Tag: NFTs

Editorial: New Year, New Directions, Part II—How I Plan to Cover Blockchain Metaverse Platforms Going Forward

Photo by Pierre Borthiry – Peiobty on Unsplash

There is simply no better place to watch as the dominoes fall in the beleaguered world of cryptocurrencies, blockchain, and non-fungible tokens (NFTs) than the cryptosnark subreddit, r/Buttcoin (tagline: “ButtCoin. It’s a scam. At least we’re honest about it!”).

And it was there where I learned that the latest domino had fallen—Genesis Trading, a crypto lender forming part of Barry Silbert’s Digital Currency Group (DCG), filed for bankruptcy:

Crypto lender Genesis filed for Chapter 11 bankruptcy protection late Thursday night in Manhattan federal court, the latest casualty in the industry contagion caused by the collapse of FTX and a crippling blow to a business once at the heart of Barry Silbert’s Digital Currency Group.

The company listed over 100,000 creditors in a “mega” bankruptcy filing, with aggregate liabilities ranging from $1.2 billion to $11 billion dollars, according to bankruptcy documents.

A list of the 50 largest unsecured creditors was leaked, and it turns out that both of the co-founders and the current Chief Financial Officer of blockchain metaverse Decentraland are owed an eye-watering US$55 million. Crypto news website The Block reports:

Virtual world platform Decentraland has not one but three of its executives and founders listed among the 50 largest non-insider unsecured claims against Genesis Global, the crypto lender that filed for bankruptcy protection on Thursday.

Decentraland CFO Santiago Esponda drew attention after his Decentraland email address was listed in court filings as the contact for Heliva International, a Panama-based company owed $55 million by Genesis. But a closer look reveals that Decentraland’s two co-founders are also listed in the documents with non-Decentraland email addresses.

Esteban Ordano, a Decentraland co-founder who now acts as an adviser, is listed as the contact for an entity called Winah Securities. Genesis owes Winah, which is located on the same floor in the same building as Heliva, almost $27 million. Ordano told The Block that Winah has no relationship with Decentraland.

Gaming company Big Time Studios is owed $20 million. It’s run by Ari Meilich, Decentraland’s other co-founder. He started Big Time in 2020 but also remains a Decentraland adviser. Meilich declined to comment. 

Which brings me, in a roundabout way, to the point of this particular editorial: how I will be covering blockchain-based metaverse platforms going forward on this blog.

In a previous editorial, I explained that I was substantially cutting back on my coverage of Second Life, to refocus my blog on virtual reality in general, and social VR in particular. Likewise, I have also decided that I will no longer be writing about any blockchain-based metaverse platform unless it incorporates virtual reality. According to my comprehensive and reasonably up-to-date list of virtual worlds and social VR, the only platforms which incorporate blockchain technology (cryptocurrencies and/or NFTs) and support virtual reality are three:

  • NeosVR (a social VR platform with an associated cryptocurrency called NCR, which was planned to be the in-world currency but has not been incorporated; please note that Neos does not have NFT-based virtual real estate, or use NFTs at all)
  • Sensorium Galaxy (this ultra-high-end social VR platform uses the SENSO cryptocurrency to purchase avatars in their online store; as far as I am aware, Sensorium Galaxy does not use NFTs)
  • Somnium Space (a blockchain-based virtual world that supports VR, with a cryptocurrency and NFT-based real estate)

All the other blockchain metaverse platforms I have written about on this blog (including the one that first attracted my attention, Decentraland) are either flatscreen virtual worlds which do not support virtual reality, or they have not yet launched (and, in the current crypto nuclear winter, are increasingly unlikely to do so; the only exception being The Sandbox, which is still in extended alpha testing).

And (as illustrated by my initial anecdote about the Decentraland co-founders and executive entangled in the Celsius bankruptcy case), those platforms which had the great good fortune to launch well before the current crypto carnage, are possibly still entangled in the web of interconnected crypto companies lending and borrowing from each other, in highly speculative cryptocurrencies whose actual value is based only on what the next greater fool is willing to pay for them. In particular, those who purchased overpriced NFT-based real estate on such platforms as The Sandbox, Somnium Space, and yes, even pioneering Decentraland, are going to find it very difficult, if not impossible, to make any sort of profit off their investments.

And one only has to observe the travails which NeosVR has gone through, after a cyncial pump-and-dump instigated by cryptobros, to see how a social VR project with such technical promise can be hamstrung by attaching a cryptocurrency to it. There has, to my knowledge, been no active development on the platform in over a year, and it is unclear what 2023 holds for NeosVR. It breaks my heart and it angers me.

While I will continue to follow the current crypto winter shenanigans as an interested (and bemused) observer, I have decided that I will no longer be writing about any blockchain metaverse unless it has launched, and it supports virtual reality. In particular, I will no longer waste my time (and your patience) writing about all the blockchain metaverse projects which consist of little more than an .io website, a Telegram or Discord channel, and a white paper long on hand-waving, but short on actual technical details. Enough with the bafflegab and bullshit.

