Web3 – the Heartbeat of the Open Metaverse

Abstract

The term “Metaverse” itself is derived from the fusion of “meta” (signifying “beyond”) and “verse” (an abbreviation of “universe”), suggesting a realm transcending physical reality. It foreshadows a networked constellation of virtual worlds wherein individuals can engage in various activities, including work, recreation, and social interactions. Web3, in conjunction with AI, will be integrated into Metaverses, where people can interact, learn, exchange, and have new immersive experiences. A profoundly transformational aspect of Web3 Metaverses will be the creation of community-owned economies, known as decentralised autonomous organisations (DAOs). With blockchain and smart contracts, community rules can be encoded, and digital assets allow members to exchange value within a token economy. The chapter describes a future world of greater decentralisation, a new data economy, and a world where the open Metaverse, powered by Web3, will provide social utility across multiple sectors.

1. Introduction

While the Metaverse has been the subject of much discussion, there is not yet a universally accepted definition. A recent definition from the ITU Focus Group on Metaverse, which produced a Technical Report [1] that reviewed Metaverse definitions from academia, business initiatives, and international organisational collaborations, aiming to develop a working definition. The term “Metaverse” itself is a combination of “meta” (signifying “beyond”) and “verse” (an abbreviation of “universe”), suggesting a realm transcending physical reality. It foreshadows a networked constellation of virtual worlds where people can engage in multiple activities, including work, recreation, and social interaction. A future where individuals may concurrently visit multiple distinct virtual worlds. The analysis emphasises the convergence of technologies, such as artificial intelligence (AI), Web3, blockchain, and digital twins, together with immersive modalities, including virtual (VR), mixed (MR), and augmented reality (AR). Thus, the Metaverse is a digital ecosystem comprising interconnected virtual worlds that provide new digital experiences, facilitate multiple transactions, streamline human-computer interactions, and foster social connectivity. This chapter will describe how the open Metaverse, powered by Web3, will provide social utility across various sectors.

2. The transformative potential of Web3 and AI integration in the metaverse

Web3 offers a transformative iteration of the Internet from “the internet of information” to “the internet of value” [2]. Central to Web3 is the foundational framework of blockchain, which has the capabilities to facilitate the seamless sharing and exchange of information and value through blockchain-based tokenisation mechanisms. The ethos of Web 3.0 incorporates principles of decentralisation, transparency, and enhanced user utility. Outlier Ventures has articulated a modular Web3 toolbox comprising decentralised finance (DeFi), non-fungible tokens (NFTs), decentralised governance mechanisms, cloud services, and self-sovereign identity frameworks [3]. These elements are summarised below.

2.1 Decentralised finance (DeFi)

Decentralised Finance (DeFi) represents a paradigm shift in financial intermediation, facilitating direct peer-to-peer interactions without traditional intermediaries and physical infrastructure. DeFi transcends geographical barriers, enabling widespread access to financial markets via mobile devices. DeFi is underpinned by the programmability inherent in blockchain technology, fostering the proliferation of decentralised financial instruments. These encompass borrowing and lending protocols, options contracts, decentralised exchanges, and automated market makers, which collectively augment market efficiency, transparency, and inclusivity [3].

2.2 Non-fungible tokens (NFTs)

Non-Fungible Tokens (NFTs) offer the digitisation of tangible assets, with a wide array of digital representations ranging from artworks and music to in-game items and cinematic content. NFTs confer digital assets with inherent scarcity, offering novel avenues for asset monetisation and ownership verification. NFTs have been used for collectables, virtual real estate, and gaming, catalysing the emergence of open Metaverse ecosystems. Specialised protocols such as the Boson Protocol have extended NFT functionality to physical assets, facilitating seamless redemption and trade within decentralised Metaverse environments, thereby bridging the divide between virtual and physical realms [3].

2.3 Decentralised autonomous Organisations (DAOs)

DAOs represent a departure from conventional governance structures, empowering communities to codify and automate collective decision-making processes through smart contracts. DAOs foster a distributed governance model where communities delineate and hard code mission statements, values, and operational protocols. This democratic framework facilitates community engagement, incentivisation, and collaboration, transcending geographical boundaries to engender inclusive and participatory governance frameworks. Despite their transformative potential, DAOs also pose inherent challenges and risks, necessitating robust governance frameworks and technological safeguards to mitigate against potential vulnerabilities [3].

