Metaverse: Concept, Content and Context 3031243587, 9783031243585

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Shenghui Cheng

Metaverse: Concept, Content and Context

Metaverse: Concept, Content and Context

Shenghui Cheng

Metaverse: Concept, Content and Context

Shenghui Cheng The University of Westlake Hangzhou, Zhejiang, China

ISBN 978-3-031-24358-5 ISBN 978-3-031-24359-2 https://doi.org/10.1007/978-3-031-24359-2

(eBook)

- Original English Title “MetaTranslation from the Chinese language: verse: Concepts, Technologies and Ecology” by Shenghui Cheng © China Machine Press 2022. Published by China Machine Press. All Rights Reserved. © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Preface

Over the past period of time, “metaverse” has become a household word. Its related stocks have risen sharply, and its land price has been constantly renovated. The startups associated with it have also become the dark horses of the capital market. However, many people are very confused about the technology behind it, such as web3.0, blockchain, immersive interaction technology, etc., and do not understand the technical details and implementation methods. For this reason, we have written the book Metaverse: Concept, Content and Context. In this book, we first introduce the concept of metaverse, the origin and development of metaverse, and its layout and architecture. Then we introduce metaverse and Web3.0, big data, and AI technologies. For the construction and display functions of metaverse, this book introduces immersive interactive technologies, including virtual reality (VR), augmented reality (AR), mixed reality (MR), and extend reality (XR), as well as principles of image display, computer graphics, and digital twin, and finally extends to cases of application implementation. For transactions in the metaverse, this book introduces blockchain technology, including its concepts, principles, characteristics, application scenarios, and digital currencies related to it. Moreover, this book introduces the asset view and social view in the metaverse, in which the social view includes real life. Later, the book introduces the asset view and social view in the metaverse, where the social view includes concepts such as the social view in real life and the Internet era, digital life, and immortal technology. And the asset view includes concepts such as digital assets and virtual real estate; then the security and legal issues of the metaverse are introduced; and finally the investment and prospect analysis of the metaverse are introduced. We hope readers will give us valuable suggestions and comments while reading. Hangzhou, China

Shenghui Cheng

v

Acknowledgments

Thanks to Yiran Meng, Junwei Wang, Kun Ma, Xiaoqing Guo, Xueyang Han, Jing Zhang, Bohan Liu, Yueming Cheng, Chenchen Mo, Ding Li, etc. for great contributions to the publication of this book. Thanks to Prof. Weicheng Cui, Prof. Luting Ma, Prof. Huamin Qu, Prof. Xiaoru Yuan, Prof. Xiaoyin Xu, Prof. Zhengjun Zhang, Steve Hoffman, etc. for the treasure valuable comments and suggestions in the process of writing this book. This book was originally published in Simplified Chinese by China Machine Press, under the title Metaverse: Concepts, Technologies and Ecology, by Shenghui Cheng. This edition is published by arrangement with the author and with permission from China Machine Press.

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Contents

1

Metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 The Concept of Metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 Origin and Development of the Metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.1 Portal Search and Social Networking Era . . . . . . . . . . . . . . . . . 1.3.2 The Prototype of the Metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 Layout of the Metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4.1 The Seven-Layer Chain for Building the Metaverse . . . . . . 1.4.2 The Metaverse Layout of the Leading Internet Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4.3 The Architecture of the Metaverse. . . . . . . . . . . . . . . . . . . . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 1 1 6 8 11 15 15

2

Basic Infrastructure of the Metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Metaverse Core Network Ecology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.1 Three Technical Iterations of the Web . . . . . . . . . . . . . . . . . . . . . 2.2.2 Web 3.0 and the Metaverse. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Big Data Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.1 Big Data in the Metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.2 Data Storage in the Metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.3 Edge Computing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 Metaverse and Artificial Intelligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.1 AI Chip . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.2 Building the Virtual Environment . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.3 Virtual Identity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.4 Artificial Intelligence and the Digital Twin . . . . . . . . . . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25 25 25 26 30 32 32 33 35 36 37 42 43 45 46

3

Metaverse and Immersive Interaction Technology . . . . . . . . . . . . . . . . . . . . . 3.1 Introduction of Immersive Interaction Technology . . . . . . . . . . . . . . . . . 3.1.1 Virtual Reality (VR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

47 47 49

18 22 23

ix

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4

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3.1.2 Augmented Reality (AR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.3 Mixed Reality (MR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.4 Extended Reality (XR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Support and Development of Immersive Interaction Technologies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.1 Image Display Principle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.2 Data Visualization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.3 Computer Graphics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.4 Other Supporting Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 The Application of Immersive Interaction Technology . . . . . . . . . . . . 3.3.1 Digital Twins. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3.2 Other Applications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

50 52 53

Metaverse and Blockchain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Blockchain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.1 Concepts, Principle, Characteristics, and Application Scenarios of Blockchain . . . . . . . . . . . . . . . . . . . . . . 4.1.2 Characteristics of Blockchain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.3 Applications of Blockchain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.4 Development of Blockchain. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.5 Blockchain and Digital Currency . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.6 Digital Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.7 Concepts of Digital Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.8 Types of Digital Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.9 Characteristics of Digital Currency . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Digital Currency in the Metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.1 The Role and Application of Digital Currency in the Metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.2 Building the Currency of the Metaverse . . . . . . . . . . . . . . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

83 83

Metaverse and Social View . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Real-World Views of Community and Socialization . . . . . . . . . . . . . . . 5.1.1 The Concept of Community . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1.2 Classification and Structure of Communities . . . . . . . . . . . . . 5.2 Socializing in the Internet Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2.1 The New Social in the Internet Era . . . . . . . . . . . . . . . . . . . . . . . . 5.2.2 Innovation of Social View in the Internet Era . . . . . . . . . . . . . 5.3 Digital Life and the Metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.1 Digital Life in the Metaverse. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.2 Virtual vs. Physical Distances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 Games and Socialization Under the Concept of Metaverse . . . . . . . . 5.4.1 Game Experience Under the Concept of Metaverse . . . . . . 5.4.2 Social Experience Under the Concept of Metaverse . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

54 54 59 64 68 71 72 75 81

84 89 92 94 96 96 97 97 101 102 102 103 106 107 108 108 109 110 111 113 115 115 118 119 120 121 122

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6

Metaverse and Digital Asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Holding Patterns and Ownership of Digital Assets-NFT . . . . . . . . . . . 6.1.1 Concept of NFT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.2 History of NFT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.3 NFT’s Transaction Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.4 NFT and Metaverse. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Digital Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.1 Concept of Digital Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.2 Value of Digital Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.3 The Great Potential of Digital Assets . . . . . . . . . . . . . . . . . . . . . . 6.3 Virtual Real Estate that Took Off in the Metaverse . . . . . . . . . . . . . . . . . 6.3.1 Concept of Virtual Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.2 Valuation of Virtual Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.3 Big Events and Classic Projects in Virtual Real Estate . . . 6.4 The Relationship Between Metaverse and Real-World Assets . . . . . 6.4.1 Metaverse Changing Real-World Business Models . . . . . . . 6.4.2 Realization of Assets in the Metaverse . . . . . . . . . . . . . . . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

123 123 124 125 127 128 129 129 130 131 134 134 135 137 141 142 143 144

7

Metaverse Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 Metaverse Technology Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1.1 Metaverse and 5G Security Issues . . . . . . . . . . . . . . . . . . . . . . . . . 7.1.2 Metaverse and AR/VR Security Issues . . . . . . . . . . . . . . . . . . . . 7.1.3 Metaverse and Cloud Computing Security Issues. . . . . . . . . 7.1.4 Metaverse and Blockchain Security Issues . . . . . . . . . . . . . . . . 7.1.5 Data in the Metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1.6 Metaverse Data Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1.7 Status of Data Security Protection . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Metaverse Data Security Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2.1 Data Security Governance Framework . . . . . . . . . . . . . . . . . . . . 7.2.2 Metaverse Personal Privacy Protection . . . . . . . . . . . . . . . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

145 146 146 148 149 151 154 156 158 160 160 163 163

8

Metaverse and Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1 The Order of the Metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1.1 Legal Supervision of the Metaverse in Various Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1.2 The Rules of Access to the Metaverse . . . . . . . . . . . . . . . . . . . . . 8.1.3 Law-Making in the Metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 Legal Relations in the Metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2.1 “Legal Subjects” in the Metaverse . . . . . . . . . . . . . . . . . . . . . . . . . 8.2.2 “Legal Objects” in the Metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2.3 “Legal Rights” and “Legal Obligations” in the Metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

165 165 166 168 169 170 171 173 175

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8.3

Law-Making, Implementation, and Enforcement in the Metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3.1 Law-Making: “Legislation” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3.2 Metaverse Implementation and Enforcement: “Law Enforcement and Justice” . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 Legal Risks of the Metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4.1 Protection of Privacy and Personal Information Rights. . . 8.4.2 Ownership Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4.3 Intellectual Property Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4.4 Identity Theft and Fraud. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

176 177 178 179 179 181 182 183 185

9

Metaverse and Investing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2 Metaverse Value in the Eyes of Real Capital . . . . . . . . . . . . . . . . . . . . . . . 9.2.1 Market Demand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2.2 Industry Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3 Secondary Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.1 U.S. Capital Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.2 China Capital Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.3 Japan Capital Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.4 Korean Capital Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4 Primary Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.5 Investment Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

187 187 187 190 190 191 192 196 199 200 202 202 205

10

The Future of the Metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2 Metaverse Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2.1 Hardware Development for Wearable Devices and Chips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2.2 Backend Infrastructure Sector Focused on Increasing Transmission Speed . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2.3 The Underlying Architecture of the Core Technology Ecosystem . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2.4 Artificial Intelligence to Enhance the Virtual Environment Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2.5 Content and Scenes Related to Everyday Experiences . . . 10.3 The Metaverse and the Technology of Immortality . . . . . . . . . . . . . . . . 10.3.1 Entrance to the Eternal Life of the Universe: Brain–Computer Interface. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3.2 Advance in the Eternal Life of the Metaverse: Consciousness Upload. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4 The Limits and Problems of the Metaverse . . . . . . . . . . . . . . . . . . . . . . . . . 10.4.1 Technology Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4.2 Interpersonal Relationship and Social Experience . . . . . . . .