If you happen to actually launch a product which incorporates blockchain in some way (cryptocurrencies and/or NFTs), and it supports users in a VR headset, then I will gladly write about it. Otherwise, I’m no longer interested.

Stick a fork in it; it’s DONE. (Image by Pete Linforth from Pixabay)

UPDATE 4:43 p.m.: Well, well, well…another news nugget I gleaned from the r/Buttcoin subreddit: AsiaMarkets.com is reporting this evening that the mighty SWIFT global financial network will, as of Feburary 1st, 2023, no longer process fiat currency transfers from bank accounts to cryptocurrency exchanges, if they are worth less than US$100,000:

The SWIFT payments network has made an extraordinary decision that will have widespread implications on cryptocurrencies.

Asia Markets can reveal SWIFT will no longer process fiat currency transfers from bank accounts to cryptocurrency exchanges, with a value of less than US$100,000, effective from February 1, 2023.

The move will thwart cryptocurrency access to tens of millions of people worldwide.

One of the first crypto giants to notify users of the development this weekend, has been the world’s largest exchange, Binance.

“The banking partner that services your account has advised that they are no longer able to process SWIFT fiat (USD) transaction for individuals of less than $100,000 USD as of February 1, 2023. This is the case for all their crypto exchange clients,” said Binance.

“Please be advised that until we are able to find an alternative solution, you may not be able to use your bank account to buy and sell crypto with USD via SWIFT with a value of less than $100,000 USD.”

Time to go get more popcorn; this three-ring circus is just getting started!

UPDATE Jan. 25th, 2023: It turns out that my previous update is not as all-encompassing as it first was reported! Amy Castor and David Gerard write in David’s blog, Attack of the 50-Foot Blockchain, today:

Binance sent a notice to customers that starting February 1, their banking partner, Signature, would not be processing SWIFT transfers of less than $100,000.

Retail customers of Binance have until the end of the month to get their US dollars off the exchange. After that, their money is stuck.

Rumors are swirling around this — not helped by an early news report (rapidly corrected) claiming that the SWIFT system itself was cutting off all crypto exchanges. Here are the facts that we know so far:

  • Binance is cut off from Signature for transactions below $100,000.
  • Signature’s other exchange customers have not said they’re affected, and we haven’t seen their customers saying so either.
  • We haven’t heard of other banks putting such a condition on Binance or another exchange.

So it’s so far just Binance, via Signature.

Still, it is significant that Binance, the biggest cryptobroker still standing, is facing such a stringent sanction by one of its banks. (By the way, Attack of the 50-Foot Blockchain is well worth following, for its expert analysis of the ongoing crisis in crypto!)

EDITORIAL: How Big Tech Layoffs, the Deepening Crypto Winter, and Global Chaos Will Impact the Metaverse

So (like many of you), have been following the news media these past seven days, and between the U.S. midterm elections, the jaw-dropping layoffs at both Meta and Twitter, and the collapse of major cryptocurrency exchange FTX, it’s been quite a week!

As I write this, I am listening to a Sept. 22nd, 2022 report written by Adam Fisher for clients of the investment firm Sequoia, titled Sam Bankman-Fried Has a Savior Complex—And Maybe You Should Too.

UPDATE 3:08 p.m.: Sequoia has just removed Adam’s report from its website but, as always, the Internet Archive’s Wayback Machine has you covered! WARNING: I listened to all one-and-a-half hours of the audio version of this article, and I want that time back! The level of hubris and cringe in this article is off the charts!

Given what’s happened in the past 48 hours, this report has aged like milk—badly. I had bookmarked it yesterday, and when I went to revisit the page today, I noticed that it had been updated:

UPDATE: Nov 9, 2022: Since this article was published, a liquidity crunch has created solvency risk for FTX and its future is uncertain. Many have been affected by this unexpected turn of events. For Sequoia, our fiduciary responsibility is to our LPs. To that end, we shared this letter with them today regarding our investment in FTX. For FTX, we believe its fiduciary responsibility is first to its customers, and second to its shareholders. As such, FTX is exploring all opportunities to ensure its customers are able to recover their funds as quickly as possible.

Of course, the best front-row seat to the three-ring circus that is crypto is the r/Buttcoin cryptosnark community over at Reddit, and let me tell you, there has been no shortage of things to talk about. Many there predict that (much like the unraveling of the LUNA cryptocurrency “unraveling “stablecoin” on May 7th, 2022, which in turn led to the failures of cryptofirms like Celsius and Voyager) there will be a significant impact to the sudden FTX implosion (Sequoia announced that they have written down their investment in FTX to zero). Even in the crazy world of crypto, the speed with which Sam Bankman-Fried has fallen off his pedestal and destroyed his reputation and his companies (not to mention his investors’ money) is bonkers. But that’s not the only big news these past seven days.