2.4 Decentralised cloud

Decentralised cloud computing is a distributed network architecture where user data is stored across multiple providers without centralised control. In contrast to conventional cloud services, decentralised cloud platforms prioritise user sovereignty and data privacy, ensuring that only the user retains access to their stored data. This empowers individuals to monetise surplus computing resources by renting out a storage or computational capacity within the decentralised cloud network, thereby fostering a more equitable and decentralised cloud computing ecosystem [4].

2.5 Self-sovereign identity

Self-sovereign identity frameworks are a foundational tenet of Web3, enabling user sovereignty and self-custody of personal data. Innovations in self-sovereign identity and verifiable claims afford individuals control over their digital identities, enabling identity verification and transactional engagement without divulging sensitive underlying data. These frameworks engender trust, security, and privacy in digital interactions, facilitating seamless identity management and authentication across diverse Web3 platforms and applications [3].

The convergence of Web3 and AI will catalyse profound changes in the emergent landscape of Metaverses. An example of Web3’s transformative potential lies in the potential of community-owned economies, a paradigm shift enabled by decentralised autonomous organisations (DAOs) [5]. Empowered by Web3, communities can now come together and establish decentralised structures or DAOs which govern community affairs, codify regulatory frameworks, and facilitate a token-based economic ecosystem. This concept reimagines the democratisation of economic agency and the decentralisation of power structures.

3. Metaverse fundamentals

A fierce debate continues about the merits of an open (Web 3.0) or closed (Meta) Metaverse. An open Metaverse is decentralised and uses blockchain to enable the exchange of value peer-to-peer. This is combined with gaming augmented and virtual reality (AR/VR) to enable users to participate in an immersive meta-economy [3]. Blockchain technologies, including virtual assets and NFTs, enable the transfer of digital assets across virtual borders. Increasingly generative AI will be incorporated into Metaverse experiences. The Metaverse is the next frontier for online interaction.

3.1 Metaverse stakeholders

The development of the Metaverse involves diverse stakeholders, including BigTech companies, the gaming industry, government and industry sectors, and Web 3.0 communities, each contributing to its creation through various initiatives. Big tech firms such as Meta and Microsoft are investing substantial resources in Metaverse development, with Meta alone committing $10 billion to VR-related hardware and software acquisitions [6].

The video gaming industry has long used virtual and augmented reality and has a huge user base, many of whom are young and understand the value of digital goods [7]. Thus, the gaming industry, valued at USD 195.65 billion in 2021, is poised to drive Metaverse adoption through GameFi integration, offering players opportunities to spend, earn, and exchange digital assets within games [8]. This industry’s expansion is facilitated by technological advancements and improved infrastructure, ensuring seamless digital asset storage and distribution for gamers [9]. Governments worldwide are also exploring Metaverse applications, with initiatives ranging from Neom’s planned virtual city in Saudi Arabia to Seoul’s municipal Metaverse and Singapore’s utilisation of advanced gaming systems for urban planning. Additionally, Web 3.0 companies like Decentraland and Dapper Labs aim to foster Metaverse interoperability through initiatives like The Open Metaverse Alliance, emphasising decentralised governance and the integration of technologies such as DeFi and NFTs to enable asset exchange within interconnected virtual worlds [10]. These efforts collectively underscore the multifaceted nature of Metaverse development and its potential implications across various sectors.

3.2 Metaverse assets

There are three types of assets in the Metaverse. These are: 1. Physical Assets - space, objects, avatars, 2. Economic assets - currency, financial instruments, marketplaces, and 3. Content assets - media and data assets [3].

3.2.1 Physical assets

In a Metaverse, users can acquire space and various objects, such as in-game assets. They can also create 3D digital identities or Avatars as a virtual representation of themselves in games and Metaverses. Users can create Avatars and, enter a virtual world and can communicate with each other and other’s Avatars from anywhere in the world [11].

3.2.2 Economic assets

MetaFi refers to the elements that enable peer-to-peer financial interplay within a Metaverse. It uses the key blockchain tools of NFTs, DAOs, and digital assets, as well as two of DeFi’s main characteristics: unstoppability and composability. The combination of mutualisation of risk, gamification of finance, increased availability of financial tools, and a functional DAO are enablers [11]. MetaFi is expected to incentivise developers globally to actively participate in the new ecosystem [12].

