, similarly, now, where people hold crypto, they will hold Bitcoin as a store of value.
Exactly. And in the same way that it's not practical to transact using gold or trade gold contracts, it's for —specific design reasons— not really practical to use Bitcoin for small transactions that often take place in the metaverse.
So what would ARK36's involvement be with Web 3.0 specifically?
We’re a hedge fund so our interest in Web 3.0 is more to add value to our investors— spotting trends and investing in those trends. Some of those trends would, for example, be coins and growth coins within the metaverse with good perspectives to grow and maybe already have shown some growth tendencies.
How much does ARK36 rely on automated methods? What are your thoughts on robots like say, 3Commas?
We have a lot of data coming in and you can say bot suggestions about what to do, but we have actual people reviewing it and assessing it along with a lot of other data and macro parameters.
So it really is something that works. We see, for example, sentiment data working very well. When we cross-reference sentiment data from social media with, for example, Bitcoin price developments, we see a correlation between the two, and yes, we do use that in our trading.
But people who only depend on bots and say they are doing well are lying.
It requires a clever combination of intelligent human beings with knowledge and trading skills along with AI that really optimizes and gives good profits.