First: The crypto crash is looking more and more like a sustained crypto nuclear winter. Blockchain is now tainted, perhaps irredeemably so, and blockchain-based metaverses are tainted by association. What this means is that the already-established, relatively stable platforms (Decentraland, Voxels, Somnium Space, and a handful of others) are going to have a very difficult time selling NFT-based land, avatar accessories, etc., as well as encouraging new users to come and set up shop. We’re rapidly reaching the point that the general, non-tech public will run the other way when crypto, blockchain, or NFTs are mentioned, given the unending litany of bad news.

People and companies who invested in these platforms at the height of the hype cycle may have to make some hard choices between holding on (perhaps forever) in hopes of seeing a profit, or being forced by circumstances to sell at a loss, because they desperately need to get out of the market. (Perhaps they worked at Meta or Twitter or some other company downsizing during this increasingly brutal recession?). In my opinion, this will keep prices for NFT properties at or near rock-bottom for the foreseeable future, and it will impact these metaverse firms and their future development plans.

But, as bad as that is, the news is even worse for those blockchain-based metaverse projects which have not yet launched. In my opinion, many of these projects are doomed to fail, taking their investors’ money along with it. Some were designed to be rugpulls from the very beginning, hoping to cash in on the ignorant, while others were just weirdly-hatched and poorly-executed but honest proposals (e.g. Cirque de Soleil’s Hanai World project, which I am told has now folded).

Second: Meta is wounded, having lost the public’s trust and investors’ confidence, and facing increasing blowback for its decision to heavily invest in the metaverse and virtual reality. Meta’s missteps are negatively affecting the general public’s impression of the “metaverse”.

Say the word “metaverse” to your average man (or woman) on the street and you probably would get one of the following two responses:

  1. The “metaverse” is Meta/Facebook’s Horizon Worlds and Horizon Workrooms only; or
  2. The “metaverse” consists of the blockchain/crypto/NFT-based platforms only, e.g. Decentraland, Voxels, Somnium Space, The Sandbox, etc.

I’ve already dealt with the blockchain-based metaverses above; now let’s turn to Meta. Mark Zuckerberg and his team at Meta have spent a fair deal of time and money to promote Meta’s visions of the “metaverse”. Mark doesn’t want you to spare a thought for the countless other metaverse platforms which have been in development for years, and in some cases like Second Life, decades. He wants you to focus on Meta. Meta, people! Pay no attention to those other people!!! (Yeah, I know; it’s going about as well as you can expect, given people’s lack of trust in Mark or his company.)

Things have not been going especially well for Meta at the moment, with numerous new media reporting on its financial turmoil, as Mark Zuckerberg invests billions of dollars into research and development to build his vision of the metaverse. Venture capitalist Nathan Benaich recently tweeted (please note that Meta Reality Labs is the R&D arm of Meta working on VR/AR/MR/XR projects.):

In fact, things have been going so badly for Meta lately that many metaverse pundits (myself included) have begun to worry that it is tainting the general public’s perception of the “metaverse”, perhaps unfairly so. Tony Vitillo (a.k.a. SkarredGhost), an Italian man whose blog, The Ghost Howls, covers the VR/AR/MR/XR industry and the metaverse, wrote a recent editorial which I think needs to be read. He echoes what I and other metaverse pundits have noticed for quite some time now: the general public’s mood on the metaverse has soured quickly.

Tony Vitello points out something that many of us writing about the metaverse have noticed for quite some time now: the concept of the metaverse is developing a bad reputation

In an article titled Meta bad, metaverse bad, Tony writes:

After my usual Sunday tour of Twitter and LinkedIn feeds to gather news for my weekly newsletter, I feel the need of writing a rant about a trend I’m seeing online after the Meta Connect about Meta and its involvement in the “metaverse” field.

Many journalists of important tech magazines (TechCrunch, Business Insider, etc…) are all playing a common sport now: targeting Meta and Mark Zuckerberg. They are all writing posts about how Meta has failed, the metaverse has failed, the Meta Quest Pro failed, and also Zuck has failed. Everything is a huge failure. I admit that this news has caught me by surprise, because I have many projects in XR that are doing pretty well, and actually this has been one of the best moments to be in the ecosystem for me. I’m sorry that I hadn’t received the memo that everything failed: I’ll stop doing what I’m doing now and immediately go looking for a job to make fries at McDonald’s.

Look, I get it. Bad news draws eyeballs and clicks, and most people don’t like or trust Mark Zuckerberg or his Meta/Facebook empire. So the negative press pile-on in the wake of the Meta Connect 2022 event was not unexpected. Here’s an example of the recent coverage, by Paul Tassi of Forbes:

Meta shocked the financial world this Thursday by posting a 52% profit decline, its second straight quarterly decline, and a revenue decline of 4% year-over-year. This decimated their stock so badly with a 24.5% drop that it caused financial analyst Jim Cramer to break down crying and apologize on air for having faith in the company.

A main culprit of Meta’s decline is the thing it was named after, Mark Zuckerberg’s relentless pursuit of the metaverse through the company’s Reality Labs division, which has lost $9.4 billion this year so far, and there are warnings that bigger and broader losses are to come in 2023.