MetaFi will be driven by four main factors. (i) Decentralised NFT platforms enable content creators to negotiate the conditions of creative exchange with users. (ii) These NFT platforms can provide recurrent income for content creators. (iii) MetaFi will open the doors to collect digital asset value and flow in open free marketplaces. (iv) Play-to-earn games and monetisation of data will attract users and complement and boost Metaverse’s functionality [9].

Using the example of sports, clubs provide fan tokens which confer special benefits and privileges to fans. MetaFi can simplify the process of creating, purchasing, and trading fan tokens. In video games, there is often a feature of playing and earning, where players earn tokens for their participation, which can create an in-game economy, in which capital and labor are linked to produce value [13].

3.2.3 Content assets - media and data assets

Many millions of content developers, using self-sovereign identity, will be able to control how their content is used and monetise their data [3]. Existing blockchain NFT markets like Open Sea, Magic Eden, Rarible, and LooksRare enable the exchange of non-fungible goods such as art, music, gaming collectables, avatar skins and virtual clothing. In the future, MetaFi markets will list every single asset type from multiple chains, allowing collectors to access all NFTs on a single platform and boosting the efficiency of digital asset exchange.

3.2.4 Protocols

The Metaverse offers developers new horizons. Physical assets, such as avatars, serve as identities within the Metaverse, offering users immersive experiences across diverse virtual spaces. Avatars, often generated en masse through Profile Picture Projects (PFPs), afford users unique interactions, including communication with other players globally. Economic assets, categorised under MetaFi, facilitate financial transactions within the Metaverse, leveraging Blockchain technology to enable the exchange of non-fungible and fungible tokens. MetaFi platforms, characterised by their composability and unstoppable nature, empower developers to create decentralised finance (DeFi) applications and innovative financial instruments. Moreover, the convergence of DeFi and NFTs in the Metaverse fosters novel opportunities for community-based engagement and value creation. As the Metaverse continues to evolve, the interoperability of virtual worlds and the facilitation of decentralised commerce remain critical areas for further exploration and consensus-building.

3.3 Governance in the metaverse

There is no doubt that Metaverse economies will demand a rethinking of governance. Web3 makes it possible to create leaderless, decentralised organisations. Automation and smart contracts will require a deep analysis of each network, its objectives, decision rights, incentives, and accountabilities. Web 3 Metaverse decentralisation facilitates the shift from centralised human governance to decentralised algorithm governance. DAO governance is an area which requires further experimentation and research, as there can be information asymmetries and a lack of transparency about participant ambitions, motivations, values, and priorities.

As there are risks with digital assets generally, these will be replicated in the Metaverse. For example, volatility, smart contract vulnerability, market manipulation, money laundering, terrorist financing and consumer protection. When smart contracts fail or are hacked in a decentralised economy, there is no recourse to a central authority. As with digital assets, the jurisdictional boundaries of the Metaverse need to be determined as they can cross multiple physical borders.

Many Metaverse users will freely share data across multiple devices without understanding that their data may be transferred or monetised. This is an increased risk in an immersive environment with sensitive data, like long-term brain wave data. This poses the risk of “biometric psychography”, which is the gathering and use of biological data to reveal intimate details about a user’s likes, dislikes, preferences and interests [14]. In immersive worlds, algorithms record users’ subconscious emotional reactions to specific situations through features such as pupil dilation or change in facial expression.

3.3.1 Digital identity and representation

The Metaverse’s jurisdictional delineation, like physical borders, raises questions regarding regulatory oversight and accountability mechanisms. Ethical concerns regarding data privacy and identity authentication underscore the need for standardised decentralised identity systems and robust data protection protocols. Digital Rights Management (DRM) technologies also assume significance in safeguarding data integrity and intellectual property rights within the Metaverse [15]. Ultimately, digital education initiatives and governance frameworks are essential for mitigating risks and fostering responsible practices within the Metaverse ecosystem.

4. Web3 and metaverse use cases

An open Web3 Metaverse embodies a decentralised experience using blockchain to create a virtual experience with a meta-economy with its own currencies that can be exchanged peer-to-peer. The open Metaverse will impact many sectors, which are demonstrated in the following industry cases which exemplify the power of the Web3 Metaverse.

