What is the Metaverse and why is it important right now?

The term “metaverse” was coined 30 years ago. Until recently, it has been part science fiction and part speculation. American science fiction writer Neal Town Stephenson coined the term “metaverse” in his 1992 novel, “Snow Crash.”

At the time, Stephenson was already talking about some of the technologies that could make the metaverse a reality today: augmented reality (AR) and virtual reality (VR). What he couldn’t imagine was the explosion of big data, ultra-fast networks, and artificial intelligence (AI) that we are experiencing, where everything is being connected, stored, and analyzed.

Developing the metaverse and mixed realities

Thirty years after the first mention of the metaverse, the concept of a virtual world available to everyone could become a reality by combining several technologies, such as AI, blockchain, VR, and AR.

Many companies are now trying to develop metaverse technology or different versions of mixed reality environments. Microsoft, Bentley, Imagine 4D, Lockheed Martin, Ricardo, Willow, and over a hundred more are now members of the Digital Twin Consortium, an industry group working on developing AR and XR technologies for industrial applications.

Today, billions of sensors are installed in almost everything: appliances, cars, trains, factories, machines, traffic lights, etc. The data collected from those sensors can help to provide preventive and predictive maintenance for many assets, assist in simulations for better designs and deployment, and help technicians to identify potential problems. Simulations such as a digital twin make it possible to visualize the data in a more direct and comprehensive way, making it easier to arrive at better decisions and results.

Microsoft’s HoloLens 2 is probably the best example of an augmented reality device for professional applications. These ergonomic, untethered self-contained holographic smart glasses are now used in manufacturing, healthcare, engineering, and education. Apple and Google are also working on the next generation of smart glasses, which will feature an augmented reality and could be used both as an extension of the smartphone and a standalone product for many applications.

In October 2021, Facebook decided to change its corporate name to “Meta.” A few days later, in a conversation with entrepreneur Gary Vaynerchuk, Mark Zuckerberg talked about it, saying, “The metaverse to me today feels like the next frontier in social connection in much the same way that social networking did when I was getting started back in 2004. That’s a big reason why we wanted to change the brand of the company.”

What is the purpose of the metaverse?

The metaverse could be considered the realization of Web 3.0, wherein technologies such as blockchain and NFTs finally create a truly decentralized digital world.

Depending on who you ask, the metaverse could be just a digital representation (twin) of physical assets that can be used for monitoring and simulating different scenarios. Other versions now focus on virtual reality applications for various industries such as retail, real estate, product testing, or manufacturing.

“From attending virtual classrooms to buying digital land and constructing virtual homes, these activities are currently conducted in separate environments. Eventually, they will take place in a single environment — the metaverse,” says Gartner, defining it as “a collective virtual shared space, created by the convergence of virtually enhanced physical and digital reality.” It will be powered by “a virtual economy enabled by digital currencies and non-fungible tokens (NFTs).”

Is Web 3.0 the internet enabling the metaverse?

Some critics believe that the Metaverse and Web 3.0 are little more than a rebranding for crypto and convincing people that blockchains are the natural next phase of computing. Social media platforms such as MySpace, Facebook, Twitter, and LinkedIn, created Web 2.0. Before, the World Wide Web was just a place for people to browse static pages and communicate by email. Web 2.0 opened the way for real-time interaction and participation.

Indeed, the next generation of the World Wide Web, Web 3.0, will mark a leap in the internet experience to a new level, where the physical world and the virtual world will interact as mirrors of the same reality. The term has been around for several years but only started to get attention in the past year. Packy McCormick, an investor who helped popularize Web 3.0, has defined it as “the internet owned by the builders and users, orchestrated with tokens.”

Matt Levine, a Bloomberg columnist, put it this way: “A basic premise of Web3 is that every product is simultaneously an investment opportunity.”

Web 3.0 won’t arrive at once. It will require many different services and stakeholders to cooperate and establish new standards. Meanwhile, many internet companies are experimenting with the building blocks of the new frontier, such as blockchain, AI, and extended reality (XR).

One of the first exciting examples of the possibilities of these technologies is the Digital Twin.

Digital twins in the metaverse

Digital twins represent physical assets that utilize IoT data, enabling use cases such as predictive maintenance when combined with AI.

