Tokenizing Our Virtual Future: A Deep Dive Into Non-Fungible Tokens | Hacker Noon

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@rhianRhian Lewis

Developer, writer, cryptocurrency obsessive

COVID-19 has changed the way we work, study and socialize, at least temporarily. Many of those who were privileged enough to transfer to remote working instead of losing their jobs will never return to the office, even if they want to.

Companies have found — often to their surprise — that they can make significant cost and efficiency savings on office facilities, with little impact on output. And it wasn’t only the workplace that became digital: even the most analogue suddenly found that the only way to keep up with friends and family was to dive into technologies like Zoom or HouseParty.

The received wisdom is that the pandemic served only to hasten trends that were already happening, rather than directly bring about social change, but even seasoned futurists have expressed surprise at how swiftly the transition has come about.

Ownership, identity, and economics in the Metaverse

For many people, grappling with the social etiquette of online meetings is enough to contend with, but inhabiting a two-dimensional digital space is a world away from the fully immersive virtual worlds imagined in movies and books. It is true that we are not immediately going to be able to dive into William Gibson’s cyberspace or Neal Stephenson’s Metaverse, but the idea of a parallel digital reality is starting to seep into our physical world, via gaming, mixed-reality art, and crypto-economics.

Digital pioneers stake their claim to plots of undeveloped land in games like Decentraland; industrial training sessions and mental-health treatments take place in VR, moderated by qualified teachers and therapists.

Book launches, conferences and other PR events can now be hosted in a glamorous virtual space, and the world’s largest corporations are staking their claim to some of the most prime real estate in these strange new worlds that redefine notions such as presence and even what it is to be human.

In other words, augmented, mixed and virtual reality are finally starting to live up to their early hype, albeit only in isolated pockets so far. If you have an Oculus Quest or an Oculus Go, you can take advantage of your own virtual office space: a customised wraparound room containing multiple screens that allows you to focus with no external distractions from the physical world.

Watch the video at https://immersedvr.com/ to get an idea of how it works. If deep focus isn’t your thing and you’d rather co-work with either your own colleagues or some random strangers in a co-working space, Immersed gives you options there, too.

Many people, however, still think of VR’s killer app as gaming — and with good reason. The faster your broadband connection and the more convincing the virtual world in which you find yourself, the easier it is to move the focus of your existence to an environment where your possibilities are limited only by your imagination and your gaming skills: South Korea has some of the fastest broadband speeds, the tiniest apartments and the most committed gamers of any developed country. None of these facts are unrelated.

As our digital existence comes to mirror more closely our life in the real world, it becomes more and more apparent that the social, legal, economic and behavioural rules and conventions that govern our corporeal, existence cannot simply be transported wholesale to our parallel lives. New ethical dilemmas are raised.

Science fiction offers us the trope of the humanoid robot, powered by AI to act as an almost-person. However, we are far more likely to encounter these almost-people in digital form, as avatars and presences interacting with us in a virtual world, rather than as one of the unsettling humanoid, clammy-skinned robots that we might encounter in the real world. Deepfakes — or synthetics, as they are politely known — are an economical and practical alternative to actors for corporate training films, especially in the time of Covid-19, when production companies have to deal with social distancing issues on set.

And what will happen when the dead can be uploaded to VR, presenting as 3-D animations of their living selves? We already know that the dead will begin to outnumber the living on Facebook before the turn of the century, but at some point those no longer with us may also begin to infiltrate the digital realities in which we work and play.

This is not quite as far-fetched as it sounds. A heart-rending TV documentary in South Korea “reunited” a bereaved mother with her late seven-year-old daughter, after the little girl was brought to life from video footage of her running around and playing.

The mother said later that she found the experience therapeutic. This is hardly surprising: psychotherapy and cognitive behaviour therapy are growth areas in the VR space, with therapists working with service users to replicate situations that they might find contronting in real life, allowing their clients to work through their feelings safely before being faced with them in the real world..