And, of course, the news yesterday that Meta was laying off over 11,000 employees has not helped matters in the slightest. It’s not yet known how these massive layoffs will affect Meta’s work in virtual reality, augmented reality, and the metaverse, but I wouldn’t be surprised if a few projects in that area are trimmed. Many in the financial community are attacking Mark Zuckerberg and his desire to repivot Meta to be a metaverse company, and the negative blowback will also impact other companies working in this space. I’ve written more about this on my blog in this August 2022 editorial, How the Crypto Crash—and Meta’s Missteps—Are Souring the General Public on the Metaverse, so rather than repeat myself, I will direct you there if you want to learn more of my thoughts on the matter. On to the next point!

Third: Elon Musk is killing Twitter, and its death throes, plus Meta’s continued struggles, will lead to many people radically rethinking their use of social media, and leaving Twitter, Facebook, and Instagram.

Image source: r/EnoughMuskSPam subreddit on Reddit

If you haven’t got the memo yet, surveillance capitalism and algorithmically-driven echo chambers/walled gardens are about as popular as crypto nowadays. Despite daily reassurances from the Chief Twit himself, the MIT Technology Review reports that Twitter may have already lost one million users, many of whom have moved to Mastodon and other federated services, beyond the control of capricious billionaires. And, while not in dire straits like Twitter, Meta’s social media platforms are similarly bleeding users, as the younger generations abandon Facebook and Instagram for TikTok (which, of course, has its own user data privacy and surveillance capitalism issues, not to mention a parent company now marketing a standalone VR headset to compete with Meta, but that is an issue for a different editorial).

How will this affect the metaverse? Well, for starters, it’s going to be a lot harder for metaverse-building companies to get attention using traditional social media during this time of turmoil and upheaval, which is their primary form of advertising. For example, Mastodon is notoriously resistant to influencer culture and corporate shilling, even going so far as to ban entire instances/servers to avoid being tainted by the filthy lucre of capitalism. (For example, the overly-protective but proactive moderator of the well-established scholar.social Mastodon instance/server just banned the new journa.host instance, because of problems the latter has had in setting up their server, which means that journalists who set up accounts on journa.host are barred from seeing what is going on over at the scholar.social server. These people, many of whom were burned by older forms of social media, are not playing around!)

Another example of the impact: I have unfollowed all the people I used to follow on Twitter, deleted almost all of my tweets, and deactivated my account, in direct reaction to the callous, heartless way that Elon Musk handled his layoffs, gutting half the Twitter staff (I wrote about it in an update at the end of my previous blogpost). This means that I deliberately cut off one venue by which I leaned about news and events taking place in the VR/AR/MR/XR and the metaverse. However, I am still a member of almost 100 different Discord servers, including the 715-member RyanSchultz.com Discord, and my connections there keep me just as well-informed, without having to take part in Facebook or Twitter! I am also quite active on Reddit, although lately most of that time has been spent lollygagging in r/Buttcoin! 😜

Finally, we are entering a severe global recession, with both mass layoffs (see above) and staffing shortages, combined with skyrocketing inflation, which means that we are going to continue to see chaos, disorder, and upheaval all around the world. The war in Ukraine is still upending global supply chains, and China’s continuing strict COVID lockdowns are still impacting product manufacturing. Oh, and did I mention that we need to act now to put the brakes on global climate change before many parts of the world become inhospitable and even uninhabitable? If you’re not depressed, then you haven’t been paying attention!*

Fasten your seatbelts, kids; I have a feeling it’s going to be a bumpy ride, and not just one bumpy night! While chaos can be liberating for some people, it is anxiety-inducing for many others (including myself). We are also still operating under an ongoing pandemic that is absolutely NOT over (for example, my best friend’s 92-year-old mother passed away from COVID-19 in hospital a couple of weeks ago). I am, still, barely leaving my apartment, and my university still has an indoor facemask mandate in place. (Good thing my passionate hobby is virtual reality and the metaverse! Avatars can’t catch the virus. 😉 )

In summary, this global chaos (plus all the other points I made above) will impact the people and companies building the metaverse, as well as the people using it! There will be new challenges, but also new opportunities. Expect the unexpected!

* If you are struggling with your mental health, at the start of the pandemic I pulled together a list of helpful resources, which you can find here. It’s a little out-of-date, but most of the links should still work. Remember, help is out there if you need it!

Editorial Rant: Yet Another Bullsh*t Article About the “Metaverse” by Canadian Business Magazine (And Why All Metaverse Companies Are in Danger of a Widespread Negative Backlash by Consumers)

Have you read? How the Crypto Crash—and Meta’s Missteps—Are Souring the General Public on the Metaverse

A billboard for the NFT “metaverse” Upland, in the New York City subway system;
I wrote about Upland and its ilk in this editorial
(image source: posted to the Buttcoin crypto snark subReddit)

I have been trying (dear Lord, how I try!) to stay away from what seems to be an unending litany of bad news lately, but last night I slipped up and opened the Apple News app on my trusty iPad, which promptly spit up the article which is the topic of today’s cranky editorial. (It’s a bit old now, but it’s the first time I read it.)