207 207 207 209 209 210 210 211 211 212 213 213 213 214

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10.4.3 Data Security Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214 10.5 Cultural, Legal, and Ethical Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214 Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217

About the Author

Dr. Shenghui Cheng is a WestLake fellow and the director of the Intelligent Visualization Lab, WestLake University, China. He obtained a Ph.D. in computer science from the State University of New York at Stony Brook (Stony Brook University), and conducted research at Brookhaven National Laboratory and Harvard Medical School, USA. He also served as a consultant for the World Bank, a mentor of the Stanford Artificial Intelligence Global Executive Leadership Program, the executive chairman of the CSIG-VIS Big Data Summit Forum, the program committee member of the IEEE VIS, IEEE Pacific Vis, and Chinavis, etc. He was selected as a high-level overseas talent in Shenzhen and leadship program in Zhejiang University, China. For more information, please visit https://www.csh.ac.cn/.

xv

Acronyms

AI AIPU AR ARPA ARPANET ASIC AWS BCI CBDC CMOS CMT CNN CPU CSA CSS CV DAO DeFi DLP DMA DSA EEG eMMB FoV FPGA GDFS GDPR GIC GPT GPU GSM

Artificial Intelligence AI Processing Units Augmented Reality Advanced Research Projects Agency Advanced Research Projects Agency Network Application-Specific Integrated Circuit Amazon Web Services Brain-Computer Interface Central Bank Digital Currencies Complementary Metal-Oxide-Semiconductor Computer Magnetic Tape Convolutional Neural Networks Central Processing Units Cloud Security Alliance Cascading Style Sheets Computer Vision Decentralized Autonomous Organization Decentralized Finance Digital Light Processing Digital Markets Act Digital Services Act Electroencephalograph Enhanced Mobile Broadband Field of View Field Programmable Gate Array GoodData File System The General Data Protection Regulation Guaranteed Investment Certificate Generative Pre-trained Transformer Graphics Processing Units Global System for Mobile Communications xvii

xviii

GUI HCI HTML HTTP IC IoT IP IPD IPO KICTPA LCD LCoS LED LTE MAS MCM MMS mMTC MR MVS NFT NFV NLP NTT OLED P2E PC PCA RNN RS SDN SIP SLP SMS SoC SVD TCP uRLLC VR WBE WWW XR

Acronyms

Graphical User Interface Human-Computer Interaction HyperText Markup Language HyperText Transfer Protocol Integrated Circuits Internet of Things Internet Protocol Interpupillary Distance Initial Public Offering Korea Information and Communications Industry Pro- motion Agency Liquid Crystal Display Liquid Crystal on Silicon Light-Emitting Diode Long-Term Evolution Monetary Authority MultiChip Module Multimedia Messaging Service Massive Machine Type of Communication Mixed Reality Metaverse Non-Fungible Token Network Functions Virtualization Natural Language Processing Nippon Telegraph and Telephone Corporation Organic Light-Emitting Diode Play-to-Earn Personal Computer Principal Component Analysis Recurrent Neural Networks Recommender Systems Software-Defined Network System In a Package Smooth Love Potion System Management Server System on Chip Singular Value Decomposition Transmission Control Protocol ultra Reliable Low Latency Communication Virtual Reality Whole Brain Emulation World Wide Web Extended Reality

List of Figures

Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig.

1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10

Fig. 1.11 Fig. 1.12 Fig. 1.13 Fig. 1.14 Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig.

1.15 1.16 1.17 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10

Word cloud presentation for metaverse-related concepts . . . . . . . . . . Key features of metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Seamless integration of virtual and reality . . . . . . . . . . . . . . . . . . . . . . . . . . High fidelity in metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Some of the virtual currencies in the market . . . . . . . . . . . . . . . . . . . . . . . Socialization in the metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Internet processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . First mention of “metaverse” in snow crash . . . . . . . . . . . . . . . . . . . . . . . . Metaverse search popularity (data source: Google trend) . . . . . . . . . . Metaverse geographic search popularity (data source: Google trend) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Level of metaverse of representative companies . . . . . . . . . . . . . . . . . . . Daily activity of metaverse concept companies (data source: Blockchain game info) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The seven-layer industry chain of building metaverse . . . . . . . . . . . . . Ranking of NFT transactions on Opensea in the past 7 days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Domains covered by spatial computing software . . . . . . . . . . . . . . . . . . . Metaverse layout of big companies with radar diagram . . . . . . . . . . . . Infrastructure of the metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Basic techniques for building a metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . From the Web 1.0 to the Web 3.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Web 1.0 Era . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The illustration of Web 2.0 Era . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Web 3.0 Era . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Web 3.0 and the metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Types of Big Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Blockchain technology combined with IPFS . . . . . . . . . . . . . . . . . . . . . . . Cloud computing and edge computing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Market revenue value of AI chips (data source: STATISTA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2 3 3 4 5 6 7 12 13 13 14 14 16 17 18 19 22 26 26 27 27 29 30 32 34 35 38 xix

xx

Fig. Fig. Fig. Fig. Fig. Fig.

List of Figures

2.11 2.12 2.13 2.14 3.1 3.2

Fig. 3.3 Fig. 3.4 Fig. 3.5 Fig. 3.6 Fig. Fig. Fig. Fig.

3.7 3.8 3.9 3.10

Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig.

3.11 3.12 3.13 3.14 3.15 3.16 3.17 3.18 3.19 3.20 3.21 3.22 3.23

Fig. 3.24 Fig. 3.25 Fig. Fig. Fig. Fig. Fig. Fig. Fig.

3.26 3.27 3.28 3.29 3.30 3.31 3.32

Market segmentation of AI chips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Brain implantable device . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Virtual human by MetaHuman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . AI algorithms applied to digital twins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stages of mental expansion to the real world . . . . . . . . . . . . . . . . . . . . . . . VR products: (a) CardBoard, (b) Xiaomi Split VR box, (c) Samsung Gear All-in-One VR, (d) HTC VIVE, and (e) PS VR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . AR cell phone and AR smart glasses devices: (a) Apple AR Cell Phone App and (b) ODG’s AR Glasses . . . . . . . . . . . . . . . . . . . MR devices: (a) HP MR, (b) Samsung Genron MR, and (c) HoloLens 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The relationship between XR, VR, AR, and MR . . . . . . . . . . . . . . . . . . . Horizontal and vertical Field-of-View angular maps for human . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Immersion effects when using different devices . . . . . . . . . . . . . . . . . . . . Viewing effects in non-direct and direct view structures . . . . . . . . . . . The principle of operation of holographic waveguides . . . . . . . . . . . . . Full immersion, optical see-through, and video see-through presentation diagrams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LCD structure diagram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Visualization process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Different examples of scientific visualization . . . . . . . . . . . . . . . . . . . . . . Different examples of information visualization . . . . . . . . . . . . . . . . . . . Different examples of visual analytics cases . . . . . . . . . . . . . . . . . . . . . . . . Geometric modeling concept drawing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rendering comparison chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Image rendering workflow diagram in computer graphics . . . . . . . . . Comparison of 2D and 3D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Examples of common software used to create animations . . . . . . . . . Demonstration of Kinect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Three major application scenarios for 5G . . . . . . . . . . . . . . . . . . . . . . . . . . . Comparison of End-to-End Delay (milliseconds) with different communication technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital twin definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital twins and metaverse: cloned universes and multiverses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schematic diagram of the characteristics of the digital twin . . . . . . . Digital twin application areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Application of immersive interaction technology . . . . . . . . . . . . . . . . . . Portable holographic sandtable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Holographic interactive table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Holographic screen concept diagram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Immersive interactive projection experience room (2D immersion) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

40 42 44 45 48

51 52 53 54 55 55 56 57 57 58 60 61 63 63 65 66 66 67 68 69 69 70 72 73 74 75 76 77 78 78 79

List of Figures

Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig.

3.33 3.34 3.35 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 6.1

Fig. 6.2 Fig. 6.3 Fig. 6.4 Fig. 6.5 Fig. 6.6 Fig. 6.7 Fig. 6.8 Fig. 6.9 Fig. 6.10 Fig. 6.11 Fig. 6.12 Fig. 6.13 Fig. 6.14 Fig. 6.15 Fig. 6.16

3D holographic projection experience room . . . . . . . . . . . . . . . . . . . . . . . . Museum holographic transparent screen . . . . . . . . . . . . . . . . . . . . . . . . . . . . Holographic live . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The mechanism of hash function operation . . . . . . . . . . . . . . . . . . . . . . . . . Block structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Binary hash tree . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The principle of blockchain transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The features of blockchain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Blockchain applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The history of blockchain development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Types of digital currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Classification of stablecoins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Three major features of digital currencies . . . . . . . . . . . . . . . . . . . . . . . . . . Currency in the metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Decentraland virtual reality platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Axie Infinity virtual reality platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Sandbox virtual reality platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Metaverse and social view . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Community classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Community structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . New socialization in the Internet era . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Social function of a music app . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Metaverse digital life imagination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital life in the metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PC Internet era to the metaverse era . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Roblox . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fortnite mode . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Comparison of NFT, cryptocurrency, and central bank digital currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NFT transactions in 2021 (data source: NonFungible) . . . . . . . . . . . . . The process of NFT transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Classification of digital assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The process of XCarnival platform auction . . . . . . . . . . . . . . . . . . . . . . . . . XCarnival platform and components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The process of XCarnival platform risk avoidance . . . . . . . . . . . . . . . . . Virtual property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Main factors affecting the price of metaverse properties . . . . . . . . . . . Genesis blocks in blockchain game Axie Infinity . . . . . . . . . . . . . . . . . . Home page of TheSandbox . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Home page of Decentraland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchase page of CryptoVoxels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Purchasing virtual items on the Roblox website . . . . . . . . . . . . . . . . . . . . Axie Infinity website virtual item transaction real-time data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Metaverse game “LiveTopia” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

xxi

79 80 81 85 86 86 89 90 92 96 97 99 101 104 104 105 106 108 109 111 111 114 116 118 119 120 121 124 127 128 130 132 133 134 135 136 136 138 139 140 140 141 143

xxii

Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig. Fig.