The uses of VR environments can, of course, be entirely corporate and focused on cost-savings rather than therapy. Holly Atkinson, an Ethereum developer for blockchain-based gaming platform The Sandbox, points out that industrial training is another sector where the use of virtual reality is expanding: immersive simulators are used, for example, to train engineers to perform retrofits and maintenance activities on remote sites in inaccessible locations — a more economical option than flying trainees out to remote sites simply for training purposes.

Wind turbine specialists Vestas Mediterranean also use VR for virtual meetings as well as design reviews and verification courtesy of their Virtalis ActiveWorks system, enabling them to bring products to market much earlier.

The current situation — tiny pockets of VR here and there: a virtual office here; a first-person shooter game there; a HoloLens meeting room; the occasional VR therapy session and a few augmented-reality artefacts flying around in the form of Pokémon GO, or digital artworks — may not be the seamless, planet-sized playground of William Gibson’s or Neal Stephenson’s imaginations, but just as Usenet groups and text-based games prefigured Netflix, TikTok and Steam, we are highly likely to experience the Metaverse — or something very like it — in our lifetime, although the journey towards this may seem glacial right now.

How do I prove I own this artefact, and how do I prove I am who I say I am?

Perhaps this slow progress is a boon: we are still only just starting to get to grips with notions of identity and ownership in a two-dimensional virtual world, let alone a fully immersive alternate reality.

The rules, mores and belief systems that have sprung up around our interactions in the physical domain have evolved over millennia. Two of the major challenges in a world that is fully digital involve identity and ownership: how do I prove I own this artefact, and how do I prove I am who I say I am?

Debates about identity online are not new. One of the very earliest memes satirically tackled the subject of anonymity and subterfuge in the digital world: ‘On the internet, no one knows you’re a dog’.

These days, any given individual is far less likely to be a dog than a bot, or a fridge or a doorbell. There are now more devices than humans registered on global networks, and potentially as many as 15 per cent of accounts on Twitter are bots. We interact with them every time we participate in social media, or when we phone a customer services department or click the Chat button on an ecommerce site.

Bots are not the only imposters: there are a million and one reasons why someone — or something — might want to pretend to be someone they are not. We will examine some typical problems and solutions later.

Ownership is as tricky as identity: I can prove to you that the car I am driving down the M4 motorway to London is my car. But how can I prove to you that the car I am driving in this game is mine and that it is not some fancy asset I saw elsewhere and made a copy of? Owning things, buying things, selling things: these are some of the most deeply human things we can do.

If you visit the British Museum, some of the earliest examples of writing (clay tablets engraved with cuneiform) do not deal with matters of the heart or philosophical musings but are instead records of supplies held and correspondence dealing with trade routes. If we define ourselves by the things we have, rather than just the things we are, then we need to find new solutions for a new reality.

Ownership is complicated, and perhaps it takes digital assets to make us realise that our relationship with objects is actually more complex than it first appears. In the physical world, objects can be stolen and their provenance difficult to prove.

There is a reason for the common expression:

‘Possession is nine-tenths of the law’.

So you own a vintage coffee table, or an electric hand-saw. You possess a receipt that was written or printed to validate your ownership. What then happens when someone comes and physically removes that item from your home or workplace?

Something does not need to be moved from one location to another in order to be stolen: land disputes remain surprisingly common. In fact, decentralized data structures such as blockchains can have an important role in tracking provenance and ownership, but this is not what this post is about.

If tracking the ownership of physical goods is out of scope, at least for now, let’s first think about purely digital goods: a house that you own in Second Life, a store of turnips in Animal Crossing, a CryptoKitty or a block of land in Decentraland.

As computer games have moved from simple text-based interfaces to complex, visually rich worlds in which our alter ego is limited only by our imagination and that of the game designer, there has also evolved a necessity for a parallel system of ownership in these virtual worlds which is as good as — or better than — our ownership systems in the real world. Ownership goes hand in hand with the need to make payments in order to buy and sell our not-quite-real possessions.

Here, I’m using games as an example, but the principle applies to any kind of non-physical setting: a virtual trade fair, for example, where a VR conference centre is set up with booths and one’s avatar can walk between them and make purchases or deals of any kind.

