If you pay attention to the tech, gaming, or crypto worlds, then you might have heard about the metaverse well before late 2021. But even if you aren’t immersed in those spheres, chances are good that you’ve seen the marked increase in chatter since Facebook marked out its grand plans to build the metaverse.

What is the metaverse, exactly? Well, that’s tough to pin down in a quick snippet. Effectively, it’s a future vision of the Internet that could be more immersive and all-encompassing, with virtual reality (VR) and augmented reality (AR) headsets likely to play a big role as online experiences look and feel more real—and potentially replace some real-world activities.

According to none other than JP Morgan, the metaverse represents a $1 trillion market, and a wide range of companies have announced their intention to explore the opportunities it presents.

How the metaverse will work and who will control it both remain to be seen, however, and the term has recently been used as a catch-all for a wide array of forward-looking tech, gaming, and NFT-centric initiatives. Plus, it could be years before we’re all vibing online as avatars.

For now, however, here’s what you need to know.

What is the metaverse?

While there are potentially competing visions for how the metaverse will function, this much seems to hold true: it’s viewed as the next major evolution of the Internet, shifting from the text-driven websites and oft-closed ecosystems of today into shared, overlapping 3D spaces in which users interact via avatars.

Proponents believe that the metaverse will be used for a wide array of things, from socializing to events, gaming, shopping, and even work. The metaverse won’t be one site or platform, but rather an array of online destinations that will support customizable avatars and assets that you can move from one virtual place to another.

That last element could rely on NFTs and blockchain technology. Non-fungible tokens are digital assets with programmed scarcity, and as such are an ideal tool to represent ownership of virtual assets like in-metaverse items or plots of virtual land. Popular NFTs like the Bored Ape Yacht Club and CryptoPunks could be transformed into 3D avatars that owners can bring into metaverse worlds, for example. These virtual assets can also be traded, customized and even monetized. 

The metaverse as a concept predates the current surge of interest in it; the term itself first appeared in Neal Stephenson’s iconic cyberpunk novel 'Snow Crash,' while Ernest Cline’s 'Ready, Player One'—and especially the Steven Spielberg-directed film adaptation—brought the concept to a wider audience.

What’s so special about it?

Some of what you just read above might sound familiar. It’s true: virtual world games have been around for a long time now, particularly Second Life, which debuted in 2003. If you play Fortnite or Roblox, then you’re probably already familiar with the idea of a shared server in which users control avatars to play and socialize.

One of the big differences between games like that and the potential blockchain-fueled metaverse is the idea of true asset ownership. In Fortnite and Roblox, you pay money for virtual currency that can be exchanged for digital items, but they remain on the centralized servers of the game maker. You can’t resell them for money on third-party marketplaces, or move them into other games. It’s a one-time transaction and that’s that.

In the proposed NFT-powered metaverse, you can own things like avatars, land, digital apparel, and other items, and migrate them across platforms via your crypto wallet. Interoperability is the key here for crypto startups pushing the tech: it’s not just about being locked into a single platform from Facebook, Google, or any other tech giant.

Furthermore, metaverse advocates believe that it will unlock additional economic opportunities for users and creators alike, whether through play-to-earn video games (like Axie Infinity), creating content and items that others can purchase as NFTs, or even designing games and places that users can explore and enjoy for a fee. A crypto-powered metaverse may better democratize the Internet, and accrue significant value to users rather than just platform operators.

Given that the metaverse is billed as a more immersive Internet, it’s no surprise that VR and AR headsets will surely be a key way to experience the 3D worlds. Meta calls the metaverse an “embodied Internet” made more robust and believable not only through 3D graphics, but also an improved sense of digital presence and interactivity. But the metaverse won’t be purely for headsets: expect it on computers and smart devices, too.

How does it work?

In Facebook’s vision of the metaverse, users would interact together in 3D spaces and have the ability to shift between different experiences. For example, you could share a room with other users and chat or play cards, and then pop out with a pal into a 3D surfing game. From there, you could hit an NFT art gallery, pop into a digital casino, or check out a live concert. And then you can get some alone time in your own personal, customizable home base.