List of Figures

7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 7.10 7.11 7.12 8.1

Three elements of information security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Metaverse technology risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Security challenges of edge computing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CSA cloud security threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51% of the arithmetic attack risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Smart contract security incidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Blockchain “Impossible Triangle” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Data in the metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Percentage of data security incidents in the last 3 years . . . . . . . . . . . Domestic data security system construction . . . . . . . . . . . . . . . . . . . . . . . . Foreign data security system construction . . . . . . . . . . . . . . . . . . . . . . . . . . Basic framework of data security governance . . . . . . . . . . . . . . . . . . . . . . Enter the metaverse: the mapping of real individuals to virtual individuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fig. 8.2 Metaverse decentralized group consensus . . . . . . . . . . . . . . . . . . . . . . . . . . Fig. 8.3 The legal bottom line in the metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fig. 8.4 Legal relationships in the metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fig. 8.5 Legal subjects in the metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fig. 8.6 Legal objects in the metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fig. 8.7 Laws and cases related to the protection of virtual property . . . . . . . Fig. 8.8 The three-layer structure of the metaverse . . . . . . . . . . . . . . . . . . . . . . . . . . Fig. 9.1 Investment product segment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fig. 9.2 The diagram of investment process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fig. 9.3 Roblox developer share trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fig. 9.4 Roblox revenue trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fig. 9.5 Roblox total platform hours by region and quarter . . . . . . . . . . . . . . . . . Fig. 9.6 Roblox cash flow by quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fig. 9.7 The word cloud of meta investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fig. 9.8 ByteDance metaverse investment chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fig. 9.9 Roblox and Tencent co-funded the joint venture company “Roblox” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fig. 9.10 The word cloud of Tencent’s investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fig. 10.1 Market map of the metaverse diagram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fig. 10.2 Brain–computer interfaces . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

146 147 148 150 152 153 154 155 156 158 159 161 168 169 170 171 172 173 175 177 188 189 192 193 194 195 196 197 198 199 208 212

Chapter 1

Metaverse

1.1 Introduction With Roblox going public on the New York Stock Exchange in 2021 with its metaverse concept and Facebook announcing that it is forming a metaverse company and changing its name to Meta, metaverse has become the latest target for many tech giants around the world. The metaverse development is also the driving force behind Facebook’s acquisition of Oculus VR, its efforts to develop the newly announced Horizon virtual world, and many other projects, such as AR glasses and brain– computer interfaces. Figure 1.1 is a word cloud graph generated from a collection of comments on the metaverse from tech giants on the web. It can be seen that words such as “Blockchain,” “Virtual World,” “Facebook,” “3D,” and “VR” frequently appear in these collections of comments. Based on the current technological development, whether metaverse is the next revolution of Internet technology has become the hottest topic. And what exactly is the metaverse? Is it possible to realize the metaverse in the future? Who will build the metaverse? This chapter will give a preliminary description and introduction to the overview of the metaverse through the concept of the metaverse, the origin and development of the metaverse, the layout of the metaverse, and the architecture of the metaverse.

1.2 The Concept of Metaverse Metaverse is also named the postulated universe, metaphysical universe, metaverse, supersensible space, or virtual space. It is a persistent and decentralized online 3D virtual environment, and all events in the metaverse occur in real-time and have a permanent impact. The term metaverse is made up of the prefix “meta” (beyond) and the ending “-verse” of the word “metaverse,” abbreviated as MVS. There is © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Cheng, Metaverse: Concept, Content and Context, https://doi.org/10.1007/978-3-031-24359-2_1

1

2

1 Metaverse

Fig. 1.1 Word cloud presentation for metaverse-related concepts

no precise definition of “metaverse.” Still, Wikipedia describes the “metaverse” as follows: a metaverse is a future Internet-based, connected, perceptual, and shared 3D virtual space characterized by convergence and physical persistence through virtual, augmented physical reality. It is a 3D virtual space with connected perception and shared characteristics (Fig. 1.2).1 The metaverse is considered the next revolution of the Internet. However, there is no definite conclusion on the ultimate form of the metaverse from all walks of life. Currently, the following core attributes of the metaverse are recognized. 1. Boundless Space As a 3D virtual space, the metaverse eliminates the barriers of physical form. It is an endless space with no restrictions on the number of participants that can use it simultaneously, the number of activities that can be performed, the number of industries that can be accessed, etc. On the other hand, the borderlessness is reflected in the fact that the metaverse is more accessible than the current Internet platform, it is open-source, and all participants can create in the metaverse according to their different needs. Each participant can not only buy and use the content created by others, such as virtual identity and NFT, but also create it by themselves. In this model, the boundaries of the metaverse will be continuously expanded

1 https://en.wikipedia.org/wiki/Metaverse.

1.2 The Concept of Metaverse

3

Immersion The metaverse is a virtual space with high immersion and interactivity.

Boundless Space The metaverse is an endless space that has to be able to seamlessly integrate with the real world.

Decentralization The metaverse does not belong to anyone "centralized" organization but is operated independently by different participants.

Persistence The metaverse does not end or reset, but operates in an open source and open-ended manner and continues to evolve indefinitely

Social Experiences The metaverse is a world co-created and shared by all participants, which will create completely new social relationships and social experiences.

Economic System A unified digital currency is available within the metaverse, which runs a virtual economic system powered by cryptocurrencies.

Fig. 1.2 Key features of metaverse

Fig. 1.3 Seamless integration of virtual and reality

(Figures 1.3, 1.4, and 1.6 are the metaverse world imagined in Meta’s promotional video.) 2. Persistence The perpetuity of the metaverse is reflected in two aspects. First, there is no “shutdown” or “reboot” of the metaverse, so users can freely connect to the metaverse at any time from anywhere in the world with the device, which ensures a continuous experience for users. This feature can blur the sense of unreality

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Fig. 1.4 High fidelity in metaverse

when users enter the metaverse, making the metaverse a parallel world with the real world. Second, the metaverse will not stop or be reset but will continue to develop indefinitely in an open-source way. Each participant in the metaverse is a “user” of the metaverse and a “user” to ensure the continuous development of the metaverse. Each participant in the metaverse is both the “user” and the “creator” of the metaverse to ensure its sustainable development. 3. Immersion Having a high degree of realism is the basic condition for building a metaverse. Everything that happens in the real world can simultaneously be realized in the metaverse. The development of virtual reality technology, somatosensory technology, and interaction technology allows participants to have a high level of immersion in the metaverse. In this virtual space, humans can fully engage their senses to participate more fully in the metaverse world. As a highly realistic virtual space, the metaverse can change the environment, color, and light according to the user’s needs. 4. Decentralization Decentralization has two meanings in the metaverse. One is that the metaverse operates decentralized and is not attributed to a specific platform or company, and the other is that the network architecture of the metaverse is decentralized. Advances in technology in recent years have made decentralized networks possible. A decentralized network is one in which data processing is distributed across

1.2 The Concept of Metaverse Fig. 1.5 Some of the virtual currencies in the market

5

Bitcoin BTC

Dogecoin DOGE

Decentraland MANA

Ethereum ETH

Sand Coin SND

Gala Coin GALA

multiple devices and is no longer dependent on a single central server. Each unit device is a mini-central processor that can interact independently with other nodes. Thus, even if one of the master nodes crashes or is attacked, the other servers can still function, and the users can continue to transmit and access data. Developments such as cloud computing and edge technologies have also equipped computers and other devices with superior data processing power, greatly increasing the speed of data transmission and access. 5. Economic System The economic system is the foundation to ensure the effective organization and distribution of production factors and resources. Building a virtual economy system is an essential part of the entire metaverse architecture as a mapping of the real world. The virtual economy allows participants to exchange digital assets in the virtual world and is an effective way to motivate more participants to output content in the metaverse. The economic system in the metaverse is based on blockchain technology, which is also one of the important technologies for decentralized operation. The peer-to-peer transmission method of blockchain ensures that all transactions in the virtual world are public so that the security of participants’ digital assets can be guaranteed without the management of a “centralized” organization. Therefore, it is possible to secure participants’ digital assets without a “centralized” organization. Figure 1.5 shows several of the more popular virtual currencies currently on the market, of which Bitcoin is the most familiar virtual currency. In 2008, Satoshi Nakamoto proposed the concept of Bitcoin, and in 2009 the Bitcoin Genesis block was born, which has since triggered the digital currency boom, and as of November 2021, the price of Bitcoin is nearly $69,000 a piece (Fig. 1.6).

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Fig. 1.6 Socialization in the metaverse

6. Social Experiences The development of the Internet has changed people’s lives, and socialization in the Internet era has overturned the traditional social model. The metaverse will further expand the boundaries of Internet social networking because the core of the metaverse is every user who “lives” in this virtual space, where all participants can experience, create, and share the generated content. The traditional order in the real world is completely broken under the “decentralized” operation mode. The metaverse blurs the boundary between reality and virtual, which will create a new social relationship and experience.

1.3 Origin and Development of the Metaverse Since the birth of the Internet in 1960, Internet technology has undergone several iterations. From portal search to mobile Internet to the current concept of the Internet of Things, people’s lives have been revolutionized by the development of Internet technology. The metaverse is considered the next revolution in Internet technology, and its construction relies on advanced digital technologies. Before we understand the metaverse era, let us first understand the iterative history of the Internet (Fig. 1.7).

