The Metaverse Glossary: The most important terms explained compactly

7 Sep
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The second renaissance? The metaverse could fundamentally change our society. To understand what's happening, you first need to know and understand the key terminology.

Web 1.0 has been the Internet revolution's first step. Web pages were simple and informative; their majority consisted of boilerplate texts and other static content. No interactivity, comments or videos existed.

Examples: Wikipedia and MySpace still contain many Web 1.0 elements today.

Web 2.0 was developed around 2002. The name does not refer to a specific technical improvement of the Internet. It instead refers to the way the use of the Internet has changed. In the new age, there is much more information exchange and networking between participants.

Examples: Facebook, YouTube (social media in general), and user-generated content.

Web 3.0 is the next iteration. It is based on the core concepts of decentralization, openness and greater utility for the user. With Web 3.0, information and content are more interconnected and ubiquitous. It is accessible through multiple applications and an increasing number of everyday devices.

Examples: Internet of things, virtual worlds, crypto, and blockchain.

Augmented Reality (AR): In augmented reality, the actual environment is enhanced with virtual content (e.g., images, videos, virtual objects) in real-time.

Examples: Pokémon GO, Google Lens, soccer coverages (e.g., offside line).

Virtual Reality (VR): Users enter a fully computer-generated environment in virtual reality. The best way to experience the artificial world is by wearing VR glasses.

Examples: Metaverses and video games like Minecraft.

Mixed Reality (MR): In mixed reality, the real and virtual worlds merge, creating an environment where physical and digital objects interact. The best way to experience MR is with a headset with transparent lenses or a camera. It is a generic term that covers the entire spectrum between physical and virtual reality.

Extended Reality (XR): This term describes any environments or systems blended or generated with an artificial, computer-generated perception. In contrast to mixed reality, this term also includes pure virtual reality.

Immersion/immersive: Immersion related to AR and VR means immersion or submersion into a virtual world by simultaneously suppressing the physical world. The more the user feels they are actually in virtual reality, the better the immersion works. The word originates from the Latin word "immergere", which means "to immerse" or "plunge".

Metaverse: In the broadest sense, the metaverse concept refers to a virtual space where people may interact with each other as avatars thanks to virtual reality technologies. The real metaverse expected in the future shall be interoperable, i.e., virtual goods can be shifted across platforms. It should also be unlimited, with no upper limit concerning the number of concurrent users, and open to everyone. Other features frequently mentioned: Decentralized, three-dimensional, synchronous (consistent and in real-time for everyone) and persistent (permanently running).

Central metaverses are managed and developed by individual companies. The data sovereignty remains with the operator. One example of a central metaverse is Meta's Horizon platform (formerly Facebook).

Decentralized metaverses are based on blockchain. They are hosted on different servers and are usually managed and developed by communities. Blockchain enables digital assets, even digital income, through a token economy. Users don't need to log in and therefore don't need to disclose personal data. Data sovereignty remains with the user. One example of a decentralized metaverse is the Decentraland platform.

Customised Metaverse: The respective knowledge enables the use, customization and development of VR elements, gaming components and other software elements. This allows the creation of personalized metaverses. However, the effort and cost involved remain incredibly high.

Spatial is a VR platform where people can chat as avatars and work together or interact with each other. Spatial first launched as a central metaverse but evolved into a mixed application, integrating decentralized elements such as wallets, NFTs and avatars. In addition, Spatial is one of the few metaverses that can be used from any device (VR headset, desktop and mobile). As a result, it is very inclusive. Its central development and hosting enable quality design, especially compared to decentralized metaverses and sophisticated 3D modeling, which are essential for hosting exhibitions or events.

Decentraland is a decentralized VR platform, which is not accessible via VR headset yet but only via laptop or computer. Decentraland is based on the Ethereum blockchain and named its own cryptocurrency MANA. The platform consists of exactly 90,601 parcels of digital land, which are purchasable and tradable. Wearables and collectibles, which are customizable to your avatar and purchasable as NFTs, are a trademark of Decentraland. In addition, Decentraland hosts numerous events ranging from language courses and art exhibitions to church services and concerts.