It became clear more than a decade ago with the popularity of games such as Second Life and World of Warcraft that concepts of asset ownership were very different from those we are used to in the physical world. With Second Life in particular, we saw the evolution of the first truly large-scale example of a game as a parallel economy.

Launched in 2003, Second Life allows players to buy land, build homes, create artwork and other goods, which are paid for using the in-game currency, Linden Dollars. While you are participating in the game, you “own” these assets, but this ownership does not work the same way as ownership in the physical world: the game manufacturers can revoke your ownership of your currency, and while you own the rights to any assets you create and Linden Labs will issue takedown notices if required, this does not pre-emptively prevent other citizens from copying your products.

Copying material from digital media in order to consume it without payment or to pass it off as one’s own for profit has always been one of the barriers to the recreation of ownership and payment mechanisms in digital worlds. A book can be copied and uploaded to Google Drive. An image or a video can be downloaded and either replicated wholesale or used to create deepfakes.

As Toby Tremayne, co-founder of ‘White Mirror’ technology startup Crucible, says: “You put something out there and it can be copied. No matter what system you use, eventually someone will write a piece of code that talks straight to your video card and rips everything off the screen.

There’s no way to completely prevent that. However, in the virtual world, if you can secure who you are, then you can actually prove ownership of certain things by using things like public and private keys

“At the moment I can’t buy the digital equivalent of a signed baseball, for example, or a signed football jersey or a book or something like that. I don’t have the ability to make my digital items that unique — and it is that property of being unique that makes something valuable.”

The evolution of Bitcoin and other cryptocurrencies has reframed our understanding of purely digital assets that have no corresponding presence in the physical world.

Just as Bitcoin solves the double-spend problem (how do I know that the payment I have just been sent has not also been sent to someone else?), we need a robust system for proving irrefutably that the asset I have just purchased is the original artwork I was promised, rather than one of several million copies, or that the sword or tank that was used on a particular Twitch stream is the original digital representation and not a copy?

Tremayne uses the example of Esports: “There’s a particular Esports game where they can play using different avatars. And this guy was really keen to get hold of the digital copy of the avatar that this one Esports champion wore when he won his 10th equivalent of the SuperBowl. It was really important to him.”

Why is it so important to hold the original, rather than just a copy?

Apart from the sentimental — or excitement — factor, it is scarcity that adds value. Just as Stradivarius violins or Picasso paintings reach astronomical prices not only because of their “quality” but also their uniqueness, and one of the factors determining currency exchange rates is the number of units of that currency in circulation, something becomes worthless if the market is flooded. We thus see that it is important to be able to identify objects in the digital world in a way that makes them unique — and even better, recognized as unique even outside the confines of the game itself.

This idea that a digital artefact can be as unique as an item in the physical world and not simply able to be copied is something that can be difficult to comprehend, as is the idea that a digital asset within a game, for example, can be owned whether or not you are engaged in the game at a particular moment in time, or that a computer-generated artwork is owned by you, even if the particular laptop or phone on which you originally viewed or downloaded it is no longer yours.

This ability to assign an identity to a specific digital object, regardless of the context in which it is viewed or used, is entirely dependent on the idea of decentralization. Returning to the example of Second Life, while residents can create assets and sell them to others, and even list them for sale on external marketplaces, this is a different type of ownership from, say, buying a T-shirt in a bricks-and-mortar store, and thus being able to wear it anywhere you like.

Owning an asset in Second Life is more like going to a bowling alley and owning a particular pair of bowling shoes, which are reserved for your use while you are there. You may be able to sell them to another customer under particular terms and conditions laid down by the bowling alley, so that they, instead of you, would have the right to wear them inside the bowling alley.

However, if you try to remove them from the premises, customise them in a way that has not been agreed or use them as collateral to raise money, the bowling alley retains the right to destroy or confiscate them. And if the bowling alley ceases to exist or if its records are destroyed or it is taken over by a company that does not operate the same kind of agreement when it comes to bowling shoes, you risk losing access to your shoes. You may be eligible for some kind of compensation in these circumstances, but the ownership of what you perceived as ‘yours’ has been revoked.