4.1 Gaming

Web3 Gaming encompasses not only playing games but also the growth of communities, social integration, and the facilitation of meaningful connections among people. Antler estimates the addressable market for Web3 Gaming to be valued at approximately $200 billion, indicative of its burgeoning significance within the digital ecosystem. The total transaction volume for blockchain games surged to $5.41 billion in 2022, with a projected compound annual growth rate (CAGR) of 68.9%. This exponential growth is further evidenced by a 2000% increase in Web3 gaming activity from 2021 to 2022 [16].

Play-to-earn (P2E) games emerged during the pandemic but encountered criticism due to inherent challenges such as unsustainable tokenomics, volatile inflation and deflation dynamics of in-game tokens, and a skewed emphasis on income generation at the expense of gameplay quality [9]. In response to these challenges, the Play-and-Earn (PAE) model has emerged as an alternative, marrying the financial incentives of P2E gaming with immersive gameplay experiences. Emphasising sustainable tokenomics and long-term viability, PAE games prioritise enjoyable gameplay, fostering a more inclusive gaming environment. Notably, PAE games are increasingly adopting free-to-play models to broaden their audience appeal, with notable titles such as Illuvium, Guild of Guardians, Sidus Heroes, Shrapnel, and Big Time exemplifying this trend, which craft exceptional games that seamlessly integrate NFTs and enhance user value without necessitating explicit blockchain knowledge.

Web3 technologies also present many opportunities for Esports, including integrating NFTs to facilitate cross-platform asset utilisation, tokenised rewards distributed based on players’ performance, and establishing decentralised autonomous organisations to democratise governance structures. Fan tokens offer enthusiasts a stake in their favourite teams, enabling active participation in decision-making processes and exclusive engagement opportunities. Additionally, tokenised crowdfunding mechanisms empower teams to raise capital by offering ownership or revenue-sharing rights to investors and fans, thereby aligning incentives and fostering community engagement.

Web3 gaming enhances player agency, equitable participation, and new economic paradigms. As the Web3 gaming ecosystem evolves, stakeholders will face inherent challenges such as tokenomics sustainability, regulatory compliance, and user adoption to unlock its full potential. Concerted efforts to address barriers to adoption and foster inclusive, transparent, and ethical gaming environments will be paramount in realising the transformative vision of Web3 gaming. The promise of Web3 gaming is to empower players as owners, facilitate tokenised economies, and redefine traditional gaming experiences.

4.2 Healthcare

Metaverse platforms tailored for healthcare purposes are attracting significant attention because of their potential to enhance healthcare practices. Immersive experiences derived from real surgical procedures are being recreated, with surgeons receiving real-time guidance through integration with surgical navigation systems and fusion of data from multiple imaging sources. Avatars are employed to facilitate realistic consultations, personalised care, and treatment, leveraging data interconnectivity and digital twin technology. Gamification strategies are being employed to foster connectivity between healthcare providers and patients, particularly in wellness and fitness domains, where augmented reality enhances workout experiences with guidance from virtual instructors. The monetisation of health data presents new economic opportunities, and education stands to become immersive, rewarding and precision-targeted through data analytics. The culmination of these advancements is envisioned in the creation of a comprehensive meta health ecosystem within the Metaverse, representing a significant leap forward in healthcare innovation and delivery [17].

Collaborative Work in the Metaverse: In the Metaverse, health professionals can seamlessly collaborate using 3D avatars alongside digital tools such as whiteboards and workstations, facilitating face-to-face interactions without the need for complex conferencing equipment. Leveraging the expansive capabilities of the Metaverse, virtually any object or environment can be three-dimensionally modelled, with real-world specifications replicated through digital twin technology. This enables the testing of machinery, systems, and procedures through digital twins, affording the opportunity to detect potential failures and refine processes before implementation in physical settings. The Metaverse fosters collaboration and knowledge exchange, exemplified by platforms which incorporate Metaverse interfaces to facilitate collaborative learning activities. Learners are ranked based on their engagement and performance, enabling the formation of groups with similar proficiency levels. Incentivising intra-community collaboration through token rewards further enhances the collaborative learning experience.