A digital twin could become part of a larger metaverse and be used for specific applications. Industrial digital twins have been around for many years, especially in the automotive, rail, and aerospace industries. Running simulations on expensive rockets and airplanes is very costly and dangerous. That’s why the aerospace industry has been building digital copies of those for decades.

The advances in miniaturization, sensors, and connectivity allow for installing thousands of sensors in each asset, such as a vehicle, a factory, or a solar farm. Those sensors, continuously transmitting data to a cloud system, enable real-time visualization of the conditions of every asset, its performance, and the potential problems associated with components and the environment.

Furthermore, using advanced analytics and machine learning makes it possible to use the data to simulate different scenarios without changing the physical asset.

“As edge computing and AI give visibility into entire environments, and as more and more of these assets and products are being connected, companies are connecting entire environments — be those smart factories, be those smart cities, be those energy generation and distribution networks,” said Sam George, corporate vice president of Azure IoT at Microsoft. “You need a system that can create, monitor, and maintain digital replicas of that entire environment. That’s what we developed Azure digital twins to enable.”

Spain has the second-largest high-speed rail network globally, with over 4,900km (3050 miles) of high-speed railway lines. And Renfe, the rail operator, promises on-time arrival on all its AVE (Alta Velocidad) trains across the country. Using thousands of sensors, edge computing, and digital twins, Siemens, which builds and maintains most trains, can predict potential breakdowns and determine the best time for maintenance or component replacement. Because of this razor-edge technology, delays caused by technical failures of more than 10 minutes occur on average only every 1.5 million kilometers. The trains are available for operation 99.94% of the time, the highest average worldwide.

According to a study from Juniper Research, the global market for digital twin technology has not been severely affected by the pandemic. The research predicted that manufacturing would be the single most significant sector for digital-twin deployment, accounting for 34% of total spending in 2021, followed by energy and utilities at 18%.

“Digital Twins are really the hot potato, I think, in the industry at the moment, and it’s fascinating. I believe Digital Twins will be one of the factors that will bring the entire industry together, because the built industry is known to be very fragmented due to different decision-makers along the life cycle of the static building.” says Elisa Rönkä, Business Development Manager, Europe at Siemens. “I really think Digital Twins are one of the pivotal aspects of changing the entire industry.”

Juniper Research co-author Nick Maynard said, “Digital twins are only as valuable as the quality of data that enters the platform. As such, the most successful vendors in the market will be those that use partnerships to pair existing platform ecosystems with innovative digital-twin solutions”.

Could existing cloud data centers handle the metaverse?

Realizing the metaverse, digital twins, and XR are already fueling heavy investment in cloud data centers.

The massive amount of data that the metaverse will require will put a lot of pressure on the networks that internet service providers run and the ability of data centers to process and transmit the information.

Last year, just after Facebook (Meta) announced a plan to raise its capex by about 66% in 2022, in large part to invest in the metaverse, the shares of both NVIDIA and AMD surged 30% and 20%, respectively, in four weeks.

NVIDIA could be one of the biggest beneficiaries of the surge of data center investment. NVIDIA has just announced its new ARM-based Grace CPU aimed at high-performance servers. This new superchip design can hold up to 144 ARM v9 CPU cores and move 900-GB/s coherent interfaces, 7× faster than PCIe Gen 5.

Apart from designing the new processors for data centers, NVIDIA is also turning increasingly to software to push its technology into broader use. The NVIDIA Omniverse™ platform facilitates real time creation and collaboration with 3D assets. These 3D assets could include the creation of the digital worlds of the “metaverse,” digital replicas such as digital twins, and simulation of autonomous driving. The platform, which NVIDIA CEO Jensen Huang calls the “operating system of AI,” could open a new software market for the company worth $300 billion.

All the cloud infrastructure needed for the metaverse won’t be there overnight. New data centers will require significant investments in computing, storage, communications, and sustainable power.

Is 5G ready for the metaverse?

Most cellular service providers have been deploying the fifth generation of cellular connectivity (5G) in the past three years.

5G promises fast connectivity, reliability, and ultra-fast latency. It will provide a new level of functionality and programmability, enable features such as Network Slicing, critical IoT, mmWave spectrum, and gigabit broadband speeds. The full functionality of 5G will take time to be available everywhere.