This is clearly a suboptimal type of ‘ownership’ which would not satisfy most people in the physical domain, and suggests that we need to establish a process that more closely mirrors the real world, and even improves on it.

For all the hype around blockchains and other decentralized data structures, this is genuinely a case where their underlying architecture can facilitate entirely new possibilities.

Under the existing system, a game developer can record on their database that you “own” a particular item, in the same way as you “own” the fictitious bowling shoes, but the company can hedge their bets by including in their small print multiple circumstances in which your ownership can be revoked, and your asset destroyed, taken down, confiscated or transferred.

You own your property only as long as the game provider permits this, or as long as they stay in business. With the metaphorical stroke of a pen, the value of your digital objects can be wiped from the single database — or database cluster — in which they reside.

Along with the power of blockchains to shift value across time and space [something that is not unique to such data structures] comes the idea of trustlessness: a shared record of transactions and/or ownership that exists simultaneously in many locations and cannot easily be rewritten — the idea that “you see what I see”, as Richard Gendal Brown describes it.

Ownership of such an asset can be represented by a pair of keys — a unique set of two combinations of letters and numbers, which allows the holder to keep the asset in their wallet.

The public key of the wallet can be inferred from the private key, but it is impossible to infer the private key: only the owner of the asset knows the private key and it must be kept secret at all times.

When an asset is transferred, the underlying computer code of the blockchain or ledger which records its ownership, uses the owner’s private key to sign the transaction, without ever disclosing the private key to anyone else.

What is fungibility?

When a digital artefact is minted (created), it is identified by its unique address on the blockchain that is being used. This means that the asset becomes non-fungible: instead of being ‘an’ artwork or ‘a’ signed football shirt, it becomes ‘the’ artwork or ‘the’ football shirt.

It cannot be copied in a meaningful way or replaced by something else. Fungibility is an interesting concept. In legal or accounting terms, it means that one unit of a commodity is exactly equivalent and interchangeable for another unit of the same commodity, particularly in terms of settling debts.

Hence a barrel of Brent crude oil is considered exactly the same as another barrel of Brent crude, and a gold bar of a particular purity is the same as another of the same grade. People tend to regard fungibility as a binary property — something is either fungible or it is not — but in real life, things are not quite so simple.

Consider physical currencies, for example. Theoretically one £20 note or one £1 coin is exactly like another £20 note or £1 coin, but there may be subtle differences that make a particular instance of a note or a coin more or less valuable, or at least more or less desirable.

For example, some of the rarer 50p coins in the UK are in such great demand among collectors that people will pay several hundred pounds for them. Some shops and businesses in England will (illegally) refuse to take Scottish bank notes, despite the fact that they are legal tender.

Anyone demanding cash as part of a criminal enterprise knows to ask for new, unmarked notes that could be used to identify them. So, while currencies are regarded as fungible, this is more like a sliding scale than an absolute truth.

At the other end of the sliding scale are extremely non-fungible assets such as Stradivarius violins, antiques, houses and signed memorabilia, where one unit is not at all interchangeable for another.

It may seem that a piece of digital art which can be copied multiple times is extremely fungible: one copy of the artwork is identical to another. In fact, you can have as many copies of something as you like, all visually identical, but once they have been tokenized, they become distinguishable artefacts whose provenance can be traced and whose value can be calculated.

Virtual kitties and their cattributes

Take CryptoKitties, for example. In late 2017, an addictive mobile app sprang into being that was an unholy mashup of graphic art, trading cards and cryptocurrency investing. CryptoKitties allows people to trade and breed cartoon cats.

Their appearance is determined by their unique genetic pattern, and there is a strict upper limit on the number of Kitties that can ever be generated. The assets are represented as non-fungible tokens on the Ethereum blockchain. For a few brief months after launch, CryptoKittymania swept the world. By December 2017, a new record was set when a CryptoKitty sold for $100,000 — a record which would be broken five months later when another sold for $140,000.

Obviously any random asset in a random game owned by a random person is not going to be worth $100,000 today or tomorrow, but it is the theoretical possibilities that are interesting. One particular game could, for example, feature tens of thousands of swords or daggers that all look identical.