Education: Innovations in AR and VR technologies will transform medical education and training, enhancing learning processes and procedural proficiency. VR enables immersive journeys within the human body, providing learners with panoramic views of anatomical structures or replicating real-world medical procedures. AR supplements hands-on learning experiences, allowing students to simulate patient encounters and surgical scenarios, thereby fostering skill acquisition and technique refinement.

Clinical Care: The integration of avatars in clinical consultations introduces a new dimension of personalised care and diagnosis facilitated by data interconnectivity. The Metaverse holds potential for clinical applications, ranging from providing real-time guidance during surgical procedures to enhancing pre- and post-surgical assessments through immersive experiences.

Gamification: The gamification of healthcare in the Metaverse connects patients and healthcare providers, particularly in wellness and fitness domains, where AR enhances exercise regimens with virtual instructors. Concepts such as “move-to-earn” incentivise physical activity, promoting healthier lifestyles through interactive gaming experiences.

The convergence of Blockchain technology and GameFi models in the Metaverse creates new avenues for monetising health data and fostering economic opportunities through concepts such as “learn to earn” and “move to earn.”

4.3 Education in the metaverse

The Metaverse is projected to play a pivotal role in shaping the future of education. Forecasts indicate that the market for Metaverse Education is poised for robust growth, with estimations pegging it at US$56.73 million by 2023 and projecting a compound annual growth rate (CAGR 2023–2030) of 44.98%, culminating in a value of US$763.70 million by 2030. This trajectory reflects the growing recognition of the Metaverse as an instantaneously accessible, cost-effective educational platform, potentially emulating the “Uberization” phenomenon in the transportation industry. The metamorphosis towards a “Bricks and Mortarless” educational narrative becomes increasingly pronounced, reflecting a world where education is ubiquitous and handheld.

The globalisation of education coupled with internet connectivity serves as the linchpin for this borderless education, facilitating real-time collaboration and knowledge exchange among students irrespective of their geographic dispersion. Integral to the realisation of a seamless, borderless Metaverse will be interoperability across disparate jurisdictions and a robust framework of Self-Sovereign Identity. This framework will serve as a gateway to virtual worlds, ensuring the veracity of transactions, the legitimacy of educational platforms, and the validity of credentials conferred upon learners and professionals.

The integration of Web3 “Learn to Earn” games incentivises student engagement through token rewards, aligning incentives with educational objectives. The Metaverse empowers educators to tailor virtual learning environments to individual learner profiles, fostering personalised learning pathways boosted with quests, missions, and social interaction opportunities. This, combined with generative AI in education, with avatar instructors and tutors leveraging advanced algorithms to offer personalised learning experiences tailored to individual learner profiles, will enable highly curated. Real-time assessments, automated grading mechanisms, and curriculum refinement will be facilitated by AI algorithms, creating an educational environment characterised by adaptability, responsiveness, and learner-centricity.

VR and AR technologies offer educators tools to overcome traditional barriers to learning, affording students immersive and realistic experiences. For instance, Curiscope’s Virtuali-Tee, an AR T-shirt, enables students to explore anatomical structures in the human body with unprecedented depth and interactivity [18]. Similarly, VR simulations provide a safe and cost-effective means for students to engage in high-risk scenarios, such as experiments related to radioactivity in virtual environments like Second Life [19]. VR facilitates hands-on training in contexts characterised by prohibitive costs or logistical challenges, exemplified by Boeing’s Aircraft Maintenance Metaverse, where professionals and trainees utilise VR headsets to simulate aircraft maintenance procedures [20].

Traditional modes of virtual learning are also undergoing paradigm shifts, transitioning from passive consumption of recorded lectures to dynamic and interactive experiences. Projects like the VoluProf initiative aim to enhance online lectures by integrating mixed-reality applications featuring lifelike avatars, thereby fostering direct interaction between students and lecturers [21]. Virtual classrooms within the Metaverse afford students immersive interactions with peers and instructors, access to course materials, and engagement in collaborative learning activities [22]. The Metaverse transcends geographical constraints, enabling students to embark on virtual field trips to museums, historical sites, and culturally significant locales, thereby enriching learning experiences and catering to diverse learning needs [23].

The Metaverse stands poised to democratise access to education, ensuring inclusivity and accessibility for individuals constrained by geographical, physical, or socioeconomic barriers, giving rise to an educational landscape that is immersive, globally accessible, gamified, and generative in nature.