The piece, written by Katie Underwood on July 7th, 2022, for Canadian Business magazine, is the perfect example of metaverse bullshit that is currently circulating in the news and social media, and I have had it up to here with what passes for accurate reporting on the topic. Honestly, I swear, if this keeps up, I fear that the word metaverse itself will become so tainted that the general public will run the other way when it is mentioned! (And Mark Zuckerberg and his many missteps trying to pivot Meta into a metaverse company are not helping, either.)

The title of the article is Your Next Home May Be in the Metaverse (although the web page itself is actually titled Buying Real Estate in the Metaverse Isn’t Cheap; if you should hit a paywall, here is an archived version). The article starts with a profile of digital artist Krista Kim, who built the home of her dreams—and then apparently promptly minted an NFT of it and sold it:

“I imagined creating a house that would heal me,” she says. She also hoped she’d find a buyer. “The question was: Would anyone else understand what I was selling?”

As it turns out, someone did. Kim’s futuristic dreamscape sold for approximately US$512,000 in March of 2021. The metaverse is a loosely but increasingly understood shared virtual space, accessible via smartphone, goggles or headset—and it’s the newest frontier in the global real estate blitz. The sale of Mars House, a 3-D file rendered using the video game software Unreal Engine, marked the metaverse’s first-ever NFT-based residential transaction.

Already, at the very beginning of the article, I am ready to tear my hair out. First, THIS IS NOT THE METAVERSE! The artist built a home using Unreal engine, but it is simply a three-dimensional object, which needs to be imported into an actual metaverse platform (e.g. VRChat) in order to be used! A CNN article about this transaction correctly reported:

The new owner paid digital artist Krista Kim 288 Ether — a cryptocurrency that is equivalent to $514,557.79 — for the virtual property.

In exchange, the buyer will receive 3D files to upload to his or her “Metaverse.”

So yeah, the fool who paid half a million U.S. dollars for this house still has to find a place to park it before inviting his or her friends over for a virtual barbecue.

Second, it is far from “the first NFT-based residential transaction”, which Katie Underwood would have known if she had bothered to do a little research before writing this article. Blockchain-based metaverse platforms have been buying and selling NFT-based virtual land parcels for years now! Decentraland, for one, began selling land back in 2017, and yes, some people have built virtual homes on that land.

With my teeth firmly set on edge, I continued reading, to find yet another section of Katie’s article which raised my blood pressure a notch:

Like terrestrial homebuyers, users keen to buy or sell real estate in the metaverse will have to go through a rigmarole not unlike the one for bricks and mortar. Right now, land sales in the metaverse are typically concentrated within the “Big Four” platforms—Decentraland, The Sandbox, Somnium Space and Cryptovoxels—which are developed and owned by users. (To date, their combined total of virtual plots is just under 300,000.)

…aaand once again, here’s yet another blinkered reporter writing an article that completely overlooks the fact that metaverse platforms like Second Life and Sinespace have been doing brisk business in buying and selling virtual real estate for years, in some cases decades, without the use of blockchain, crypto, or NFTs! (I wrote about this at length in an earlier, similarly cranky editorial: Why Focusing Exclusively on Blockchain-Based Metaverse Platforms Ignores the Bigger Picture, and the Rich and Vibrant History of Social VR and Virtual Worlds.)

The article continues:

Even in the metaverse, location is everything. In Decentraland, neighbourhoods are designated for specific activities; for example, there’s Festival Land (for live music events), University (for education) and District X (for clandestine dating adventures and adult-themed e-stores). Its fashion district is of particular interest to the Metaverse Group, a Toronto-based virtual-real-estate company that scooped up more than 100 of the area’s 16-by-16-metre parcels for US$2.4 million last November.

Also, “last December, one of Snoop Dogg’s most ardent fans dropped US$450,000 for a plot next to the rapper’s mansion in The Sandbox, a popular gaming platform.” Again, these quotes make me want to tear my hair out! Listen to me, people: LOCATION IS NOT EVERYTHING. For example, in Decentraland you can click on a URL with the exact coordinates of the parcel of land that you want to visit, which will take you directly there. Any metaverse platform worth its salt offers you some form of teleporting from place to place.

And—as we have seen before with previous failed celebrity-endorsed metaverse projects like Staramba Spaces, which hooked its wagon to Paris Hilton—spending a fortune just to be “next to” a rapper’s virtual home is just plain fucking stupid. (Staramba Spaces was a complete and utter failure, but Paris Hilton has since moved on to other crypto projects, from what I understand. It’s never the celebrities who lose money on these harebrained schemes; they get paid in filthy but stable fiat currency, up front. Ask Matt Damon.)

The idea of one virtual piece of land being “worth” more than another due to its location is patently absurd, an idea first brought you by the NFT-based metaverse companies who were only too eager to incite FOMO-driven bidding wars during the crypto bull market which has now cratered so spectacularly!