Tokenizing these assets — thus making them non-fungible — means that if a celebrity gamer uses an asset in a Twitch stream that hundreds of thousands of people have watched, that asset can be sold on the open market and the buyer will have confidence that it was the exact item that they saw on the stream, even though others may look indistinguishable.

Thus it’s possible to envisage a scenario where items that are almost totally fungible in real life — barrels of oil, sacks of wheat, bullets or grenades — become non-fungible, each one capable of being represented by a token.

We can tokenize assets right now, in two-dimensional games and worlds. We don’t need virtual reality in order to create, identify and trade these items. However, the more immersive and realistic these parallel digital worlds become, the more tangible and desirable these objects will become.

There is the world of difference between viewing your virtual house or shop on a 2-D screen and letting your imagination take you into the interior where you can view your painting, sculpture, unique piece of furniture or bespoke car and, via the media of VR headsets and bodysuits and haptic wearables, actually walking into the space, experiencing what it is like to be there and inviting others into your space to experience it too.

Tokenizing your socks

Fully immersive VR is not here yet, but mixed reality (augmented reality or AR) is starting to make inroads into our lives. AR is a non-immersive experience where we can perceive and interact with digital objects in our normal physical surroundings. Just as fungibility is a sliding scale rather than a binary property, there are graduations of augmented reality.

Pokémon GO was probably the first example of an AR app hitting the mainstream — the ability to see digital objects overlaying the physical landscape via a phone camera — but it is wrong to believe that this is all that AR has to offer.

Microsoft’s Hololens and companies like the much-hyped Magic Leap prefer to talk about mixed reality, rather than augmented reality. Their technologies allow a wider vision field than the limited view offered by a mobile phone camera and screen, and more accurate positioning of digital elements in relation to their surroundings. T

he 2016 short video Hyper-Reality by Keiichi Matsuda (http://hyper-reality.co/) suggests a near future where drab urban surroundings are overlaid with bright, cartoonish colours and where social media and a dizzying array of advertisements and special offers dance in front of our eyes, competing for our attention.

It is easy to see how digital assets that can be viewed in our own surroundings would be prime targets for tokenization. Take digital art, for example. The ImpactAR app works with acclaimed artists to allow you to experience the pleasure of seeing an exclusive mixed-reality artwork in your own home — even fleetingly.

Impact’s user interface may be annoyingly janky at times, and your view is limited to your phone screen, but it gives a hint of what may be possible in the very near future, when you will be able to buy a piece of AR art for your home in the knowledge that it is the original copy, and you and visitors to your home will be able to view it at the same time, occupying exactly the same location in your apartment.

It takes only a small amount of imagination to see further applications for this: AR Cut & Paste allows anyone to capture objects from their immediate surroundings and move them somewhere else.

Want to see what your armchair would look like on the other side of the room but can’t be bothered to move it? Or take your favourite painting with you on a countryside walk so you can sit and stare at it for inspiration? This is just scratching the surface of what is possible.

Theoretically, an app like AR Cut & Paste allows you to capture one of the items on your desk, tokenize it and sell it to someone else so they can have its original digital representation in their home. This may not seem a particularly compelling idea, but you can be sure that if Elon Musk tokenized the things he happened to have lying around on his desk and offered the AR originals on the open market, there would be plenty of takers.

This blurring of boundaries between the physical and virtual world is a fascinating proposition. If we imagine NFTs as a digital representation of an asset that allows it to have a presence outside the namespace of a game — or potentially even to move assets from one game or platform to another, using NFTs to bridge the gap between the digital and physical worlds, in effect, we are allowing an object and its concomitant market value to exist simultaneously in both worlds.

Gregor Borosa, co-founder of Boson Protocol, a decentralized autonomous commerce network, explains why connecting on-chain value to off-chain products changes the way we view the uniqueness of a particular product: “In the physical world, one pair of socks is like another pair of socks and a one bottle of water is like another bottle of water.

Uniqueness is really much more strictly enforced in the blockchain sense that in the physical world.”