4.4 Metaverse tourism

The tourism industry is witnessing a profound transformation-driven demand for experiential tourism, sustainable tourism, and digitalisation, each of which underscores the industry’s need to cater to the evolving needs and desires of modern travellers. Experiential tourism incorporates active engagement, where travellers seek authentic, immersive experiences that foster a deep connection with the destination’s cultural setting [24]. By facilitating meaningful interactions and personalised narratives, experiential tourism offers travellers a profound sense of place and belonging. In response to mounting environmental concerns and societal imperatives, sustainable tourism has also emerged as a cornerstone of responsible travel practices [25] by prioritising environmental conservation, community empowerment, and cultural preservation, sustainable tourism endeavours to minimise negative impacts while maximising the positive contributions of tourism to host destinations.

4.4.1 Metaverse and tourism opportunities

Technological advancements within the Metaverse are democratising access to travel experiences, enabling individuals to virtually explore destinations. The immersive nature of the Metaverse facilitates deeper consumer engagement through personalised, interactive experiences tailored to individual preferences. By enabling travellers to preview destinations, activities, and accommodations within a virtual environment, the Metaverse influences decision-making processes and augments customer satisfaction and loyalty. AR and VR enable virtual tours, historical reconstructions, and experiential simulations, which redefine the boundaries of spatial exploration and cultural immersion within the tourism domain. The integration of Metaverse technologies streamlines various operational aspects of the tourism industry, from virtual booking systems to AI-driven customer service. By leveraging digital twins and decentralised platforms, tourism operators can optimise resource allocation, enhance scalability, and mitigate operational inefficiencies.

4.4.2 Web 3 as an enabler of metaverse tourism

At the heart of technological innovation lies Web 3.0, an emergent paradigm that integrates decentralised finance, non-fungible tokens, and self-sovereign identity within the fabric of the internet [26]. By empowering travellers with decentralised access to virtual experiences, personalised reviews, and digital assets, Web 3.0 catalyses the evolution of Metaverse tourism towards a more inclusive, equitable, and participatory ecosystem.

Blockchain technology underpins the secure, transparent exchange of value within the Metaverse, facilitating transactions, ownership verification, and digital asset management [citation needed]. Non-fungible tokens (NFTs), as unique digital assets authenticated on a blockchain, imbue virtual experiences with scarcity, ownership, and value, thereby revolutionising the economics of digital tourism.

Digital twins serve as virtual replicas of physical entities, ranging from cities to landmarks, within the Metaverse. By simulating real-world environments with unparalleled accuracy and fidelity, digital twins enhance the authenticity and immersion of virtual tourism experiences, enabling travellers to explore destinations with unprecedented depth and detail.

Metaverse tourism empowers travellers with an unprecedented agency, enabling them to personalise their experiences, engage with destinations, and co-create value within a decentralised ecosystem]. By fostering community-owned economies, social tokens, and decentralised governance mechanisms, the Web3 Metaverse catalyses a paradigm shift towards participatory tourism models characterised by trust, transparency, and inclusivity.

Shanghai’s ambitious endeavour to integrate Web 3.0 technologies within the tourism sector underscores the city’s commitment to innovation, sustainability, and cultural preservation [27]. By leveraging blockchain, AI, and VR environments, the project aims to deliver immersive, decentralised travel experiences that showcase the city’s rich heritage while embracing the digital future.

Airlines are harnessing the power of the Metaverse to enhance pre-travel experiences, streamline operations, and attract tech-savvy travellers [28]. By offering virtual previews of flights, airports, and destinations, airlines facilitate informed decision-making and foster deeper engagement with their brand, thereby redefining the boundaries of customer experience and loyalty.

Hotels are venturing into the Metaverse to reimagine the hospitality experience, offering virtual tours, immersive events, and digital replicas of physical properties [29]. By leveraging the Metaverse as a platform for brand engagement, community building, and experiential marketing, hotels are transforming how guests interact with their properties, both online and offline.

Metaverse technologies offer novel solutions for training and operations within the tourism and hospitality sector, exemplified by case studies such as KLM’s virtual fleet tours [30]. By leveraging immersive simulations, 360° imagery, and real-time data optimisation, organisations can enhance staff training, streamline operations, and optimise guest experiences, thereby driving operational efficiency and customer satisfaction.