1.3 Origin and Development of the Metaverse

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Fig. 1.7 Internet processes

Birth of the Internet The Internet began in the 1960s as a way for government researchers to share information. Computers in the 1960s were large and difficult to move. To use the information stored in them, one had to travel to the computer’s location or send Computer Magnetic Tape (CMT)2 through the traditional postal system. Another catalyst for the Internet’s formation was the Cold War’s heating up. After the Soviet Union launched the Sputnik satellite, the U.S. Department of Defense considered how information could still be disseminated smoothly after a nuclear attack. This led to the Advanced Research Projects Agency Network (ARPANET). This network eventually evolved into what we now know as the Internet. ARPANET was a great success, but in the beginning, ARPANET consisted of only four nodes located within four universities that had cooperation with the U.S. Department of Defense.3 In 1980, the U.S. Department of Defense developed the Transmission Control Protocol/Internet Protocol (TCP/IP) for all military computer networks. On January 1, 1983, the TCP/IP protocol became the standard protocol for APA Networks, and

2 CMT

is the external storage system for traditional medium and large computers. four universities are the University of California, Los Angeles (UCLA), the University of California, Santa Barbara (UCSB), the Stanford Research Institute’s Center for Enhancement Research, and the University of Utah. 3 The

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the Internet was born. Before this, there was no standard way for various computer networks to communicate, and the creation of TCP/IP marked the beginning of the ability for different types of computers on other networks to communicate. 1991 saw the first mention of the HTML (Hyper Text Markup Language) by Tim Berners Lee, followed by the standardization of the features already implemented in 1993, which marked the birth of the World Wide Web (WWW). The advent of HTML also made Web access more accessible, and the popularity of the Internet could become more widespread.

1.3.1 Portal Search and Social Networking Era Portal Search With the development of Web technology, the Internet has become a dizzying mass of information. This has led to the creation of tools that can categorize vast information, namely search engines. Search engines are massive databases that collect information from websites and then dump that information into a database. The information in these databases is collected using computer programs (called “spiders” or “bots”) that scan the Web and gather information about individual documents. These special programs automatically find the information the site’s creator asks them to obtain. A browser is an application that views documents on the World Wide Web. Some text-based or terminal-based browsers, such as Lynx. At that time, browsers would only allow users to view only text on the Web. Most browsers today are graphical browsers that can be used to view text, graphics, and other multimedia information. Users can access search information on the Internet through their browsers. Most Internet giants we know today were created and grew during the portal search era, such as Google and Microsoft. Social Networking Era The development of social networks has brought significant changes to the world, and their emergence has revolutionized how people socialize. Today, people can instantly communicate through the Internet in their personal lives and at work. In 1971, the first email was sent via two computers side by side. This was done by Ray Tomlinson (Ray Tomlinson). Later, in 1978, BBS (Bulletin Board System) was communicated to other users via telephone lines. In addition, the first copies of the Internet browser were distributed through the Usenet platform in the same year. In 1997, Microsoft launched Instant Messenger, an application that sent instant messages and allowed users to achieve basic chatting. It is also considered to be the pioneer of instant messaging services. In 2004, one of the most widespread social networks to date, Facebook, was born, and a year after its launch, the new social network quickly surpassed the others and quickly became an industry leader. Currently, Facebook is considered to be one of the most important social networks of all time.

1.3 Origin and Development of the Metaverse

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Two years later, Twitter was born, limiting users to 140 characters, which made the microblogging network famous. Today, almost every news spread quickly on Twitter, a milestone in the history of this social network. Meanwhile, in China, WeChat and Weibo became the dominant social networks. Mobile Internet Era The mobile Internet grid has changed the path of Internet development, with cell phones replacing PCs just like cell phones replacing landlines. Before the birth of the systems represented by iOS and Android, the development of the Internet had been limited by the penetration rate of PC. The mobile Internet era took 2007 as a watershed year. Before 2007 was a relatively backward age for communication technology. With the progress of communication technology, the solution to network speed and bandwidth problems provided unlimited possibilities for the mobile era after 2007. After 2008, the penetration rate of mobile broadband began to grow at an accelerated rate, and in 2011, smartphone sales surpassed PC sales, reaching 4844 million3 units, and mobile devices are reshaping our world in ways we could not have predicted. Most countries will begin adopting 5G in 2020, which will help drive the development of IoT and Big Data technologies. 1. 1G Era In 1979, Nippon Telegraph and Telephone Corporation (NTT) launched the first generation of mobile networks, the 1G network, in Tokyo, and by 1984, the 1G network covered all of Japan. 1983 saw the approval of the first 1G services in the United States, and Motorola’s DynaTAC became one of the first “mobile” handsets to be widely used in the United States. In 1983, the first 1G services were approved in the United States, and Motorola’s DynaTAC became one of the first “mobile” phones to be widely used in the United States. A few years later, countries such as Canada and the UK launched their own 1G networks. However, there are many drawbacks to 1G technology. For example, the coverage is poor, and the sound quality is poor. There is no roaming support between operators, and there is no compatibility between systems because different systems operate on different frequency ranges. Moreover, calls are not encrypted, so anyone with a radio scanner can receive calls. 2. 2G Era The second generation of mobile networks was launched in Finland in 1991 based on the GSM (Global System for Mobile Communications) standard. 2G networks allowed for encrypted calls and more explicit digital voice calls. In the 2G era, people could send text messages by using system management server (SMS) and send picture messages or multimedia messages by using multimedia messaging service (MMS) on their cell phones. 2G revolutionized the business landscape and changed the world forever.

4 Data

Source: https://www.counterpointresearch.com/recap-of-the-smartphone-market-in-2011/.

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3. 3G Era NTT DoCoMo introduced 3G in 2001 to standardize the network protocols used by providers. This means that users can access data from anywhere in the world because the “data packets” that drive the network connection are standardized, making international roaming services possible. Because of 3G’s enhanced data transmission capability, four times faster than 2G, services such as video conferencing, video streaming, and Voice over IP (e.g., Skype) are beginning to emerge. 2007 will see the introduction of iPhones supporting 3G networks, meaning that the capabilities of the mobile Internet will be extended as never before. 4. 4G Era 4G was first deployed in 2009 in Stockholm, Sweden, and Oslo, Norway, as the Long Term Evolution (LTE) 4G standard. It has subsequently been rolled out worldwide, enabling millions of consumers to enjoy high-quality video streaming. 4G provides fast mobile network access, facilitating industries such as handheld gaming, HD video, and remote video conferencing. The need to design 4G-enabled mobile devices to accommodate 4G networks has helped device manufacturers expand profits by introducing phones that support 4G networks, and the dramatic growth in the scale of development and production of new phones has been a major reason for Apple’s rise to become the world’s first trillion-dollar company. With the development of 4G networks and mobile devices, many smartphone software applications have emerged, such as Taobao, Alipay, Instagram, YouTube, Jitterbug, Meituan, and others. This software penetrates every aspect of life and has become a part of people’s daily lives. With the development of science and technology and the high network penetration in the mobile Internet era. The use of information and the Internet platform has enabled the integration of the Internet with traditional industries and the use of advantageous features to create new development opportunities. In the mobile Internet era, the Internet has long penetrated various fields such as politics, economy, society, culture, and military, greatly accelerating the flow and sharing of labor, capital, and other factors and all kinds of information, and having a huge and farreaching impact on the way of life, work, and social operation of human beings, making the effectiveness of human communication, collaboration, and exploration of new fields greatly enhanced. Internet of Things Era The Internet of Things (IoT) describes networks of physical objects embedded with sensors, software, and other technologies designed to connect to other devices and systems to exchange data via the Internet. These devices range from everyday household items to complex industrial systems. In the past few years, the Internet of Things has become one of the most critical technologies of the twenty-first century. We can now connect everyday objects (kitchen appliances, cars, thermostats, baby monitors, etc.) to the Internet through embedded devices, and making seamless communication between people and things will be possible.

1.3 Origin and Development of the Metaverse

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With low-cost computing, cloud services, Big Data, and mobile technologies, devices and systems can share and collect data with minimal human intervention. In this highly interconnected world, digital systems can record, monitor, and adjust every interaction between connected things. Based on several technologies, the Internet of Things has evolved. These technologies are listed below: Sensor Technology Affordable and reliable sensors make IoT technology available to manufacturers. Cloud Computing Services The increased availability of cloud platforms allows businesses and consumers to access the infrastructure needed to scale without having to manage it all physically. And the Internet’s vast array of network protocols makes it easy to connect sensors to the cloud and other “things” for efficient data transfer. Machine Learning With the development of machine learning and access to vast amounts of data of all kinds stored in the cloud, enterprises can gather information faster and more efficiently. The emergence of these related technologies will continue to expand the boundaries of the IoT, and the data generated by the IoT supports these technologies. Artificial Intelligence (AI) Advances in neural networks have led to dramatic improvements in Natural Language Processing (NLP) technology, lowering the development and production costs of smart devices and making IoT devices (such as digital personal assistants Alexa, Cortana, and Siri) accessible to the masses.