I wonder how the Metaverse Group is feeling about that particular $2.4 million-dollar purchase, on the other side of a cataclysmic crash. Or another company called Republic Realm, which shelled out a cool $4.3 million for virtual property in The Sandbox. They are among the tens of thousands of corporate and personal investors whom I predict are going to be waiting a long, long time to see any profits from their expensive virtual land, no matter what they build there. And good luck trying to flip it to the next Greater Fool…Fortune reports that trading volume on the leading NFT marketplace OpenSea is down a staggering 99% since its peak, only a short four months ago.

I could go on, citing other parts of the Canadian Business article that drive me insane, but I’m done enough ranting for today, and you get my drift (you can go read the rest of the article yourself if you want). I need to go put my feet up and listen to some Enya to calm down. If I sound absolutely and completely fed up about all this, it’s because I am. THE METAVERSE BULLSHIT HAS GOT TO STOP, NOW.

Look, I have no problem with the idea of a blockchain-based metaverse, but the entire ecosystem and environment around it have now become a toxic cesspool of scams, frauds, and rugpulls. And all that negative attention is dragging down even the legitimate players in the metaverse space. Frankly, things are now getting to the point that whenever the general public hears the words crypto, NFT—even metaverse—they start gingerly backing towards the exit door, because so many scammers and other bad actors in the blockchain space have tainted the concepts themselves!

It doesn’t matter if there are actually working blockchain-based metaverse platforms out there, like Cryptovoxels, Decentraland, and Somnium Space (soon to be joined by The Sandbox)…the bad actors are like a pervasive rot that has set in, damaging their credibility merely by association, and potentially negatively impacting their future operations. (And God help those companies who are trying to set up new blockchain-based metaverse platforms during this crypto winter!)

For example, NeosVR is the perfect example of a truly wonderful, cutting-edge metaverse platform that has been effectively hamstrung by what happened to Neos credits (NCR), NeosVR’s associated cryptocurrency.† The resulting deluge of attention of the cryptobros earlier this year completely changed the tenor of the Neos community, causing great divisiveness and conflict, and finally, a cynical pump-and-dump by a cadre of investors (who were impatient for profits) eventually led to NCR becoming near-worthless. I had started what was intended to be a multi-part series of blogposts to cover the entire sad saga at length, but unfortunately I got too busy to complete it in a timely way.

However, the prolific VR YouTuber ThrillSeeker has done an excellent 20-minute overview video, which does a much better job than I could do to explain what befell Neos:

The Twitter user Coinfessions (with over 100,000 followers) reposts items submitted anonymously to a website form, and let me tell you, the reading is WILD, people. And at times heartbreaking. Here’s just one example from the Twitter feed:

See what I mean? I swear, between what’s been going on in the crypto crash, and companies like Meta stumbling around trying to build the metaverse and getting roundly criticized for not getting it, I’m afraid that the term metaverse is going to get an extremely negative connotation…and then all of us will be the poorer for it.

Think about it—what do you want the average person to think of when you talk to them about the metaverse? Because I can tell you, pieces like this article from Canadian Business are not helping matters out there, in the general public’s minds. More and more people are starting to ridicule the entire concept of the metaverse, either ignorantly equating it with Meta’s soulless Horizon Worlds platform, or else associating it only with the NFT metaverse platforms, many of which are now facing tougher times as greedy speculators (who thought they could make a quick buck) get burned and flee the market, never to come back.

And, ultimately, those people (Joe or Jane Average on the street) are the people we are going to need to the sell the metaverse to in order for it to eventually take root, and take off, in any way beyond existing uptake.

Feh, enough bullshit! Time for some Enya…

† UPDATE Sept. 7th, 2022: I had originally written that Neos credits had not even been implemented yet as an in-world currency in NeosVR, but I have been told that this is not strictly true. Apparently, Neos credits, while underused, had been implemented and usable for user-to-user transactions (e.g. tipping) for years, and a bit more recently Neos had added features like buying and gifting storage space using Neos credits. So I stand corrected! Thank you to the person who reached out to me to correct my mistake.

UPDATED! Editorial: How the Crypto Crash—and Meta’s Missteps—Are Souring the General Public on the Metaverse

As somebody who writes about social VR and flatscreen virtual worlds on this blog, with a popular Discord server packed with metaverse fanatics and a front-row seat on pretty much everything that has been happening in this space, let me tell you, the past twelve months have been a wild ride. You can even see it in my blog statistics of the number of visitors and views the RyanSchultz.com blog has attracted over the past year:

See that surge from October through March? In October, Mark Zuckerberg announced in a Connect 2021 keynote that Facebook would rebrand as Meta, and would focus on realizing his vision of the metaverse. This also coincided with a crypto speculation boom, where people and companies were frantically bidding for artificially scarce NFT-based plots of land in various blockchain metaverse platforms.

Together, these events sparked a greater awareness among the general public of the metaverse (as indicated by a corresponding increase in traffic to my blog). However, it would appear that the ongoing crypto crash, combined with Meta’s recent woes and missteps, are causing people to sour on the concept. (And by “people”, I mean the general public, not the metaverse fanatics, content creators and world builders whom I tend to hang out with!)

