By Ingo Rübe, founder of KILT Protocol and CEO of BOTLabs GmbH, the initial developer of KILT.
The internet is evolving as rapidly as technology develops, leading to a lot of talk lately about Web3 and the Metaverse. These developments are not just about a better quality of immersive gaming, they also point to a bigger shift in the way we all live and do business. While it may take years for this new era to reach maturity, now is the time to consider how it is developing and what kind of a future we want to be part of creating.
Web3
Web3 has been described as the next generation of the internet — a fairer, decentralized version where big corporations lose their monopolies and their hold on our data. Blockchain technology is a major contribution to this development, due to its ability to facilitate decentralization and enable the transfer of both data and tokens (cryptocurrencies) safely without having to trust in an individual or centralized organization.
While Web3 has been criticized in some quarters as a shift away from the free internet, it could rather be seen as a shift away from our current internet model where users are the product, with their data used and monetized by service providers.
The Metaverse
The Metaverse has many definitions. In its simplest form a Metaverse can be understood as a digital universe running alongside our physical universe. Although often associated with gaming and 3D technologies like virtual reality (VR) and augmented reality (AR), a Metaverse can also be in 2D, like our internet or platforms that offer a way to create a second life in a digital world. These Metaverses have many of the features of our physical world. We can exist, we can interact and communicate with others, we can create objects of value, and we can own and trade things there. Therefore, these digital worlds can become a kind of reality.
Making the Connection
But as the number of Metaverses grow, so do the challenges. How do you connect your individual identity, your “me”, in the physical universe with your identity in the Metaverse? How can you move and take things with you from one Metaverse – platform, game, or service — to another? When a user connects their real-life personality and bank account to their avatar, participates in a game, and buys or wins land or accessories, how do they manage their ownership of these goods? How can digital identity and continuation of ownership extend across Metaverses?
Identity in the Metaverse
Solutions to these challenges can be found using blockchain technology. Identity in the metaverse needs to be linked to the real-life person using it. A game in the Metaverse is more than a game. It also involves in-game purchases, so as a user, you need money, and you need to store your purchases somewhere. As a player you can build a reputation and want to bring that reputation with you to other games and platforms. You may not need to know your opponent’s real name or address, but you do need to be able to identify and trust who you’re talking to, playing against, or paying for a service.
Practically, there’s also a need to provide a way for the people who build the software to earn money. And virtual things in the virtual world connect to the real world. Already, the technology exists for brands in the real world to advertise in the metaverse. Virtual billboards are owned by real people who have part-ownership of this virtual billboard, can vote on what brands get to advertise, and can receive part of the profits from this advertising. This level of complexity requires new solutions.
Blockchain Solutions
This is the point we are at now, with Web3 infrastructure that makes this possible safely. While the current version of the internet runs on advertising, in the Metaverse, work and time are valued. The principles and structures of the real world apply: If I can create something that someone wants to own, I can create a business. Anyone can start producing digital goods and data, and getting paid for it. Work, even on a small scale, is valued and rewarded.
On a larger scale, blockchain technology also provides the ability to create Decentralized Autonomous Organizations (DAOs), online organizations or companies in a virtual world that can connect to the real world. In a DAO, no one person takes responsibility or ownership, but there are rules that need to be followed. Although early DAOs failed with very public consequences — the most famous example lost the equivalent of around US$50 million worth of funding in a hack — with subsequent improvements in the technology, DAOs of the future can be created to be truly decentralized and safe, creating a whole new way of working. Anyone can work anywhere, and be paid in digital tokens that can be easily converted into the local currency.
But how do we avoid the mistakes made in Web2, where a few big corporations often have the monopoly on business and hold the data of many? Although blockchain has the potential for decentralization, it does not inherently give a guarantee of decentralization, as it can also be used to create private systems.
All technology is as good or bad as its users. Although it has often been criticized by mainstream sources as something that is used by criminals to hide their ill-gotten gains, the reality is that changes to a blockchain are generally very transparent, leaving a trail that is easy to follow once the initial address is known.
Equally, while data recorded on the blockchain can be changed, the fact that a change was made is evident. Data can be stored privately or publicly on the blockchain. Data can be distributed and stored in the cloud across several locations using services such as IPFS (the Interplanetary File System) or Filecoin. Data may be simply attested on the blockchain to say it exists or belongs to the specified owner, with only a record of the data or its owner rather than the data itself being recorded. Like everything else in life, the blockchain and its services are not black and white, and the need to do your own research (DYOR) and establish the decentralization of services you use is highly recommended.
Identity in the Metaverse is too important to be left to centralized companies. That’s where protocols like KILT come in.
KILT Protocol
KILT was built to counter monopolies and their poor handling of user data, specifically addressing the issues of digital identity in Web3. Run using on-line, transparent governance by the community of token holders, it’s a decentralized network that uses blockchain.
In the real world, identity is made up of an identifier — for example, your name — that is linked to credentials, such as your passport, driving license, qualifications, skills, etc. All these things together make up who you are.
KILT replicates this in the digital world. Digital identity is built around a decentralized identifier — a unique string of numbers and letters specific to you — and any credentials you choose to add to this identity. Credentials in the physical world can be recreated in digital form and remain with you, not with an external company, until you choose to show them. Nothing is stored on the blockchain except a proof that the credentials are still valid. Using this method means that companies can, for example, do KYC (know your customer) checks without needing to store data, reducing centralized silos that are a honeypot for hackers. Your identity belongs to you, and no external service can deny you access to your credentials.
This is the kind of decentralized identity service that is essential for the Metaverse.
The Way Forward
The changes the Metaverse brings will probably have as big an impact on our lives as the development of the smartphone. While these changes can have many benefits, they also come with the risk of repeating the mistakes of the past, handing control of our data and digital freedom to large corporations. These corporations potentially end up having even more power over us than our government does. Thanks to blockchain technology, we now have the tools to avoid recreating these issues.
Decentralization is essential for the Metaverse and has the ability to return the power to us, the users of the internet. As we move into this new era, it would serve us well to make informed choices, starting now.
Moving Through the Metaverse: The Path of Decentralization was originally published in kilt-protocol on Medium, where people are continuing the conversation by highlighting and responding to this story.