1.3.2 The Prototype of the Metaverse In 1992, a science fiction novel called Snow Crash was published and nominated for the British Science Fiction Award in 1993 and the Arthur C. Clarke Award in 1994. In this book, author Neal Stephenson first mentioned the concept of a “metaverse.” The “metaverse” world described in Snow Crash is a virtual shared space parallel to the real world. The “metaverse” constructed in the novel is created by the fusion of the real world with powerful virtual technology and the virtual world based on digital technology (Fig. 1.8). The metaverse world Stephenson built is built in a virtual urban environment, with a hundred-meter-wide highway running through a perfectly spherical planet with a circumference of 65,536 km. Users can enter the metaverse through two types of terminals: a personal terminal that projects a high-quality virtual reality display onto the glasses worn by the user and a low-quality public terminal. In the metaverse, users can also wear portable terminals, glasses, and other physical devices to maintain a constant connection to the metaverse. At this point, the “metaverse” is only a concept in the literature. On March 10, 2021, Roblox, a sandbox game platform, included “metaverse” in its prospectus for the first time and successfully listed on the New York Stock

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Fig. 1.8 First mention of “metaverse” in snow crash

Exchange, with its market capitalization exceeding $40 billion on the same day. The event was reported by major media and quickly fermented, triggering attention from all walks of life and forming the “metaverse” phenomenon. Today, with the rapid development of technology, the “metaverse” is no longer just a virtual world in science fiction, based on many technological innovations, people have more realistic expectations for the “metaverse.” Figure 1.9 shows the search popularity of searches about metaverse on Google and YouTube in the past 12 months. Google Trends counts the keyword hotness by calculating the proportion of keywords to all topic searches, and the higher the proportion, the greater the search hotness of the keywords. As seen from the graph, in 2021, the search volume of metaverse on YouTube reached two peaks, on April 17, 2021 and October 31, 2021. And on Google, the metaverse search volume also peaked on October 24, 2021. Figure 1.10 shows the geographical search popularity of the metaverse on Google and YouTube. As can be seen from the figure, China is the country with the highest number of searches for metaverse on both Google and YouTube. The attention and discussion of a metaverse in various fields in China have reached an unprecedented concern. The degree of metaverseization is a weighted result of the six characteristics of the metaverse. Figure 1.11 shows the degree of metaverseization of the representative companies. Among the four representative companies, Roblox has a higher degree of metaverse than the other three companies. Sandbox, Decentraland, and Axie infinity are all blockchain technology-focused game companies, and they all have their digital currencies and have built platforms that allow digital transactions. And their users are also creators in the gaming world, so all three companies are highly decentralized. As can be seen from the graph, social experience, economic system, and decentralization are the more accessible parts to achieve. In contrast, immersive experience, borderless feeling with the real world, and perpetuity are the

1.3 Origin and Development of the Metaverse

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Fig. 1.9 Metaverse search popularity (data source: Google trend)

Fig. 1.10 Metaverse geographic search popularity (data source: Google trend)

bottlenecks in the current development. They are the more difficult parts to achieve in building a metaverse. Figure 1.12 shows the daily activity volume, which is the number of users active on a website per day, for these four representative companies of the metaverse concept. Only Roblox continues to grow in the daily activity of the four companies, reaching 43.2 million in the second quarter of 2021 after including the metaverse concept in its prospectus. Axie infinity’s daily activity peaked in Q2 2021 at around 40,000. Decentraland and Sandbox will both see their peak daily activity in 2020.

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Fig. 1.11 Level of metaverse of representative companies

Fig. 1.12 Daily activity of metaverse concept companies (data source: Blockchain game info)

1.4 Layout of the Metaverse

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1.4 Layout of the Metaverse As mentioned earlier, the successful IPO of Roblox with the “metaverse” concept has sparked much interest in the metaverse as a mapping of the real world. In 2021, Facebook announced that it had changed its name to Meta and developed a platform demonstrating its intention to become a metaverse company. In 2021, Facebook announced that it had changed its name to Meta and developed a metaverse concept platform, demonstrating its determination to turn Facebook into a metaverse company. Subsequently, core figures in the Internet field in various countries expressed their expectations for the metaverse, and major Internet giants began to lay out the development path of their companies based on the current advanced technology clusters.

1.4.1 The Seven-Layer Chain for Building the Metaverse Building the metaverse covers an industry chain with a market capitalization of nearly several trillion dollars, from the experience of life scenarios required by users to the technologies that can bring the metaverse concept to life scenarios. Jon Radoff, the founder of Bearable, summarizes the seven layers of building the metaverse and lists the various industries covered by each element (see Fig. 1.13). 1. Experience Layer: Reflecting Real-World Life Scenes The experience in the metaverse is not simply immersion in three-dimensional space; it can map all aspects of human life scenes into the digital world. When the physical world is digitized, experiences can become even richer. The metaverse can help humans expand their boundaries and have experiences in the virtual world that they cannot have in the real world. Justin Bieber has staged a virtual concert on Wave Presents, where fans can interact with Bieber’s avatar online; French electronic music artist Jean Michel Jarre organized a virtual concert in a virtual “Notre Dame de Paris” using the Unity engine. Such events can show that the experience in the metaverse can break the boundaries of space and time. Moreover, the experience in the metaverse helps users become the creators of content: content will be generated and expanded from the interaction between people and people, people and things, and people and space, and each user can participate in creating content while experiencing and consuming it. The “immersion” of experience in the metaverse refers not only to the high degree of replication and mapping of the digital world to the real world but also to the fact that the metaverse greatly enhances people’s experience of various things and activities that can inspire more content creation. 2. Discovery Layer: A Key Area of Content Consumption The discovery layer enables the metaverse to build an economic ecology for creators. In the future, there is an excellent possibility for people to make a good

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Experience Games, Social, Sports, Theatre, Shopping

Discover Advertising, Exhibition, Rating System, App Store, Intermediary

Creator Economy Design Tools, Asset Markets, Workflows, Business

Spatial Computing 3D Engine, VR/AR/XR , Multitasking UI, Geo-information Mapping

Decentralization Edge Computing, AI, Microservices, Blockchain

Human Interface Mobile Devices, Smart Glasses, Wearable Devices, Haptics, Gestures, Sound Recognition Systems, Neural Interfaces

Infrastructure 5G, Wi-Fi, 6G, Cloud Servers, 1.4nm Process Semiconductors, MEMS, GPUs, Materials

Fig. 1.13 The seven-layer industry chain of building metaverse

profit in this layer of the industry and achieve Play-to-Earn. In the Internet era, people have found that using network traffic to produce content for marketing is an efficient mode of cash, and many self-publishers in the mobile Internet era are relying on this form to earn profits. In the metaverse era, the ecology of producing, selling, and consuming content will be more convenient and common. People can digitize the content or products they create and use their creativity to make profits. NFT is an emerging technology that fits well with the decentralized nature of the metaverse. It can inspire more creators to participate in the process of converting content into digital assets. Figure 1.14 shows the top NFT transactions on Opensea over the past 7 days. The first one, Clone X, had a gain of 329.71%.

1.4 Layout of the Metaverse

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Fig. 1.14 Ranking of NFT transactions on Opensea in the past 7 days

3. Creator Economy: Sharing and Co-creation The creator economy layer contains the elements needed to realize the ecology and look of the metaverse. Today, the first glimpses of the creator economy are already visible in a wide range of industries. Various engines and platforms have been built, so creators who do not know how to code can create in the digital world. For example, it is possible to create your website on Wix without mastering the syntax of HTML and JavaScript or to implement advanced visual graphics on Tableau without learning any code. This includes a variety of platforms and software on the market designed for engineers to help them do their jobs more efficiently. The platform provides a complete set of integrated tools allowing everyone to create and share their content. The development of cryptocurrency, in turn, ensures that creators can cash in on their content to incentivize more people to participate. 4. Spatial Computing: A Key Technology to Achieve Boundless Spatial computing is the key technology to seamless switching between the metaverse and real worlds. Spatial computing allows humans to create and enter a virtual 3D space. It mainly contains 3D engine technology, biometric technology, geospatial mapping technology, user interaction technology, and AI and Big Data technology. These technologies enable people to enter the metaverse world anytime and anywhere. Spatial computing technology is also a technical difficulty in realizing the metaverse world (Fig. 1.15). 5. Decentralization: The Core of the Ecosystem in the Metaverse Era Decentralization is the core of the metaverse ecology, and it is only through decentralization that the real creator economy can grow and develop. The metaverse belongs to every participant. The metaverse can be created, shared, and governed together. Blockchain and edge computing are the key technologies to realize decentralization. Edge computing is the key to improving arithmetic power, which can handle the massive amount of data generated by the metaverse world with great efficiency.

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Fig. 1.15 Domains covered by spatial computing software

6. Human-computer Interaction: The Technical Core of High Immersion Microcomputer devices have become more closely integrated with the human body, enhancing the human-computer interaction experience. The development of AR/VR/XR and other devices has improved people’s experience in the metaverse world. Users can not only immerse themselves in the virtual world through AR/VR devices, but in the future, there is the possibility of using brain-computer interfaces to achieve immortality in the virtual world as well. 7. Hardware Devices: Infrastructure in the Metaverse The infrastructure layer includes the infrastructure and hardware devices that enable the metaverse. 5G networks have already significantly increased bandwidth speeds while reducing network latency. 6G will increase speeds to another order of magnitude. AI chips can dramatically increase arithmetic power, boosting the training speed of machine learning algorithms and processing even larger amounts of data.

1.4.2 The Metaverse Layout of the Leading Internet Companies Figure 1.16 shows the current layout of the metaverse by the five head tech giant companies in a radar chart. The layout is divided into six directions: digital finance, wearable devices (including AR/VR and sensors, etc.), Adtech (mainly doing content and marketing), decentralized platform, software technology (including cloud computing, spatial computing, and AI technologies), and chips. As seen from the chart, the metaverse layout of Facebook (Meta) is more balanced than that of the other four companies, and it is the only technology company involved in digital finance. Apple and NVIDIA have more significant development in the field of chips than the other companies. Apple also vigorously develops wearable devices and software technology, but Apple’s decentralization is the most backward

1.4 Layout of the Metaverse

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Fig. 1.16 Metaverse layout of big companies with radar diagram

of the five companies. Microsoft, on the other hand, is quite good at decentralization. Alphabet5 has a strong presence in centralization and Adtech. 1. Facebook (Meta) The Facebook Connect 2021 keynote covered how Facebook sees the metaverse evolving in its ecosystem. Facebook (Meta) is focused on the experience layer in virtual and augmented reality with the acquisition of Within, the creator of Supernatural VR, an immersive fitness in virtual reality platform. Facebook (Meta) is essentially an advertising company, and its main profits are derived from advertising revenue. This makes them very different from Apple’s hardware business or Microsoft’s software services business. Advertising must be integrated into products to generate revenue to support Facebook’s (Meta) estimated $10 billion or so annual investment in metaverse layout. Horizon Worlds is Facebook’s (Meta) developer platform for creating virtual reality content. It includes no-code or low-code tools for content creation. Facebook (Meta) also announced they want to use NFT to create accessories for users’ avatars.

