Metaverses – Economy


Note this is an excerpt from my masters dissertation An Inquiry into Designing Metaverses (2021), this is a study into designing and creating multiplayer virtual worlds and connecting those worlds into a wider virtual universe known as a metaverse. hosts a number of these excerpts broken into sections of particular interests. You can find all sections here or feel free to contact me if you would like a copy of the entire original document.


Content of the Metaverse

In this section we will look in more depth at the idea of content within the metaverse, which can be developer or player generated. It represents everything that exists within the structure of the metaverse and, in some cases, parts of the structure itself.



Virtual worlds do not have the same form of limited matter as we experience in reality. An object in a virtual world can be duplicated infinitely, with very little cost. This is in direct contrast to reality. For example, if you want to duplicate a car in reality, think of the cost and expense of that process.

There is, of course, some cost involved in the virtual world; for example, that duplicated car takes up a small amount of memory, which must be stored on a computer somewhere. However, the difference is size. There is no fair comparison between the physical production of a car and the data storage used to describe a virtual car. Equally, there is no fair comparison between the design labour of a real car and the design of a virtual one.

Objects that exist within a virtual world or metaverse are quite independent from our concept of a real object. In many cases, the situation is even more extreme, for example, an object in a virtual world may not be a copy, but a partial copy. That object might share assets or components with many other objects, just as a plane and a car might share the same metal textures. This is a further departure from the idea of a distinct physical object.

Even when that object is entirely made up of unique components not shared with any other object, it still relies on the world’s underlying structure. It cannot exist alone and still be a usable dynamic object with all the interactions it has in the virtual world.



As mentioned earlier, there is a design labour that goes into creating the first instance of a virtual object. Modelling work, texturing, scripting, and audio all take a significant amount of labour. Labour is a quantifiable real-world asset that has a value.

The key question is how does that value relate to the object’s presence within the virtual world? In economics this is a question concerning the exchange between real value and nominal value. There is a tendency in virtual-world design to consider virtual objects as financial resources. An object is made; therefore, it has value and, as such, it should cost something to acquire. However, as discussed in the section on scarcity above, this is not necessarily the most natural approach for a virtual world.

If scarcity is not an issue then nominal value becomes very hard to calculate. If a person spends ten hours creating an object, but that object is reused a near-infinite number of times, then the ten hours of initial work are nearly irrelevant to the object’s use or impact. In this case, it’s impossible to quantify what that object’s real value means to its original creator.

The flip side of this argument is that because every object has near-infinite potential to impact the virtual world, everyone who participates in the virtual world, including the object’s creator, has near-infinite potential to benefit from the impact of that object. The value of the object, therefore, comes from the scope of its existence.

An established idea in economics is that incentives are a key factor in economic success (Smith, 1776). Thus, the question that arises is what is the incentive for a person to create an object within the metaverse? Profit, praise, status, and self-expression are all potential answers.

More practically, this is a question that can only be answered by the culture that exists within the metaverse and by the structure that defines it.


Real-World Economy

There are two key reasons a developer will try and tie their metaverse into real-world economies. In this section we will look at both and conclude with some questions.

Firstly, the developer can earn a profit from the virtual world by converting real-world currency into virtual assets. Those assets could be purely cosmetic, or they could be intrinsic parts of the virtual world’s gameplay. In social virtual worlds this practice is generally accepted and considered a key part of the virtual world’s structure. As mentioned in an earlier chapter, Second Life, allows players to purchase Linden Dollars, which can be used to buy virtual land or assets from other players. Conversely, in competitive multiplayer games this practice is nicknamed pay-to-win and is deeply frowned upon by the gaming community. In 2017, Electronic Arts had to issue a statement claiming their game UFC 3 was not pay-to-win after a public outcry (Ruppert, 2017).

Secondly, the developer might use real-world currency to regulate virtual assets. Charging a real-world currency for a virtual asset potentially gives that asset a nominal value related to the currency. This means the developer of the virtual world is not fully tasked with maintaining their own economy. They can piggyback on the stability of a real economy to manage their own virtual economy. The developer can charge a large amount for a rare virtual item, thus ensuring that the item remains rare even though, technically, it can be infinitely replicated. This does not just apply to developer-made content but also to player-generated content. If the virtual world supports player to player trading of assets, you will very likely see players buying and selling these assets in the real world.

How necessary is this process? A virtual world does not need an internal economy to fit the definition of a virtual world. A developer does, however, need income to support a large service like a metaverse, but only if the structure of that metaverse is designed in such a way that it requires a large developer. In economics this could be referred to as the rent cost. The developer can decide the rent of a virtual world by designing it in a way that reduces or raises the cost of its operation.

Knowing that a virtual world does not need an economy, by definition, and that the cost of maintaining the virtual world could be very low if the structure allowed, it is valid to ask the question: does a metaverse need an economy?

Such a question  may be beyond the scope of this dissertation. From a game-design perspective, it is widely considered that players benefit from being able to trade and work for objects within a virtual world (Ruggles, Wadley, & Gibbs, 2005).

However, it could also be argued that while an economy may be necessary, a financial economy may not. An economy of creativity, where players trade ideas and compete to produce more elaborate or popular spaces within the metaverse, may be quite successful. There is a cultural debate here. Typically, financially successful cultural artefacts are considered more legitimate or mainstream than non-financial ones (Fiske, 1992).


Crypto-technologies and NTFs

When this dissertation was in its early stages, I did not believe there would be a viable way to enforce scarcity-based object ownership in decentralised virtual worlds. Since then, NFTs (Non-Fungible Tokens) have become hugely popular and may offer one path to decentralised virtual ownership.