Horizon Workrooms is a centralized VR platform Meta (formerly Facebook) developed. You must have the Oculus Quest 2 VR glasses to enter Horizon Workrooms. Users can play in virtual rooms, chat or create new ideas collectively. Meta plans to invest significantly in Horizon World and the metaverse in general.

An avatar is a graphic figure that serves as a visual personification and representation of a user in virtual worlds. The word avatar derives from the Sanskrit word "avatara"; in Hinduism, it represents the descent of a deity into an earthly form.

Oculus Quest is a virtual reality headset developed by Oculus VR, a subsidiary of Meta (formerly Facebook). The hardware is "stand-alone", i.e., you can enter virtual worlds without additional aids such as a laptop or gaming console. The current Oculus Quest 2 model was launched on September 16, 2020.

HTC Vive is a VR headset but does not work as a stand-alone headset. You may enter virtual worlds if you connect the VR headset to a laptop and the Internet. The current HTC Vive Focus 3 model was launched on June 03, 2021. It offers a higher resolution than Oculus and, as a result, a more intense immersive experience.

Gamification: Games, digital or analog, have many tremendously motivational mechanisms. Gamification is all about using these game-specific elements such as experience points, high scores, progress bars, leaderboards, virtual goods or awards. These game mechanisms are embedded in a context unrelated to gaming, thus, striving to increase motivation. The "power of the games" is used for processes not related to gaming per se.
**Play-to-Earn (P2E) **offers players the opportunity to earn money from gameplay. The play-to-earn concept intends to enable participation in the game's design and, thus, to obtain a kind of "codetermination" in addition to monetary profits. This contrasts with other games, where progress is only possible if you make in-game purchases.

NFT is the abbreviation of non-fungible tokens, i.e., tokens that cannot be replicated. NFTs are units of data stored on a blockchain. Thanks to blockchain technology, the owners of NFTs are easily verifiable. NFTs are often used in connection with digital objects (see collectibles and wearables) or functions (access permissions) in the metaverse. For example, you may acquire an art object or parts of it as an NFT, ensuring that you are the sole owner.

Wearables are virtual garments or accessories the avatar can wear in virtual worlds. For example, entering a metaverse may equip your character with jackets, hats, sunglasses, sneakers and other garments. These are initially free, but if you want your avatar to stand out and develop an individual identity, you need unique wearables you can purchase as NFTs.

Collectibles are "collector's items" you may purchase as NFTs. They are digital objects that can also be limited in number to obtain a higher value. The field for such collectibles in the metaverse is vast: It can include art, virtual land or sports accessories.

Airdrop: To send someone free crypto things such as NFTs or tokens.

Cryptocurrency: Cryptocurrencies are a form of digital currency secured via cryptography, most typically through decentralized networks on blockchain technology. That means it's distributed across many computers, thus, preventing any central authority control. Cryptocurrency is often lauded for its decentralization, making it impossible to counterfeit or double-spend transactions and has faster and cheaper money transfers. However, it has so far come with extreme price volatility, high energy consumption and use for criminal activities.

A **blockchain **is a distributed database shared across many computers comprising a computer network. Information is stored and verified on these shared databases cryptographically secured by keeping data in groups known as blocks connected by data chains. This structure chains data together irreversibly in chronological order and decentralized manner. As a result, some see it as a more secure and open option for information storage and exchange.

Minting: Validating information, such as domain ownership, and registering this information onto the blockchain.

Hashing: The process of taking an input of any size and producing a corresponding fingerprint of a fixed length. Hashing allows a set of data to be secured, stored, and recalled using a unique identifier code. This is the backbone of blockchain technology, enabling the verification and secure storage of data and transactions.

Wallet: A software application or hardware device that stores the private keys to blockchain assets and accounts. Unlike a traditional wallet, a blockchain wallet does not actually store the coins or tokens themselves. Instead, they hold the private key that proves ownership of a given digital asset. The best-known wallets are MetaMask and Coinbase Wallet.

Crypto Wallet: A software or system that enables the storage of your public and private keys. These keys allow you to send, receive and monitor your assets on the blockchain.