5 Alphabet is the name used by Google after its reorganization, and Alphabet has a holding company structure that separates its search, YouTube, and other web subsidiaries from its R&D investments.

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On the hardware side, this includes the Oculus virtual reality platform and the Ray-Ban Stories smart glasses. While the latter do not have augmented reality capabilities, they have cameras, voice recognition commands, and high-quality audio capabilities. They also spent more than $5 billion to acquire CTRL-Labs, a neural interface company. In addition to hardware products, Facebook (Meta) has invested in software to create multi-layer user interfaces, digital holograms, artificial intelligence for gesture recognition, and more. In addition, Facebook (Meta) has planned around a digital wallet (Novi) and its digital currency experiment (Diem, formerly known as Libra). In the infrastructure field, Facebook (Meta) is trying to catch up with Microsoft and Apple, which have many years of experience manufacturing advanced hardware. While Meta’s acquisition of Oculus consists mainly of components and semiconductors from other suppliers, with a poor level of independent R&D, Facebook (Meta) intends to invest heavily in materials science and semiconductor engineering. 2. Apples Apple has made a series of acquisitions focused on computer vision since 2014. With the acquisitions of FlyBy Media and Metaio in the AR space, the company also acquired Emotient, RealFace, and Faceshift for facial recognition and machine vision. By all metrics, these acquisitions prove that Apple’s priority areas are AR/VR and computer vision. When it comes to creating metaverse, Apple has a huge advantage with their robust software that supports the creator economy: Xcode, which can build any type of MacOS and iOS application, and numerous developer frameworks. In addition, Apple has the 3D graphics API: Metal and Apple Maps, which allows mapping, a key technology for augmented reality applications. There is also the all-important ARKit, which allows for an augmented reality application development framework. These can help Apple create a significant developer ecosystem. However, Apple seems to be quite hostile to decentralization. Their business is built around vertical integration rather than sharing their technology stack with others. Apple’s trajectory is moving toward more centralization. Apple’s good ecology exists only among Apple’s products, and they have minimal interaction and compatibility with the Internet and other providers. In addition, Apple makes computers, mobile devices (iPhone and iPad), and wearable devices such as the Apple Watch. Few Internet companies make hardware like Apple. In 2021, with the M1 chip, Apple products are far superior to other electronics on the market. M1 can unify memory, GPU, CPU, and AI processing to improve performance and power consumption, which will be vital to achieving the metaverse of virtual reality. Among the Internet giants, Apple is much more advanced in hardware devices and semiconductor engineering.

1.4 Layout of the Metaverse

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3. Microsoft Microsoft is the most decentralized of the big three: PC software development remains a truly open and license-free software ecosystem. Microsoft profits significantly from the Windows operating system while enabling software developers to capture most of the value. Microsoft’s CEO Satya Nadella also presented his vision of the metaverse at Microsoft Ignite. Microsoft has played the biggest role of the three giants in advancing and developing apps for the experience layer: through our products, such as Microsoft Flight Simulator, and through the acquisition of a series of top game studios that have produced such hits as Halo, Fallout, and Elder Scrolls. In addition, Minecraft is training countless kids on how to create content in a relatively open metaverse, and its creativity demonstrates what the creator economy of the metaverse might look like. There is also the social software Microsoft Teams, which may lead to more immersive and concrete employee collaboration. And Microsoft also has an advertising network and the second largest Web search engine. Microsoft also has a portfolio that includes Visual Studio and countless other development tools. Microsoft has also invested in artificial intelligence technologies, particularly natural language processing, which is important for developing codeless or low-code creative tools and virtual lives. DirectX is the 3D graphics API that almost all PC software relies on. Microsoft is investing in operating system technologies that enable virtual reality to integrate seamlessly with our physical environments. Microsoft is investing in artificial intelligence and deep learning technologies applicable to image recognition, which is critical to virtual reality. Microsoft’s PC software development is inherently license-free. Microsoft has also invested in technologies such as autonomous identity, which provide an open and decentralized way to authenticate and own a person’s virtual identity. Thanks to a $21 billion deal with the U.S. military, Microsoft is working hard on its virtual reality product, HoloLens. Although HoloLens is aimed at government, military, and corporate customers, it may give Microsoft a head start refining its technology before making it available to consumers at a larger production scale and a lower price. In terms of chips, Microsoft is a far cry from Apple. They are hiring engineers to help with the display engineering and AI chip areas. On the other hand, Microsoft’s Azure cloud infrastructure business is huge and is an enabler of apps, games, and metaverse experiences. 4. NVIDIA and Alphabet NVIDIA’s semiconductor technology is a leader in virtually all areas critical to the growth of the metaverse, such as graphics processing units (GPUs), artificial intelligence, and data center operations. The Omniverse platform also focuses on workforce collaboration among various artists, engineers, and designers in immersive spaces. Alphabet’s services are the most important on the Internet, encompassing the Google search engine, YouTube, and the Google Play Store. Their approach to

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hardware is to license their operating systems to the world. Alphabet also has a growing cloud services business.

1.4.3 The Architecture of the Metaverse A complete metaverse world requires strong technical support to ensure that the metaverse world is not just a concept in novels and movies. The technology of a single domain cannot build a complete metaverse form; the interplay of many advanced technologies is the cornerstone of building a metaverse. This book will focus on the clusters of technologies that can make the metaverse concept come to life (Fig. 1.17). Artificial intelligence technology is ubiquitous in all levels, various applications, and scenarios of the metaverse. It includes smart contracts in blockchain, AI recognition in interaction, automatic generation of code characters, items, game plots, data AI in the Internet of Things, etc. It also includes voice semantic recognition and communication of virtual mythical objects in the metaverse, AI recommendations for social relationships, AI construction of various virtual scenarios, and various analysis and prediction reasoning, all of which require AI technology. The massive amount of data in the metaverse has an extremely high demand for computing power. Semiconductor manufacturers such as Nvidia and TSMC are constantly developing new hardware to improve arithmetic power, and the development of AI chips is in full swing. Interaction technology includes virtual display technologies (VR, AR, MR, XR) and sensor technologies such as somatosensory devices. It is the key to enhancing the sense of metaverse experience. The 3D engine and simulation technology related to the digital twin are the key technologies to liberate the productivity of the masses

Fig. 1.17 Infrastructure of the metaverse

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for the significant development of virtual worlds. If 3D modeling can be pulled down to the extent that the general public can do it, the great prosperity of the metaverse creators’ economy can be realized. Simulation technology is a key tool for virtualizing and digitizing the physical world. It is also necessary to significantly lower the threshold to a level that the general public can operate to accelerate the digitization of the real world. Digital twin technology is the key technology that determines whether the metaverse can have a high degree of immersion. The peer-to-peer network architecture of blockchain creates an excellent ecological environment for digital finance. The metaverse must be decentralized, and users’ digital assets must be able to flow freely in the virtual world, which is a decisive factor for the establishment of a digital financial system. Blockchain technology and smart contracts guarantee ownership authentication of digital assets and credible transactions under a decentralized architecture, and the way digital assets are generated and traded can help the formation of the economic ecology of creators in the metaverse. We will also introduce the virtual economic system and the operation mode of digital finance in the metaverse. In addition to the technical aspects, the construction of the metaverse will form a new type of digital society different from the structure of the real society. Consequently, there are many problems in the security and institutional aspects of the virtual world, which are the key issues related to the harmonious and civilized operation of the metaverse society. This book will explain the problems encountered in the metaverse and the solutions at the level of rules from two aspects: information security and institutional security.

Bibliography 1. Radoff J (2021) The metaverse value-chain. Medium. https://medium.com/building-themetaverse/the-metaverse-value-chain-afcf9e09e3a7. Cited Dec 2021 2. Rong K (2021) Roblox in-depth report: metaverse first unit, Meta-Universe Leaders. https:// data.eastmoney.com/report. Cited Dec 2021

Chapter 2

Basic Infrastructure of the Metaverse

2.1 Introduction The coming wave of Web 3.0 will dramatically break through the technological limitations of Web 2.0. The transition from the existing Internet (Web 2.0) to Web 3.0 will be a decades-long process that will fundamentally change how we interact with the Internet. Decisions and efforts made today will cascade and influence future generations. Just like the financial revolution led by DeFi, the Web 3.0 revolution is inevitable and will advance gradually. With the rich interactions and globally available transaction models now possible, Web 3.0 will use efficient machine learning algorithms to connect data from individuals, companies, and machines in an encrypted manner, fueling the metaverse world. Metaverse will also have the largest sustained computing demand in human history. This chapter will describe the application of artificial intelligence technology and Big Data technology in the metaverse world, starting from the network ecology needed for the metaverse (Fig. 2.1).