As an illustration of this, I would like to focus on a recent announcement made by Mark Zuckerberg, about the expansion of their flagship consumer social VR platform, Horizon Worlds, from Canada, the U.S. and the U.K. into two new countries, France and Spain:

The first thing I think of when I look at this picture is: hoo boy, somebody working in Meta’s PR department is gonna get fired! You’re trying to sell people on Horizon Worlds with this unappealing, uninspiring, and frankly ugly image on Twitter?

The response to this on two different subreddit communities on Reddit, r/technology and r/Buttcoin, proves to be quite illuminating. (By the way, r/Buttcoin is the blockchain, crypto, and NFTs snark community, where we cryptoskeptics and critics love to discuss and dissect the latest shenanigans, antics, and scams in that world!)

Here are some of the better comments on the r/technology post, sparked by Paul Tessi’s biting August 17th, 2022 Fortune article, Does Mark Zuckerberg Not Understand How Bad His Metaverse Looks?

It looks like Mark Zuckerberg watched Ready Player One and thought he would be able to recreate that universe with MS Paint.

“Looking forward to seeing people explore and build immersive worlds!” :: “Work in my content mill, peasants.”

The more money they dump into this dumpster fire, the better chance Facebook finally collapses into the abyss. So keep doing it Zuck.

One much-upvoted comment reads as follows:

No one is building a $1500-2500 PC with [a] dedicated GPU to add a Facebook $600 VR headset to attend work meetings in a virtual space that looks like a kids CGI series from 2004 at a mass adoption level, where the majority of the public would use it daily for 8 hours at work then again for another 4-6 hours “for fun” at home, as the Meta dystopian dream suggests.

Meta has already been subsidizing the costs of their currently meh headset, which they just increased the prices of, as they were losing too much money.

For this to work, the hardware has to be good enough for grandma to be able to buy it on a pension, put it on out of the box and it just works, and it does not make her sick to her stomach in 5-20 minutes due to the low frame rates and quality.

That’s the barrier of entry to the space you need to be able to target… if that old guy at your office struggles with getting their mic to work on MS Teams for a video call every day, as the manager he is not going to order $100,000 worth of gear for your department that is hard to setup and use to meet in the metaverse.

This thing is dead on arrival, but Facebook is also dying/dead in it’s current form, so this Hail Mary [pass] is all they have.

In the August 17th Fortune article which spawned these responses, reporter Paul Tassi writes:

The thing is, this happens all the time with Zuckerberg and his metaverse because Horizon Worlds has looked terrible since its inception and has barely gotten any better over the years, where its avatars still look like Miis from 2012 and they still don’t have legs.

Granted, I understand that showing 2D screenshots of VR is difficult, and that VR generally lags behind traditional console and PC gaming in terms of graphics. And yet that doesn’t change the fact that even within VR, Horizon Worlds is one of the worst-looking offerings I have seen, and that Meta has spent something like $10 billion chasing its Horizon, VR-centric version of the metaverse, even embarrassingly changing their company name to reflect that. And…this is the result.

Meanwhile, here are some of the opinions of the cryptosnarkers over on r/Buttcoin:

If I was a Meta stockholder I would be selling the minute I saw that screenshot.

He (and many others) are hoping that nobody remembers Second Life ever existed, let alone that it still does. It has a dedicated audience of somewhere between half to one million users and that’s kinda it. I suspect the future for “the metaverse” is similar.

One r/Buttcoin member posted the following detailed comment:

This is the part I don’t understand. Any “meta” style environment will be incredibly limited in terms of graphics and gameplay due to the need to have a high number of players at once. So who is the target audience?

• Someone looking to play a game is going to go with something like Grand Theft Auto V (and continue to move on to the next biggest thing when they come out).
• The live concerts! aspect of the website seems equally absurd given the graphical limitations and that this would be less entertaining than watching a concert on TV.
• Your casual Farmville-style person isn’t shelling out hundreds of dollars for a VR headset.
• For their “practical” concepts like virtual stores, it seems to invalidate the concept of buying metaverse land as either the system will allow for fast travel style movement (making “premium” land a joke), or not allow for this travelling and completely turn off their customer base for this.

I just don’t see where the interest comes from.

And I chuckled at this wag’s opinion:

Second Life managed to survive because it fostered a community of weirdo people who fetishized the environment. I think the only person who fetishizes Facebook’s metaverse is Zuckerberg.

Absolutely SAVAGE! I live. Somebody else posted this gem to the r/Buttcoin subreddit:

Even worse, the cryptobros are starting to dunk on the metaverse, notably Shark Tank billionaire investor Mark Cuban. According to an August 8th, 2022 report in Fortune:

Mark Cuban, the billionaire Dallas Mavericks owner and avid crypto enthusiast, is not sold on the metaverse.

“The worst part is that people are buying real estate in these places. That’s just the dumbest shit ever,” he told the crypto-themed YouTube channel Altcoin Daily this past weekend.