However, 5G won’t be enough for a full mobile metaverse. Even with the upcoming 5G Advanced, which could appear in 2024, the network won’t be able to offer the latency required for virtual worlds connecting without significant lag.

Many organizations are already doing advanced research on the next generation of cellular networks. 6G is expected to provide the structure necessary for things that right now seem like science fiction, such as totally immersive, 3D virtual reality on phone calls and meetings over wireless.

The “true” metaverse will require almost zero-latency, massive bandwidth and processing power. Today’s mobile devices, including the 5G enabled ones, can’t exchange and process the information fast enough. Furthermore, we'll need new processors and materials to reduce power consumption or today’s batteries will last minutes instead of hours.

Metaverse technology and protecting users

As the metaverse technology leads to an almost-always–connected world, protecting users’ privacy and securing the applications will be an enormous challenge for developers, device manufacturers, and governments.

Organizations and governments are taking steps to regulate the platforms, give more control to the users, and stop corporations from taking advantage of data collection and algorithms to influence people’s decisions and beliefs.

The metaverse needs solid gatekeepers and regulation. Surveillance in the virtual worlds could escalate exponentially.

Over the years, Europe has been the spearhead of new regulations curbing the power of internet companies and protecting users. Legislations such as the General Data Protection Regulation (GDPR) — in effect since 2018 — and the upcoming Digital Services Act provide frameworks for service providers and greater user protection. Today, the GDPR has become the blueprint for many other legislations in different markets, including the U.S.

Some vendors are stepping in. Apple’s decision of giving control of the app’s data collection to the users, something that Google is mimicking this year, is already making a dent in the profits of social networks and online advertising firms.

“If the metaverse really is what comes next after mobile—and just before we all get brain implants and fuse with our technology completely—then whoever controls the metaverse will either be an even richer version of one of the world’s trillion-dollar tech companies, or a new giant that disrupts them.” wrote Christopher Mims, a technology columnist at The Wall Street Journal. “As for the rest of us, the lowly users of this metaverse, we’ll all be living by their rules.”

Investing in the future of the metaverse

All the big internet companies are investing in the potential future of the metaverse in one form or another. Microsoft’s recent announcement of the acquisition of Activision Blizzard for $68.7 billion is a clear example of the current investments in gaming and virtual reality.

Investment firm Grayscale, for example, estimates that global revenue from virtual gaming alone could surpass $400 billion by 2025 from $180 billion today, an increase of 122%. “The metaverse is still taking shape, but Web 3.0 open-virtual–world crypto networks are offering a glimpse of what the future of the internet may hold,” says David Grider, head of research at Grayscale. “The market opportunity for bringing the metaverse to life may be worth over $1 trillion in annual revenue and may compete with Web 2.0 companies worth ~$15 trillion in market value today.”

NVIDIA is working with designers, game developers, engineers, and different industries to enable real use cases of the “omniverse”. Their Omniverse Avatar, for example, targets different markets, including automotive. NVIDIA CEO Jensen Huang imagines 3-D virtual agents becoming commonplace in cars in the future, and many more opportunities in retail stores and warehouses.

“The work around Omniverse went into light speed in the last couple of years because we needed it. Instead of being able to come into our labs to work on our robots, or go to the streets and test our cars, we had to test in virtual worlds, in digital twins.” said Jensen Huang during a press event last month, “We found that we could iterate our software just as well in digital twins, if not better. We could have millions of digital twin cars, not just a fleet of 100.”

Every company is trying to shape the metaverse according to its strengths and strategies, each using the same word to articulate different visions. Big internet companies such as Meta, Amazon, Google, Microsoft, and others are working on developing the metaverse. All those corporations are pouring billions of dollars into development and capital expenditure, and it is not surprising that they want to get a significant return on their investment.

However, without clear standards, infrastructure, and attractive services for consumers and businesses, the metaverse might not reach its full potential as a global community.

“We’ve gone from desktop to web to phones, from text to photos to video, but this isn’t the end of the line,” Mr. Zuckerberg said in unveiling his vision for Meta. “The next platform and medium will be even more immersive and embodied internet where you’re in the experience, not just looking at it. […] Over the next decade, these new platforms are going to start to unlock the kinds of experiences that I’ve wanted to build since before I even started Facebook.”


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