Boson Protocol allows buyers and sellers of physical assets to track and finalise the delivery, paid for with a digital currency, by way of a smart voucher token, which is itself an NFT. Borosa points out that it is data trails like these that can help determine the provenance and value of an item in the physical domain in a way that was simply not possible before. Metadata is crucial here.

“We produce so much data in the physical world, and we waste so much of it,” he says. “Some of it could be really valuable. If I buy a car, I want to know what has happened to it. I mean, that could really determine its price.”

Borosa is fascinated by the potentially porous nature of this boundary between the physical and virtual worlds, where real-world items can be digitized and gamified, and digital assets reified.

“Imagine, for example, a T-shirt which you wear in a game and then wear exactly the same T-shirt in real life. Or a pair of socks that exists simultaneously in the Metaverse and in the real world.”

Borosa alludes to the paradox of the T-shirt that exists in both the digital and virtual world in his paper Blockchain Games, an Alternative World, in which he highlights the idea of unrestricted property transfers as being just one of many novel features of this convergence of technologies: https://vevarica.com/pub/Blockchain_games-an_alternative_world.pdf

Some creatives are already experimenting in this space. Wicked Sunday Club (https://wickedsunday.club/) is a collaboration between Twisted Vacancy and Metafactory that enables you to buy a shirt that has a corresponding digital wearable — “digi-physical goods”, as they describe them.

The possibilities are endless. The Martin acoustic guitar used by Kurt Cobain in Nirvana’s iconic MTV Unplugged appearance recently sold for $6 million.

If you own this, and you have a presence in a virtual world, you may wish to walk around with its digital doppelganger, safe in the knowledge that it cannot be copied in any meaningful sense or even stolen from you or damaged, as may be possible in real life.

Why is decentralization important?

Tokenization, of course, and the ability to incorporate NFTs into games or other virtual worlds or digital platforms is entirely dependent on whether the organization providing the platform is prepared to entertain the idea of cross-chain assets that are independently bought and sold.

Even without tokenized assets, governance and control of virtual worlds can already be a source of angst and frustration for participants. There are many emotional stories published about disgruntled players who were left empty-handed when a company changed direction, abandoned the game, or updated it with breaking changes — this, after all, formed the primary plotline of Ready Player One.

Games manufacturers are the creators of these worlds, and while many embrace the idea of user-generated content, they are usually keen to retain control and ownership.

Second Life residents, for example, own the copyright of their in-game creations, but Linden Labs, the owners, retain ultimate control and may issue take-down notices for perceived infringements or inappropriate content, and can even confiscate a player’s property and in-game currency, Linden dollars.

Registering ownership of such assets on a decentralised data structure such as the Ethereum blockchain, shifts the balance of power towards the players and away from the manufacturers. Note, however, that this alone is not a panacea: while CryptoKitties are registered on Ethereum, the game’s maker, DapperLabs, retains the copyright of the artwork.

At first glance, this would seem to be a negative for games developers, but some games have sprung up specifically to embrace this idea, including The Sandbox, Decentraland and Blockade Games’ Neon District, to name a few.

Holly Atkinson explains: “What is new, and the thing that is really enabled by non-fungible tokens, is true ownership of the asset. So you can prove that you own assets in an entirely new way that you couldn’t before. And that’s really empowering, not just to gamers, but to game developers, designers and other groups.

“So in a game like The Sandbox, you’d have to consider not only gamers, but also crypto collectors who are interested in the inherent value that these tokenized assets now carry. You can really generate more market value out of these assets than you ever could before, because there’s an entirely new revenue model.”

These revenue models can expand further and further into uncharted territory: for example, Niftex (https://niftex.com) allows investors to buy fractions of an NFT, whether an artwork, a game asset or even a personal brand. The first CryptoKitty fractional sale has already taken place on Niftex, and crypto visionary Marguerite deCourcelle (CEO of Blockade Games) explains here why she chose to launch a fractional sale of an NFT which represents her well known Coin Artist personal brand: https://medium.com/@coin_artist_17801/why-i-turned-myself-into-an-nft-6fe08cb7aca8

(The idea of tokenizing one’s self is not new: Alex Masmej launched his $ALEX tokens earlier this year, describing them as “a blend between a small Income Sharing Agreement and a human IPO”, but the idea of selling one’s identity into a syndicate via a fractionalized NFT sale is indeed a revolutionary one).