I’m quite sure that the various blockchain-based metaverses like Voxels (formerly known as Cryptovoxels), Decentraland, Somnium Space, and The Sandbox, all of whom have seen the value and the trading volume of their NFT-based real estate decline during this crypto winter, were not expecting the ridicule and disdain of crypto influencers themselves! After all, the crypto crowd are main target audience of these platforms, not your average non-crypto user. You know things are getting weird when the cryptobros start to turn on each other!

So, what does all this mean? Well, it looks as though the concept of the metaverse, at least among the general public, is going to sustain some reputational damage, at least in the short term (12 to 24 months). Perhaps it was inevitable that there would be such a swing from irrational metaverse exuberance to equally irrational metaverse distaste, even disgust.

I am reminded of the Gartner technology consulting group’s well-known Hype Cycle, where we appear to be rapidly moving from the peak of inflated expectations, to the trough of disillusionment:

The five steps of the Gartner Hype Cycle (source: Wikipedia)

Also, this “trough of disillusionment” means that it’s going to be harder to sell consumers and businesses on the metaverse. This will apply both to behemoth corporations like Meta, Apple, and Alphabet (the parent company of Google), as well as to much smaller metaverse-building companies. As I have said before, not all platforms currently being worked on will survive this rough period.

It is possible, perhaps even likely, that only a handful will achieve dominance in this ever-evolving market, leaving the other firms to fight over the leftover scraps. Of course, some companies will be savvy enough to focus on a profitable niche market, such as the surgical training platform FundamentalVR, which recently received another venture capital infusion of US$20 million.

So, as Bette Davis once memorably said in the movie All About Eve: “Fasten your seatbelts…it’s going to be a bumpy night!”

UPDATE August 19th, 2022: As further evidence of the antipathy towards Mark Zuckerberg’s latest announcement, Zack Zwiezen wrote this scathing report for Kotaku, titled Mark Zuckerberg’s Soulless Metaverse Avatar Has Me Worried About Our Digital Future:

Earlier this week, the alien-wearing-a-human-skin-suit known to us as Mark Zuckerberg posted a VR selfie from inside his company’s metaverse project, Horizon Worlds. The selfie showed off the Eiffel Tower and was meant to announce that his metaverse is expanding to more countries. Instead, however, people immediately began dunking on the terrible picture, the ugly avatar, and how it all looked like it fell out of a 2005 edutainment game…

And that brings us to 2022, where Zuckerberg’s avatar is a legless knock-off of a Nintendo Mii with some really weird buttons and the eyes of a corpse. And this isn’t just how Zuckerberg looks, this is the way all avatars appear in Horizon Worlds. I’ve played enough Horizon Worlds to tell you that the missing legs quickly cease to matter. But the lack of style and the cold, dead aesthetic never goes away.

Sure, part of the reason these avatars and worlds look simple and ugly compared to modern video games comes down to the limited VR hardware in Quest 2 and Facebook’s desire to make VR content that can run on as many devices as possible.

On the other hand, I can find Nintendo DS and Sony PS Vita games with better, nicer-looking art and models than what we’ve been shown so far in Facebook’s metaverse. I also don’t think you can blame the people making this stuff, as I assume they are more than capable of doing better and more vibrant things. But more and more, it seems that isn’t what Meta and Zucklehead want. Instead, they are focused on making a product that can be consumed by the masses and which lacks any defining characteristics in an attempt to get more people to dive in.

This is the exact opposite approach we see in more community-driven VR metaverses like VR Chat, which looks better and feels warmer and more inviting. In comparison, Horizon Worlds looks like an animated video I’d walk by in some fancy hospital while I look for the bathroom.

And if this bland and ugly metaverse is the future Mark Zuckerberg wants and is investing billions of dollars into, I’m worried that it could end up winning out over other, better alternatives simply because he has the money and resources to squash or buy up competitors. Well, if it does win out, at least I’ll be able to skip it and not buy a new VR headset.

Yee-OUCH!!!

Also, as further evidence of the distress in the entire cryptosphere, Bloomberg reports that ad spending by the crypto firms has absolutely cratered:

Spending by major crypto firms, including the trading platforms Crypto.com, Coinbase Global Inc. and FTX, fell to $36,000 in July in the US, according to ISpot. That’s the lowest monthly total since January 2021 and is down from a high of $84.5 million in February, when the industry flooded the airwaves around the Super Bowl.

Again, Yeee-OUCH!!! And it looks like things are not going to get better anytime soon, as inflation roars and recession looms. People have more important things to worry about (like keeping food on the table and a roof over their heads) than buying virtual real estate on the blockchain!

In December 2021, Republic Realm spent approximately US$4.3 million worth of land in The Sandbox, setting a record for the most expensive land sale in the metaverse (more about Republic Realm here). It would appear to be highly unlikely that Republic Realm, or any of the other investors who bought NFT-based plots of virtual land at the height of the boom market, are going to be able to earn a profit anytime soon.

Has the bottom fallen out of the NFT-based metaverse market? And what does this mean for the concept of the metaverse in general? Stay tuned!