A recent report from ITU [31] drawing upon recent surveys, industry insights, and technical literature, highlights the transformative potential of the Metaverse in reshaping the tourism experience, enhancing consumer engagement, optimising operational efficiency, and fostering sustainable practices. The paper concludes that by harnessing the transformative capabilities of blockchain, virtual reality, and Web 3.0 technologies, Metaverse Tourism promises to revolutionise every aspect of the tourism value chain, from consumer engagement to destination management.

4.5 Web3 and the industrial metaverse

The Industrial Metaverse is poised to grow [32]. In the aviation sector, the industrial Metaverse enables a transformative approach to aircraft design and manufacturing processes through the convergence of virtual and augmented realities. Digital twins, virtual replicas of aircraft created within the Metaverse, allow exhaustive testing and simulation protocols, leading to substantial cost savings and safety risk reduction. Digital twins also play a crucial role in optimising factory operations, serving as dynamic models that simulate manufacturing environments. They enable preemptive identification of inefficiencies and strategic planning of facility development, leading to increased efficiency and reduced resource consumption. Similarly, in electric vehicle manufacturing, the industrial Metaverse accelerates production timelines and enhances operational efficiency by enabling virtual design and refinement of production facilities, thus minimising risks and ensuring project success.

In building operations and construction sectors, the industrial Metaverse enhances operational methodologies through a synergy of VR, AR, and digital twin technologies.

The industrial Metaverse enhances workforce training methodologies within the automotive and manufacturing sectors by offering a sophisticated platform for developing simulation-based training modules. The Metaverse enables remote training, customisable scenarios, continuous learning, safety and risk management, technical skill development, and data-driven insights, ensuring the seamless integration of digital proficiencies within the workforce.

The emergence of the industrial Metaverse represents a paradigm shift towards advanced digital integration, with blockchain technology playing a pivotal role in establishing a decentralised, secure, and transparent framework for operations. Blockchain ensures transactional integrity and fosters trust among participants by facilitating immutable transaction records. Smart contracts, a feature enabled by blockchain, automate processes and enforce agreements without intermediaries, thereby streamlining operations and enhancing efficiency. Furthermore, blockchain facilitates asset management and interoperability, allowing for the seamless transfer of digital assets and information across disparate platforms. Consequently, Web3 and blockchain emerge as a foundational technology within the industrial Metaverse, underpinning its integrity and efficacy within this growing digital ecosystem.

4.6 Payments in the metaverse

The structure of payment systems in the Metaverse depends on whether the model for the Metaverse is centralised or decentralised. The decentralised model of the Metaverse is based on the idea of Web 3.0, which seeks to decentralise the Internet based on blockchain and open protocols [33]. Payments in a decentralised Metaverse could work through blockchain technology. If the native token of these systems has as base protocol a token standard, for example, ERC-20 from Ethereum, then the so-called currency is interoperable, standardised and consistent with the functionality of the native blockchain. Users in decentralised systems have some direct control over the rules of the platform. In some cases, this translates into voting rights directly in the system’s policies.

As the Metaverse expands, the adoption of stablecoins and cryptocurrencies, particularly in blockchain-based applications, emerges as a prominent trend. According to a survey commissioned by PayPal, a significant percentage of Metaverse users express a preference for using cryptocurrencies and stablecoins for purchases and transactions within virtual environments, indicating a growing acceptance of digital currencies in the Metaverse ecosystem [34]. The same survey found Metaverse users preferred to be paid in cryptocurrency (76% of respondents) with fiat currency (69%). NFTs are growing in popularity in the open Metaverse because they provide proof of ownership of products and property bought in the platform.

Cryptocurrencies and stablecoins will allow for seamless, fast and secure transactions on a 24/7 basis globally. Programability of digital assets will enable contingent payments and the tokenisation of real and financial assets. By building interoperability and eliminating barriers between assets in different ecosystems, MetaFi payment platforms could thus serve as an important infrastructure function for a broader virtual economy.

In decentralised Metaverse models aligned with the principles of Web 3.0, blockchain technology serves as the foundation for payment mechanisms. These infrastructural developments not only cater to the payment needs of Metaverse applications but also facilitate seamless, secure, and programmable transactions, paving the way for the tokenisation of real and virtual assets. While end-users may not directly perceive the underlying technical complexities, these payment platforms play a crucial role in promoting interoperability and driving the evolution of a vibrant virtual economy within the expanding Metaverse landscape.

