Expert Takes: Joachim Schwerin
Joachim, you are an economist specialised in the digital transformation of industry. How do you see the economy of the metaverse developing?
The metaverse represents an ever more immersive convergence of multiple technologies, and its economy is poised to grow in fascinating ways. That is what comes through clearly in The Metaverse Society’s meta trends report, Scaling the Metaverse. This ecosystem is vibrant, teeming with energy, ideas, and projects. We’re witnessing an integration of artificial intelligence, blockchain, quantum computing, and more, all of which contribute to its complexity and potential. The metaverse goes far beyond just digital interaction, it’s a comprehensive platform impacting sports, culture, arts, and industry, like a digital layer of our real lives.
Its economic landscape is equally multifaceted. On one hand, you have significant investments from major tech companies, which is akin to the centralised governance of Web 2.0. On the other hand, there’s the decentralised approach, where smaller entities and individual creators have the potential to drive substantial innovation and inclusivity. That triggers debate about the type of digital world we wish to cultivate—one driven by large corporate entities or a more grassroots, community-driven approach.
Does Europe have anything unique to offer when it comes to shaping the metaverse of the future?
DG GROW, European Commission
Europe holds a unique position in shaping the future of the metaverse, primarily due to the fact that decentralisation, self-organisation and the desire to protect our identity are part of our DNA. The GDPR has laid a foundation for data protection and identity development that aligns well with the decentralised ethos of the metaverse. Historically, the region has seen various forms of cooperative structures and localised governance, which now find digital expressions in decentralised autonomous organisations (DAOs) and blockchain technologies, and give Europe a unique opportunity to lead in the development of the metaverse, emphasising inclusivity, diversity, and community-driven governance.
For the past couple of centuries, we have had to rely on intermediaries to create value, and those intermediaries have – in my opinion – largely failed. The financial crisis showed everyone the risk that lies in centralised structures. But we now have decentralised, trustworthy infrastructures on which the metaverse and Web can be built. Infrastructures that enable people to engage – safely and at very limited cost – in value creation and value exchange with other people, anywhere in the world.
Interestingly, when it comes to regulation, the metaverse presents a unique challenge. Unlike traditional technologies, the metaverse encompasses a broad array of elements, making comprehensive regulation difficult. It’s not a single technology or business case but a digital extension of our world. So how could you regulate something so diverse? In part, recent EU policy measures and regulations in blockchain and crypto assets have set the stage for more bottom-up, community driven peer-to-peer models. Moving forward, in my view, policymakers need to allow the market more breathing space to adapt and innovate within the currently known framework. Collaboration between the private and public sectors will be essential to drive this forward and allow a better understanding of what is at stake, opportunities as well as challenges.
How do you view the implications of the decentralised system the metaverse is based upon for democracy?
At its core, decentralisation empowers individuals, allowing for a bottom-up approach to governance and community building. The metaverse, with its global reach and ability to connect like-minded individuals, fosters a sense of engagement and activism that transcends physical boundaries. This can lead to more inclusive and participatory democratic processes.
Decentralisation, facilitated by technologies like blockchain, is in my opinion a true social revolution, as it introduces a level of transparency and trust previously unattainable. It offers a trust environment where individuals can interact and transact securely and transparently. This not only democratises access to digital spaces but also ensures accountability through collective, rather than individual, liability.
The concept of collective liability within decentralised systems is particularly intriguing. It allows for legal and regulatory responsibilities to be distributed across the community, ensuring that no single individual is unfairly targeted. This approach aligns with the democratic principles of shared responsibility and collective governance.
Ultimately, the metaverse has the potential to revolutionise democratic engagement. By providing platforms for virtual interaction, it can bring people together, foster dialogue, and drive social change. If that space is used in a creative way, it will enable people to feel much more engaged and active. I think that is fantastically democratic.
This interview is from our first opus, released in June 2024. You can read the full opus here on our website.