2.2 Metaverse Core Network Ecology The ultimate form of the metaverse is bound to be decentralized, and the current Web ecology does not fully meet the needs of the decentralized metaverse. Some people believe that the coming Web 3.0 era and the metaverse need a high degree of overlap, and Web 3.0 may become an essential step on the road to the metaverse.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Cheng, Metaverse: Concept, Content and Context, https://doi.org/10.1007/978-3-031-24359-2_2

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Network Ecology

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Experience optimization AI Chip Building virtual environments Virtual Identity

Big data in the metaverse

Big Data

Data Storage

Boosting Arithmetic Power

Data Processing

Fig. 2.1 Basic techniques for building a metaverse

Fig. 2.2 From the Web 1.0 to the Web 3.0

2.2.1 Three Technical Iterations of the Web Web 3.0 is manifested through new technologies, such as cryptocurrency, virtual and augmented reality, artificial intelligence, etc., driven by new technologies. Web 3.0 is about creating an Internet that is for the people and by the people (Fig. 2.2). Ether brings a wave of business innovation far beyond the countless industries that have impacted Ether significantly. If it is successful, these projects will pave the way for new markets and business models that protect user privacy and allow companies to develop more sophisticated applications that will drive Web 3.0. Moving the ecosystem forward is the disruptive potential of Ethereum. The resulting Web 3.0 Ethernet system will produce rich and trusted interaction models across many decentralized sectors. Tim Berners-Lee, the founder of the World Wide Web, gave an interesting explanation of Web 1.0 to Web 3.0. Web 1.0 was the “readable” phase of the Web, where we see limited interaction between users. Web 2.0 is the “interactive” phase of the Web, where users can interact with sites and each other. Web 3.0 is

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Fig. 2.3 Web 1.0 Era

the “executable” phase of the Web, where computers can interpret information as humans do and then generate personalized content for users (Fig. 2.3). Web 1.0 Era To understand what “Web 3.0” means, we need to go back to the Web 1.0 era, which lasted from the late 1980s until 2005 and was the original World Wide Web. It was built on open-source (e.g., Linux), license-free development (e.g., PC software), and open standards (HTML/HTTP). Some of the largest existing Internet companies (e.g., Amazon and Google) were built on or expanded into this ecosystem for profit (e.g., Microsoft and Apple). At this stage, the pages were static, and the server’s file system provided the content. In addition, there was no interactivity on these pages. Users could not “respond” to posts with comments or likes. In the Web 1.0 era, users only passively consumed information (Fig. 2.4).

Fig. 2.4 The illustration of Web 2.0 Era

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Web 2.0 Era The next technological iteration of Web 1.0 was Web 2.0 or the Web as we know it today. While most Web 2.0 was built on Web 1.0 technologies, Internet companies in the Web 2.0 ecosystem built on the same open environment that enabled the Web 1.0 ecosystem but created a “Walled Garden” ecosystem to allow social connections and content creation (Fig. 2.4). Companies such as Facebook and YouTube have created “walled gardens” 1 for social networks and user-generated content. At this point, the Web no longer has static content but dynamic content, and users can now interact with the content posted on the Web. User interaction was made possible by the invention of technologies such as JavaScript, HTML, and Cascading Style Sheets (CSSs), which allowed developers to build applications where users interacted with content in real time. Three core layers of innovation drove the rise of Web 2.0: mobile, social, and cloud services. The introduction of smartphones such as the iPhone and access to mobile Internet has greatly expanded the user base and use of the Web. We have shifted from dialup access at home daily via desktop to be able to connect to the Internet anywhere, anytime. Web browsers and various mobile applications are in everyone’s pocket. Whether it is social media, blogs, or podcasts, in Web 2.0, it is all based entirely on interaction. These social networks foster user habits, where users interact through comments and can easily share content such as text, images, and music with others. Some famous applications that flourished in Web 2.0 are Weibo, Instagram, YouTube, Facebook, and WeChat. Therefore, this Web era is also known as the social networking era. Web 3.0 Era While the Web 2.0 wave continues, we are also seeing the next revolutionary shift in Internet applications, Web 3.0. Web 3.0 is a fundamental disruption that will take us one giant step closer to an open, trusted, and permissionless Web. Web 3.0 networks allow participants to interact publicly or privately without a trusted third party. Anyone, including users and providers, can participate without authorization from the governing body. Web 3.0 is a semantic Web. This means that we can not only search for content based on keywords but also use AI to understand the semantics (i.e., its inherent meaning) of Web content. This will allow machines to understand and interpret information just like humans do. The primary purpose of the Semantic Web is to make it easier for users to find, share, and combine information (Fig. 2.5). Today, however, the term “Web 3.0” has come to mean more than just the semantic Web. For example, blockchain enthusiasts use “Web 3.0” to describe the idea of building applications on an open and decentralized architecture.

1 A walled garden is the opposite of a “completely open” Internet (Garden) and refers to an environment in which the user access to Web content or related services is controlled. A walled garden generally restricts users to a specific area, allowing them to access specified content while preventing them from accessing other content that is not permitted.

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Fig. 2.5 Web 3.0 Era

The primary goal of Web 3.0 is to make the Internet more intelligent, autonomous, and open. While Web 2.0 was driven by the emergence of mobile, social, and cloud, Web 3.0 is primarily built on new technological dimensions: edge computing, decentralized data networks, and artificial intelligence. 1. Edge Computing While in Web 2.0, recently commoditized personal computer hardware was repurposed in data centers. The shift to Web 3.0 is extending the data center to the edge. As a result, the amount of data generated and consumed in the metaverse will be hundreds of times greater than the current amount of Internet data. And edge computing will dramatically increase the speed at which data can be processed. 2. Decentralized Network Structure Decentralized data networks make it possible to sell or exchange personal data (e.g., personal health data of individuals, crop data of farmers, or location and performance data of cars) without losing ownership control over the data, giving up data privacy, or relying on third-party platforms to manage the data. With blockchain technology, we can build applications on decentralized protocols. This way, we are not trapped in a Walled Garden model on the Internet. 3. Artificial Intelligence (AI) AI and machine learning algorithms have become very powerful and can create effective predictive and learning algorithmic models. With AI, we can better understand and interpret content on the Web. When on top of new decentralized data structures, we can access vast amounts of Internet data that are the envy of today’s tech giants, with potential applications far beyond

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the present. It can lead us to precision materials, drug development, and climate modeling. Web 3.0 will also use 3D graphics and virtual reality technologies, such as VR and AR, to make our Web experience more immersive. A metaverse is a place where people can interact with content online. Instead of simply interacting with a 2D application on a cell phone or merely turning pages when browsing the Web, Web interaction in the metaverse is transformed into interaction with 3D objects. Web 3.0 is equivalent to a spatial network. It combines a physical layer, a digital information layer, and a spatial interaction layer that allows users to use the Internet in new, non-textual ways.

2.2.2 Web 3.0 and the Metaverse For the metaverse to become a reality, rather than a concept hyped by capital, it needs to be open-source, interoperable, and controlled by the masses rather than the few in the Internet ecosystem (Fig. 2.6). The flaws of the second iteration of the Internet (Web 2.0), coupled with the birth of public blockchain technology, have helped us move toward a more decentralized Web 3.0, where the metaverse and the broader decentralized Web are all about the

Fig. 2.6 Web 3.0 and the metaverse

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convergence of the natural and virtual worlds. Therefore, interoperable open-source public chains are vital to ensuring that virtual and real worlds can be interlinked seamlessly. The Web 3.0 ecosystem is essentially an engine for absorbing blockchain technology. Every new blockchain concept is immediately identified and integrated into Web 3.0, which will power the metaverse products. While traditional public chains remain at the heart of the Web 3.0 ecosystem, blockchain technology has enabled more intersection of the two terms in the context of technological innovations such as decentralized finance (DeFi) and non-fungible token (NFT). Web 3.0 means that Internet access will be ubiquitous: across regions, networks, and devices. Currently, we mainly use PCs and smartphones for Internet connectivity. In the future, the use of the Internet will explode by making Web 3.0 available in areas such as wearables, smart devices, AR/VR devices, IoT interfaces, and smart cars. The Web 3.0 ecology is reflected in the metaverse world in three main ways. 1. Decentralization Web 3.0 will be based on decentralized Web architecture, a mandatory feature that is somewhat difficult to achieve. The Internet is now controlled with overwhelming power by a handful of technology giants and corporations who act as gatekeepers of data and algorithms. On the other hand, the new Internet is based on a completely open-source architecture that is not controlled by a single organization or a group of organizations and will be decentralized entirely through blockchain architecture. As a result, anyone can use, modify, and extend Internet data without any restrictions. This is one of the main reasons Web 3.0 has not become viable until recently; users, creators, and every online entity will exist in an Internet ecosystem decentralized through specially designed protocols. 2. AI and 3D Technology AI and 3D technologies can help users express themselves in virtual space. Interoperable frameworks can bring the user’s avatar into the metaverse. New online experiences that include games, music, theater, and many other metaverse applications will be ways to recombine these forms of self-expression. To achieve this in the broadest range of applications, we need a virtual identity that can be interacted with and a highly realistic spatial environment. AI and 3D technologies are the core technologies to achieve these. 3. Creators’ Economy Web 3.0 provides the creative framework for the next generation of “Play-to-Earn” (P2E). In recent years, many people have been making money through eSports, live streaming, or other forms of gaming. As a result, millions of gamers are eager to turn their hobby into a means of earning a living. The goal of Web 3.0 is to strike a better balance in the creator economy. However, there are few checks and balances on how online creators are paid. The concept of user incentives is not clear. The users may be rewarded with tokens or cryptocurrencies for their willingness to share their data. Such incentives would be an essential part of the Web 3.0 experience.

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2.3 Big Data Processing If the future digital society belongs to a metaverse, what do we need to support such a largely digital world? A metaverse is a parallel digital world separate from the physical world, created by people and manipulated in digital form. Each person who enters the metaverse forms a data file, which grows as social activities are generated, thus forming an extensive data network. It is certain that the metaverse, once developed and applied, will generate massive amounts of data, putting enormous pressure on the real world to process data. Therefore, Big Data processing technology is one of the critical technologies for the smooth realization of the metaverse.