5. Challenges, risks, and open questions

Despite its promise, the Web3 metaverse has many challenges and risks. There will continue to be a dynamic interplay between regulation and technological advancement in the Web3 ecosystem. This section summarises some of the challenges, risks and open questions to be solved.

5.1 Legal and governance challenges

Regulators are working to balance innovation with investor protection, understanding the regulatory impacts of DAOs and the need for adaptive regulatory frameworks, international collaboration, and the economic and societal impacts of Web3 regulations.

In the metaverse, governance by DAOs and algorithms poses unique challenges. These virtual worlds can have jurisdictional boundaries as significant as physical borders, complicating legal and regulatory compliance. Jurisdictional and regulatory requirements remain to be resolved. This includes which jurisdictions need to be considered and which regulatory bodies are involved.

5.2 Financial risks

Participants in the metaverse will face risks familiar to the digital asset space, including market manipulation, volatility, impermanent loss, liquidation, technical issues and price risks.

5.3 Data privacy

Data privacy will be an even larger issue with the collection of biological data and subconscious emotional reactions through indicators like pupil dilation and facial expressions. This raises significant legal and regulatory challenges, including data privacy and intellectual property rights. Establishing clear legal frameworks and regulations is essential for building trust in the Web3 ecosystem.

5.4 Intellectual property protection

The metaverse will generate new forms of intellectual property, such as virtual goods, digital assets, NFTs, and experiences. Ensuring these assets are protected is essential for the ecosystem’s growth.

5.5 Digital identity and authentication

Digital identity is complex and will require identity authentication and verification. Secure and trustworthy identity systems will be essential for user safety and trust.

5.6 Technical issues

Key technical considerations for metaverse platforms include security, scalability, privacy, energy consumption and interoperability.

5.7 Ethical challenges

Digital ethics are not different from conventional ethics, but it is the potential for inadvertent or deliberate automation of unethical conduct at scale that highlights ethical dilemmas for developers, investors, consumers and regulators at the technology, application, and societal levels [35]. Many ethical challenges will arise in the metaverse, including co-creation and co-ownership of digital assets, rights of avatars, potential harm through digital representations, and risks for vulnerable groups, such as children. Establishing guidelines for ethical standards in the metaverse will be needed.

5.8 Education and awareness

Widespread education and awareness are needed to help users understand the benefits, risks, and implications of using Web3 applications.

6. Conclusion

The chapter has described a future world of greater decentralisation, a new data economy, and a world where the open Metaverse, powered by Web3, will provide social utility across multiple sectors. Web3 has created the means to exchange value on a peer to peer basis, while the Metaverse has created the possibility of exchanging value in virtual worlds.

When combined with IoT AI, big data, and data analytics, this creates the foundations for the spatial web.

Distributed Autonomous Organisations (DAOs), with their automated governance, have allowed multi-jurisdictional economies to develop globally. This enables the creation of community-owned economies, which has opened up the world for the peer-to-peer exchange of value using Web 3 and provides opportunities for content creators globally. Gen Z and Gen Alpha will be the users of Web 3.0 and the Metaverse, and they will also be demanding better user experience, that companies take sustainability seriously. They will want a voice in the development of new products and to be remunerated for their contributions.

Interoperable Web3 Metaverses will allow people to interact and exchange value across them. Self-Sovereign Identity will enable people to control access and monetise their data. This will also enable secure cryptographically secured data exchange, making scientific discovery and medical records, for example, far more accessible. Investment knowledge will be decentralised; science will be decentralised. Decentralised developer communities will co-create products instead of companies providing products to customers.

Web3 Metaverse education will provide a means to agilely reskill workers displaced by Artificial Intelligence (AI) and prepare leaders with the tools to thrive in the new digital economies that challenge traditional views of sovereign states, nation-states, and global governance.

The world is only beginning to understand the social utility of the immersive Web3. The Web3 Metaverse will be used for entertainment and commerce, healthcare, research, education, government, and industry. Web3 will power the exchange of all kinds of value in the Metaverse, allowing it to operate a virtual economy within which participants can be rewarded for their efforts and earn in new ways. Web3 holds the promise of a future characterised by accessibility, inclusivity, and value creation for all.