Many developers and cryptoeconomists share a vision where your digital assets are portable, and able to move with you from one game to another, or one digital reality to another.

But before this can happen, not only does there need to be interoperablility, but also a conversation about how far game manufacturers will cede creative control, not only from an aesthetic point of view but from a content and safety point of view.

As Toby Tremayne says, “The first thing most game developers think of it is losing creative control. You know, if I can bring whatever I want into your game, then I can start bringing a tank into Animal Crossing.”

Games developers need to be on board with the general principles underlying independently tokenized assets, and they also need tools and SDKs that will make it easier to integrate such assets into their platforms.

“What we need is the ability for game developers to tie in easily to these kinds of economies,” says Toby Tremayne. “They shouldn’t have to suddenly become polymath experts in all kinds of Web3 technologies that are complicated for everybody. They need to be able to hook into these marketplaces and still be secure that they still have a certain level of control.”

So far, we have discussed in depth how individuals can own and transfer assets in virtual space, but there is one type of ownership that we have not yet touched on: our own identity. With deepfakes and synthetic humans already disrupting our notions of what it is to be human in a 2D virtual world, the potential for fraud, identity theft and danger in the Metaverse is a growing threat.

Proof of humanity

Toby Tremayne explains how Crucible is developing a portable, self-sovereign digital identity that will allow players to identify themselves as the same person in multiple different games and environments, a Proof of Humanity, if you like.

Why is this important? It’s not just about a kid in a game losing their reputation because someone else is using their avatar, devastating as that may be for the kid in question. Imagine your hard-earned professional reputation at stake if a malicious entity unleashes a digital doppelganger, who is hanging out in virtual reality networking on your behalf.

As more and more business deals transition from a physical handshake and a paper document signed with pen and ink, it is more important than ever to be able to know that the image on the screen or the avatar moving around in your near-field vision is controlled by the person whom it claims to represent, and that the words it is speaking emanate from the brainwaves of the human whom you think you are talking to.

Identities can be pseudonymous, too, of course — an important distinction, as sometimes we need to prove certain things about ourselves without actually giving away our identity. No one wants to doxx themselves just to prove that they are over 18, or that they have the legal power to sign a particular document.

The idea of self-sovereign identity, where the individual holds their own data and decides what particular facts about them are released to verify their identity to a particular person in a particular situation, is not new, but it is even more crucial to get it right in realities where we are represented by avatars or even by our presence in plain old 2D video.

Tremayne explains how it works: “I can get to this point where I’ve got a secure connection that’s provably mine and provably connected to your game. You can communicate to me through that connection, but you don’t have to know anything about me.

There’s no risk of my data being breached or hacked or lost. I don’t have to remember a password and I can prove that I’m who I am, which means when I buy an avatar or a skin or even a downloadable content, I can now have my system sign that and say this is owned by me.

“I get the protection of being anonymous as much as I want online without someone stealing all my data and selling it to other people. However, if I’m an abuser or a predator or a hacker or just someone who shouldn’t be there, now consequences can be applied and I can be removed from the environment.

Of course, there should always be a place that’s fully anonymous and where people are free to do things. But it should be up to you whether you go there or not.”

Challenges for those who would build these virtual worlds include reconciling ideas of privacy, identity, and ownership that can vary widely from jurisdiction to jurisdiction and agreeing on governance structures for resolving disputes.

Given that the Metaverse is not ruled by the same national boundaries as the physical realm, a universally agreed Proof of Humanity, together with decentralized ownership structures to show that you own the specific asset you are trying to sell, seems to be a sensible way to proceed.

The remaining 80 percent of this century and the years beyond will present further challenges to our ideas of what it means to be human when much of our existence and interaction takes place in cyberspace.

Sources:

https://vevarica.com/pub/Blockchain_games-an_alternative_world.pdf

https://uk.reuters.com/article/uk-southkorea-virtualreality-reunion/south-korean-mother-given-tearful-vr-reunion-with-deceased-daughter-idUKKBN2081DC

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