Smart Contracts: Self-executing code deployed on a blockchain. Smart contracts allow transactions without an intermediary figure and without the parties involved having to trust one another.

Private Key: An alphanumeric passcode required to withdraw assets from a blockchain wallet and authorize digital transactions. Because these private keys are long and difficult to memorize, wallets will generally associate them with a seed or recovery phrase that is easier to remember.

Public Key: This is an alphanumeric code pointing to your wallet address that serves as the address for a blockchain wallet, similar to a bank account number. Other users can send digital assets to your wallet via your public key, but only you can access your wallet's contents using the corresponding private key.

Seed Phrase (or Recovery Phrase): A string of words used as a master password to access a crypto wallet. Because a single wallet can contain multiple accounts with their own private keys, a seed phrase makes it easy to access them all with the same password.

Bitcoin (BTC): Created in 2009 by the pseudonymous Satoshi Nakamoto, Bitcoin is the world's largest cryptocurrency by market capitalization, though it's gone through several cycles of booms and busts since its inception.

Ethereum (ETH): Known best for its cryptocurrency, Ethereum is a blockchain-based platform that allows for the public creation and maintenance of secure digital ledgers. Its cryptocurrency is the second largest in the world by market capitalization, only behind that of Bitcoin. While known for its cryptocurrency, Ethereum is notably different from Bitcoin in its long-term goals of using blockchain technology for a diverse range of applications. Notably, both Bitcoin and Ethereum operate on proof of work protocols, but Ethereum is working to transition to a proof of stake protocol.

Meta Mask is a crypto wallet that supports all types of Ethereum-based tokens. It is based on the JavaScript programming language and is open source. Anyone active on Web 3.0 and trades, for example, with NFTs, must have a wallet. MetaMask can be a Google Chrome and Firefox add-on and a mobile app.

OpenSea is a virtual NFT marketplace. Users can create NFTs on OpenSea free of charge and offer them for direct purchase or auction. For trading, a crypto wallet such as MetaMask is required. Artists auctioning digital versions of their artwork on OpenSea are Banksy, Snoop Dogg and Damien Hirst.

Tokens: There are several types of tokens (utility, security, commodity, and non-fungible). Unlike a coin, a token is a digital asset stored on an existing blockchain. Tokens can be used to represent digital and physical assets.

Tokenization is thus a digital securitization process of goods or rights on decentralized transaction registers. For example, real estate, containers or goods, and usage or licensing rights can get a digital twin.

Token economy summarizes this operating principle. In other words: In the digital, decentralized world, a token is assigned to a wallet address, i.e., to a digital wallet, where it is logged. In the natural, analog world, however, it must be ensured that the token is assigned to the correct object and that the wallet is given to an identifiable natural or legal person.

DeFi: Short for "decentralized finance". Banking but without the fees/approvals for transactions and loans. You can lend, trade, and borrow crypto through public code that automatically stores/verifies transactions.

Proof of Work is a decentralized consensus mechanism that requires all members of a network (i.e., computer nodes in a blockchain) to complete a significant but feasible amount of work to solve an arbitrary mathematical puzzle. It's widely used to validate transactions and mine new tokens in cryptocurrency mining, as it doesn't require a trusted third party. However, despite its benefits, proof of work is notorious for consuming too much energy.

Mining: In a proof of work system, this is the process of verifying transactions, organizing them into blocks, and then adding blocks to the blockchain. Participants who perform this process are called miners.

Proof of Stake is a decentralized consensus mechanism that requires coin owners to offer their own coins up as collateral (in other words, staking their coins) for a chance to validate blocks in a blockchain. Validators are selected randomly instead of via the competition mechanism used in the proof of work. To have the opportunity to be a validator, coin owners must stake a certain amount of their coins (i.e., Ethereum's requirement of 32 ETH). Multiple validators must verify the new block before it can be finalized and closed. Proof of stake is far less energy-consuming than proof of work.

Single Point of Failure – also known as SPOF – refers to one fault or malfunction causing a complete system failure. In other words, it is a component of a technical system whose failure results in the collapse of the entire system.

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