But it won’t just be Facebook building experiences: it’ll likely be an array of companies and creators, large and small. The unifying element may be the use of a crypto wallet or similar functionality to log in to services and tap into your owned assets. Whether it’s equipping a 3D avatar, playing with in-game items, or loading up a personal location that you own as an NFT, you’ll want access to your own digital stuff no matter where you’re at.

In other words, the metaverse won’t be a single destination run by a single company or community. It’s expected to be more open than that, but all built on an interoperable, potentially blockchain-based framework that enables easy movement across places and spaces.

Decentraland is one current example of a metaverse-style game experience. The Ethereum-based game lets users purchase plots of land—which are sold as NFT assets—in the shared world and then build on top of it, creating things like NFT artwork galleries and other interactive experiences. Decentraland is primitive compared to Facebook’s vision, but it’s up and running now and has been live for a couple of years, with companies including Samsung and JP Morgan opening virtual spaces.

The Sandbox is an upcoming game with a similar approach, sporting a Minecraft-esque visual design and the ability to monetize land plots by creating premium experiences. Land owners can even rent out their plots for a fee. The Sandbox has recruited an array of celebrities and brands into its world—from Snoop Dogg to Adidas and The Walking Dead—and adjacent plots have often sold for a premium over other land chunks.

Who’s building it?

Lots of companies, apparently—and the list keeps growing over time. Beyond Facebook, we’ve seen Chinese tech and gaming giant Tencent dedicate a lot of resources to the metaverse, and Microsoft said that its planned acquisition of Activision is about building up to the metaverse.

Elsewhere, brands as diverse as Walmart and Disney have revealed plans to extend their offerings into the metaverse, with Disney CEO Bob Chapek calling it "the next great storytelling frontier." Others are taking a more cautious approach; Shuntaro Furukawa, president of gaming giant Nintendo, has stated that while there's "great potential" in the metaverse, the company has yet to formulate any concrete plans.

In the crypto space, there are seemingly countless startups and communities building parts of the metaverse, whether it’s game worlds, interoperable assets, or infrastructure. Because the concept of the metaverse is still pretty nebulous and difficult to succinctly describe, it feels like nearly anything blockchain-related could potentially be a piece of the coming metaverse.

It’s also worth asking: who’s buying in the metaverse? Digital land sales spiked in late 2021, even topping $100 million worth in a single week, and we’ve seen multi-million-dollar land sales across Decentraland and The Sandbox, with brands like Gucci snapping up virtual real estate.

Metaverse land investors are springing up; Everyrealm, formerly Republic Realm, is pouring millions into prime digital real estate—including buying a single Sandbox plot for $4.3 million in November 2021—with plans to build premium destinations in the metaverse. In February 2022, the company raised $60 million in a Series A funding round led by Andreessen Horowtiz, with investors including Coinbase Ventures, Paris Hilton and Nas.

The future

Part of the reason why the term “metaverse” feels so nebulous right now is that it’s probably still years away—at least in a polished, cohesive form. It’s early days for crypto games and NFTs, and blockchain-driven decentralized apps (dapps) still have a long way to go before they’re accessible and easy enough for mainstream consumers to use.

Facebook says its vision for the metaverse is potentially five to 10 years out. That’s a large gap, but it likewise reflects just how far off a lot of this is. It’s going to take years to build the infrastructure for the metaverse, not to mention establishing best practices, adding interoperability between platforms, and plenty more. VR is hardly mainstream, AR headsets aren’t ready for consumers, and your average home laptop or tablet today can’t handle heavily populated, super-polished 3D worlds with ease.

Nevertheless, there’s a potentially massive opportunity ahead. Bloomberg estimates that the metaverse market could be worth $800 billion by 2024. Grayscale and JP Morgan, on the other hand, see the metaverse as a potential $1 trillion market at some point in the future—but haven't specify when. Again, a lot about the metaverse is currently uncertain, but investors and startups see dollar signs ahead.

Even if the broader vision of the metaverse is years out, you can get a taste of it today in apps like Decentraland and CryptoVoxels, for example. We’re sure to see rapid, albeit gradual growth elsewhere in the months and years to come. It might be a long time before we’re really “living” in the metaverse, but it should be very interesting to see it take shape in the years to come.