Paradigm co-founder's seminal 2017 article: Blockchain is the foundational layer of the metaverse
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Paradigm co-founder's seminal 2017 article: Blockchain is the foundational layer of the metaverse
Friend, don't hold back your insights and ideas—dare to express yourself. Your future co-founder is out there looking for you. Send out the signal and let them see you.
Navigating Web3 tides with focused insights
By Fred Ehrsam
This is an article that gave me chills and made my hair stand on end.
Written by Fred Ehrsam, co-founder of Paradigm, in February 2017—yet it predicted today’s trends four years ahead of time: the metaverse, blockchain, crypto, VR...
The cognitive gap is far beyond my imagination. In February 2017, most people still lacked even a basic understanding of blockchain—even within the industry, the majority were caught up in the ICO craze... A four-year head start in thinking feels tragically heartbreaking.
Secondly, behind this article lies a story of two visionaries finding each other.
Before founding Paradigm together with Matt Huang, Fred Ehrsam was co-founder of Coinbase. At that time, Matt Huang was at Sequoia Capital, and Fred had approached them twice for funding for Coinbase—both times rejected.
In 2017, after leaving Coinbase, Fred wrote this article—and Matt read it.
Matt was captivated by Fred’s thinking and reached out via email. Initially, they discussed whether they could build a decentralized computing platform to power virtual reality and the metaverse—an idea that didn’t lead to any immediate investment. But over time, they exchanged 60 emails, brainstorming potential business ideas around crypto, eventually deciding in 2018—during the crypto market downturn—to jointly launch the venture firm Paradigm.
On November 15, Paradigm announced the formation of a $2.5 billion crypto venture fund—the largest crypto-focused venture fund in history, surpassing Andreessen Horowitz (a16z)'s $2.2 billion fund raised in June of this year.
This is a story of high-level cognition and mutual admiration—one powerful article brought these two minds together.
So, friend, don’t hesitate to share your insights and ideas. Speak boldly—your future partner is out there searching for you. Send out the signal, let them see you.
They will understand you. They will come find you. You are never alone.
The original title was “VR is a killer app for blockchains.” Below is the full text:
“Metaverse,” a name for an immersive virtual reality world, comes from Neal Stephenson’s 1992 sci-fi novel *Snow Crash*. I spent a weekend discussing with 10 executives from major companies working on VR about how to efficiently build such a world. The idea is simple: if people begin living inside virtual reality, its rules and systems will become as important as those in the “real” world.
To illustrate why, imagine everyone lives in a world like *World of Warcraft* or the virtual universe Facebook is building. People’s social lives, assets, and work would all be tied to this world. This means the central company controlling it could take everything away at will.
This is exactly the critical plot vulnerability shown in the recent popular novel *Ready Player One*.
The book describes a virtual world called OASIS, where people spend most of their time. A large corporation named Innovative Online Industries (IOI) owns and operates OASIS. In a global treasure hunt, ordinary players race against IOI employees to find it first.
Despite the excitement, because IOI owns and controls OASIS’s servers and databases, they can do anything they want—delete users, access private information, change world rules, and mint infinite currency for themselves.
Clearly, no single company should control the metaverse—otherwise, it could strip you of everything you own, alter your identity, or even erase you entirely.
Blockchain can solve many of these problems. If your assets live on the blockchain, no single operator can take them from you. If your identity is on the blockchain, you cannot be deleted.
Perhaps most intriguingly, just as Bitcoin enables computers worldwide to form the most powerful computing network on Earth—surpassing 500 Googles or 10,000 of the world’s fastest supercomputers combined—what if the servers running the world were also decentralized? What if all that computing power were used to run the world?
If this sounds too distant or futuristic, consider that *World of Warcraft* already had 12 million players in 2010, spending an average of 22 hours per week in the game. Once engaged, players become deeply immersed: 90% play more than 10 hours weekly.
For better or worse, this is factual. And these economies have become very real. Over 100,000 people once made a living in *World of Warcraft* by earning and selling in-game gold.
When people think of the “metaverse,” they often picture an immersive visual and sensory experience. At the start of our weekend meeting, the metaverse was defined as “a traversable, visually immersive, synchronized, multi-user heterogeneous network of virtual worlds.”
Yet, visual immersion is actually the least essential part. The most crucial element is the shared data layer between them. Without a shared data layer, seamless travel as your virtual “you” would be impossible. Since humans are drawn more to intense visual experiences than data layers, defining it by visual immersion makes intuitive sense.
However, I believe the shared data layer is what makes the metaverse truly a metaverse—and this data layer will be built on blockchain.
At its core, blockchain is essentially a shared version of reality that everyone agrees upon. Whether it’s a fully immersive VR experience, augmented reality, or Bitcoin and Ethereum in the physical world serving as a shared ledger of our “real world,” we will increasingly trust blockchain as the foundation of our reality.
The boundary between the virtual world and the “real world” will blur quickly. If someone builds a peer-to-peer lending application on blockchain allowing loans from the U.S. to Brazil, that app instantly exists across every virtual world, since they all run on the same blockchain.
It will be fascinating to watch how virtual worlds evolve. I wouldn’t be surprised if early versions are closed-off worlds, especially those built by large companies with massive private databases and entrenched network effects (like Facebook).
Much like AOL and CompuServe in the early days of the internet, these walled gardens might persist for years—but ultimately, they’ll be crushed by open alternatives, just as AOL and CompuServe were overtaken by the open internet. If so, there’s a huge opportunity to build open worlds from the beginning.
I believe token models based on blockchain represent the winning business model for creating these worlds. Historically, the second-largest crowdfunding campaign ever was for the virtual world *Star Citizen*, raising over $140 million. Last year (2016), blockchain-based crowdfunding exceeded $250 million. Developers can fund the creation of their worlds this way, using tokens to incentivize participation and governance within the worlds they build.
By the end of the weekend, I realized that virtual worlds would become one of blockchain’s first killer applications—perhaps its deepest users.
I suspect that blockchain will become the comprehensive backbone of virtual worlds (currency, assets, identity, even governance systems) before we do the same in the “real world.”
I think that’s ultimately where we’re headed in the real world too—the only questions are which comes first, and how long until both happen.
Original link:
https://fehrsam.xyz/blog/vr-is-a-killer-app-for-blockchains
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