Crypto technologies are a decentralised form of data storage and transmission. They use the near-unlimited nature of digital space to simulate scarcity. They do this by filling up that space with many copies of the data they wish to reference. This takes a large amount of processing, allowing the data to become scarce based on the physical cost of computing power. This process means that no central authority is needed to regulate the data, yet it is very reliable because so many copies of it can be cross-referenced (Zheng, Xie, Dai, Chen, & Wang, 2018).

There are numerous issues related to crypto technologies and many solutions proposed to those issues, one of the most pertinent being scalability. As more data is stored within the crypto system, that data must be copied and cross-referenced each time it is accessed or modified. The computing power required to maintain the crypto data expands indefinitely (Zheng et al., 2018).

When discussing metaverses it’s easy to suggest that crypto technologies are the solution to scarcity of objects, and it is possible that such a suggestion is correct. Currently, there are a number of virtual worlds offering crypto-based land ownership, including Decentraland and Cryptovoxels, with an estimated market value of millions of US dollars (Howcroft, 2021).

However, it is worth repeating, as discussed earlier, that financial value does not define a metaverse. Enforcement of scarcity is not a metaverse requirement. Crypto technologies offer a solution to something that does not need to be solved, and so an overfocus on these technologies can be misleading when designing a metaverse.


Concept – Living Content

Living content is a concept about how data within a metaverse could be shared and replicated. This is intended to complement the glass-world approach to connecting worlds, although it could be used with any other.

There are many established asset stores, such as the Unity Marketplace. These stores allow people to create and share models, scripts, textures, and sounds between different projects. It could be argued that a group of virtual worlds created in Unity, all using the same set of shared assets from the Unity Marketplace, is a kind of very loose metaverse due to the worlds’ common components. Within a true metaverse there would almost certainly be some analogy of the Unity Marketplace, a system of sharing assets between connected virtual worlds. However, in a metaverse, assets do not need to be static.

A metaverse is a living space and, as such, shared content within it can also be living. In most cases, a virtual object has a number of components: its model, its textures, its scripts, and the data that describes what its state is in the world. That data may be its location or its size. It could also be more specific information, for example, regarding a virtual person, their health or their mood. Most asset stores work by copying the models, the textures, and the scripts into a programme’s structure, then creating data within the programme. In a metaverse there is no need to copy this information. Each virtual world is already connected to the metaverse, so it can access all these things from the network. This means that the data describing a virtual object’s state is also accessible.

This suggests a potential shift in the approach to world design within metaverses. Rather than developing a world out of static objects, worlds could be constructed out of dynamic living objects that change, based on what is happening to them in other worlds. For example, one world could get the live location data of virtual characters from another world and render those characters into its own streets, instantly populating them. A proxy effect of this would be encouraging compatibility of street layouts and object sizes. Having common standards would make integrating live data much easier.

There is also the potential here for collective processing. In this situation, complex calculations could be distributed across many virtual worlds. For example, if there are a hundred virtual worlds, and each generates the data for one simulated citizen living their life, that data can be combined and each of those hundred worlds can benefit from one hundred complexly simulated citizens.

What this potentially does is provide an artistic and economic incentive to make your virtual world a part of a metaverse. The metaverse can provide a structure which allows vast and complex worlds to be created from the combination of many other worlds. An individual with very little skill could use this data to create spaces which they could never have made outside the metaverse. Additionally, access to this data could save developers huge amounts of production time. In this situation, the metaverse would be defined by an economy of abundance rather than an economy of scarcity.


Reasons for a Metaverse

Something that has not been previously discussed in much detail is the purpose of a metaverse. What can a player do in a metaverse? Why would a person interact with a metaverse rather than with another digital platform, like a video game or social media site?

In the last section, it was suggested that the economy of a metaverse was its own content. Freely shared content in the metaverse would allow participants to create things which they would never have been able to create on their own. For example, an individual working alone can build a house, but a community of individuals can build a city. This feedback loop of creation may be the most unique and powerful feature of a metaverse. All content could be freely available to be remixed and reused, including objects, music, scripts, and animations.

There is also a social aspect to a metaverse. Tim Sweeney believes that hanging out with friends may be the single most important feature of a metaverse (Takahashi, 2021). While socialising will be a large part of the metaverse experience, it is competing with both social media and real life, which puts it at a disadvantage due to the added friction of accessing a complex simulated 3D world. Perhaps a stronger community aspect is the exposure a metaverse can offer. An individual can create a small virtual world, which on its own would not afford much appeal; however, within the context of a metaverse and all the features a metaverse can offer, this small virtual world could become a far more popular world.

A metaverse can also leverage the unique aspects of being a digital world; such worlds can simulate complex theories that are outside our normal experience. A metaverse could possess multiple realities. A situation that occurs in the metaverse could be simulated with many possible outcomes, with the player moving between those outcomes. Additionally, a metaverse could implement a form of time travel, where the player could move backwards through past events. Both scenarios could be made possible through structural choices, such as logging data that flows through the metaverse, although the volume of that data could be very large. It is possible that the more a metaverse embraces its abilities in the realm of fantasy, rather than limiting itself to resembleing our reality, the more interesting it could become for players.

This departure from reality also gives a metaverse the potential to act as a bridge between real-world cultures. The TV show Star Trek, originally conceived by Gene Roddenberry, depicts a vast and diverse universe. The Federation within this universe is an organisation of many worlds who have overcome the limits of material need and instead focus their energies on discovery and creation. Star Trek can also be seen as an analogy for our own world, where we explore the interactions and challenges our societies face. A metaverse provides a platform where groups of people can work together to build new worlds, learn about existing worlds, and discover the diverse cultures that create those worlds. Like Star Trek, a metaverse can provide a means to explore ourselves and what we, as a species, hope to become.



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