2.3.1 Big Data in the Metaverse Big Data is a combination of structured (e.g., transactional and financial data), semistructured (e.g., Web server logs and streaming data from sensors), and unstructured (e.g., text, document, and multimedia data) data collected by organizations that can be used to mine information and use it in machine learning projects and to build predictive modeling (Fig. 2.7). Big Data is a product of the continuous development of information technology and computer technology. In 2009, Google engineers successfully predicted a worldwide epidemic of influenza A (H1N1) based on user search data, even before U.S. public health officials did. Google’s approach to epidemic prediction did not require large-scale field testing but used the data from billions of daily user searches

Fig. 2.7 Types of Big Data

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to arrive at these predictions. This is a typical application of Google’s Big Databased analytics to support social life. According to the actual operation process and the evolution of technology, Big Data analysis can be roughly divided into four parts. First is the preprocessing of data, including collection, storage, cleaning, and integration. After that, statistical methods can be used to describe data characteristics. Data mining techniques (primary machine learning techniques) and artificial intelligence techniques (advanced machine learning techniques) can be further employed to uncover the more profound value implied by the data. It is foreseeable that more high-quality data will be available for machine learning in the metaverse world and contribute to the continued development and innovation of Big Data technologies. In the real world, the problems of human time, labor, and cost are quickly replaced by artificial intelligence in the metaverse. In the real world, for example, people must go through many processes to broadcast news, such as hiring announcers, filming in studios, and editing video to finally broadcast on TV. However, in the metaverse, AI announcers can deliver urgent and important news quickly, consistently, and for long periods. To broadcast news in the metaverse, real announcers’ facial expressions, muscle movements, voices, nuances, and gestures are all valid data that can be used for learning. Metadata stored in blockchain blocks can then selectively provide the necessary high-quality data. Creative activities in the metaverse are often developed using artificial intelligence rather than real people. Artificial intelligence artists create work with an understanding of trends and styles and then use their knowledge to develop their work. In the past, large amounts of data were used for stylistic analysis. AI artists store data in a distributed ledger to be easily selected and reused. More data is acquired and practiced repeatedly to reduce the probability of selecting the wrong data.

2.3.2 Data Storage in the Metaverse The metaverse is a virtual 3D environment requiring much data and server capacity. However, control through a central server can incur expensive costs. The most suitable data storage tool for the metaverse is undoubtedly distributed storage. In contrast to the traditional application platform with centralized management, the metaverse network is deployed on a blockchain and uses distributed storage to handle data. All data are maintained and managed by individual nodes, reducing the risk of data loss, tampering, or data leakage from centralized storage, and can meet the high requirements of the metaverse for massive data storage.

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Fig. 2.8 Blockchain technology combined with IPFS

For example, GoodData File System (GDFS), based on distributed storage, combines blockchain technology with IPFS2 (Fig. 2.8). The reliability, availability, and perpetuity of data storage are ensured through multiple data backups and allocating storage resources nearby. GDFS, as a community-driven decentralized system, establishes a perfect incentive mechanism to reward storage providers and punish falsifiers, effectively coordinating the relationship between storage users, storage resource providers, metadata managers, and coordinators. In addition, the data is returned to the data producer as a personal asset in the metaverse. In data privacy protection, this step often requires the support of privacy computing techniques. Currently, standard privacy computing techniques include secure multi-party computing, federated learning, and differential privacy. Some privacy computing projects have been implemented, such as the GoodData blockchain. GoodData blockchain is a blockchain platform engaged in data security, sharing, and capitalization. GoodData’s primary function is to encourage users to share data from the metaverse (e.g., sleep data) on the platform to assist medical and other research institutions in studying health issues such as insomnia through the data. Users can share their sleep data, and as data owners, users can earn token revenue on an ongoing basis.

2 IPFS (InterPlanetary File System) is a peer-to-peer distributed file system whose goal is to replace the traditional Internet protocol HTTP.

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Fig. 2.9 Cloud computing and edge computing

In today’s technologically saturated world, millions of devices collect and share information over the Internet. Most information is processed in large data storage centers. Most companies have cloud servers located in distant locations, resulting in inefficiencies. To handle larger volumes of data, edge computing was created. The technology can solve the problems that companies have with traditional cloud computing platforms.

2.3.3 Edge Computing Edge Computing is a strategy that brings computing power and storage closer to the data source rather than transferring data to a distant central server (Fig. 2.9). Today, many enterprises use data as the lifeblood of their operations and are challenged by the ever-increasing volume of data. Traditional cloud-based platforms are the standard way to compute data. Edge computing is a decentralized computing architecture that moves application patterns, data, and services from the central node of the network to the logical edge nodes of the network for processing. Edge computing decomposes extensive services initially handled by the central node into smaller and more manageable parts and disperses them to the edge nodes for processing. Edge nodes are closer to users’ end devices, which can speed up data processing and delivery and reduce latency. In this architecture, data analysis and knowledge generation are more comparative to the data source and, therefore, more suitable for handling Big Data. As the name implies, edge computing works at the edge. Everything happens at the network’s edge, where most data transfer occurs, rather than transferring the raw

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data to the data center for processing and analysis. Edge computing shifts storage and computing resources to where the bulk of the data is generated. Different types of devices can perform data analysis near the edge. At this “edge,” data is sorted, analyzed, and modified. This technology will help improve business efficiency, reduce unnecessary costs, and reduce network latency. Edge computing is seen as a more efficient alternative to cloud computing when handling large amounts of data. Traditional cloud computing can process individual units of data very efficiently. However, it cannot accommodate large amounts of data across data centers, and central servers are poor at producing meaningful and real-time results. In the future, more AI devices will use edge computing rather than cloud computing. Artificial intelligence and cloud computing are both buzzwords in the IT world, and the two technologies complement each other. Artificial intelligence has traditionally existed within data centers powered by cloud computing. But over time, the technology has slowly made its way into the IoT space and the world of connected, intelligent devices. The growth in demand has more than doubled or tripled the number of data companies that must process daily. Technology companies realized they needed to upgrade computing power and bring data centers closer to endusers to reduce latency and other network inefficiencies. This realization has led the industry to incorporate artificial intelligence and edge computing into their devices to reduce latency while minimizing bandwidth consumption and operational costs. Smart speakers running on Google Assistant are an example. These devices typically have edge computing and artificial intelligence (AI) capabilities. These enable independent processing and analysis to present almost instant results. It also allows the device to run offline commands.

2.4 Metaverse and Artificial Intelligence Although the term artificial intelligence is quite commonly used, different people have different definitions. A relatively standard definition is that AI is the study and design of intelligent subjects, whereas an “intelligent subject” is a system that can observe its surroundings and act to achieve a goal. Artificial intelligence techniques enable machines to learn from experience and perform various tasks. Artificial intelligence was first introduced in 1956. In recent years, it has demonstrated its superior performance in a variety of application scenarios, including Natural Language Processing (NLP), Computer Vision (CV), and Recommender Systems (RSs). In Layman’s terms, we can think of artificial intelligence as machine learning, i.e., machine learning data and using the acquired knowledge to solve a specific problem. After nearly two decades of rapid development, machine learning tech-

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niques have shown results in many fields that far exceed those of expert systems3 and statistical models. The models used in machine learning techniques have become more complex, from regression analysis to deep learning (e.g., convolutional neural networks (CNNs) and recurrent neural networks (RNNs)), from supervised or semisupervised learning to reinforcement learning, thanks to the support of supercomputing power. Typical supervised learning algorithms include linear regression, random forests, and decision trees, unsupervised learning algorithms include Kmeans, principal component analysis (PCA), and singular value decomposition (SVD), and the popular reinforcement Learning algorithms have Q-learning, Sarsa, and policy gradient. These algorithms have demonstrated outstanding performance in computer vision, speech recognition, machine translation, and machine writing, and many applications have already gained market acceptance. The original Generative Pretrained Transformer (GPT) processed 110 million parameters; the latest Google Brain converter will exceed 1 trillion parameters. These neural networks have seen phenomenal growth in size in a relatively short period. Before the creation of these advanced neural networks, AI had already made impressive advances: speech recognition in Alexa, machine vision (for example, Tesla’s Autopilot system or Google image recognition), or algorithms that can beat humans (Alpha Go4 ) have created a stir on social media. And all these applications that have been implemented seem very basic compared to the future of AI. Undoubtedly, one of the main features of the emerging metaverse is the massive and more complex data that will be generated, providing opportunities for further development of AI, which can read and parse large amounts of data at a breakneck pace. Users can use AI to make decisions (as most enterprise applications do), or they can combine AI with automation. And it is only a matter of time before AI is used to create more intelligent, more immersive worlds in augmented and virtual reality. The metaverse will combine virtual reality (AR or VR) technology, digital twins, and AI to create virtual worlds that are scalable and closer to the real world.

2.4.1 AI Chip In the future, the computing power of chips will need to support the exponentially growing demands in the metaverse. Improving the performance of chips is becoming

3 An expert system is an intelligent computer program system that contains a large amount of knowledge and experience at the level of an expert in a particular field and can use the knowledge and problem-solving methods of human experts to address problems in that field. 4 AlphaGo, the first artificial intelligence robot to defeat a professional human Go player and the world Go champion, was developed by a team led by Demis Hassabis at DeepMind, a Google company.

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Fig. 2.10 Market revenue value of AI chips (data source: STATISTA)

increasingly complex, and artificial intelligence helps solve this problem. The success of modern AI technology relies on computation at unimaginable scales just a few years ago. Training leading AI algorithms can take up to a month of computation and cost a fortune. This powerful computing power is provided by computer chips that contain the maximum number of transistors5 and are tailored to perform some specific computing needs efficiently. From the 1960s to the 2010s, engineering innovations in shrinking transistors doubled the number of transistors on a single computer chip approximately every two years, a phenomenon known as Moore’s Law. During this period, the speed and efficiency of computer chips increased millions of times. The transistors used in today’s most advanced chips are only a few atoms wide. However, manufacturing smaller transistors is becoming increasingly complex, if not impossible, to solve, leading to unsustainable increases in capital expenditures and talent costs for the semiconductor industry. As a result, it is taking longer and longer to double transistor density. The growing demand for specialized applications such as artificial intelligence and the slowdown in Moore’s Law-driven CPU improvements have disrupted the growth of general-purpose chips. As a result, specialized AI chips are evolving and beginning to capture market share with traditional CPUs. Figure 2.10 illustrates the 5 Transistor is a solid-state semiconductor device with multiple functions such as detector, rectifier, amplifier, switch, voltage regulator, signal modulation, etc.

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market revenue value of AI chips, which was approximately $4.25 billion worldwide in 2017. The market revenue for AI chips is expected to reach $83.25 billion by 2027, an increase of nearly 20 times compared to 2017. While GPUs are often better than CPUs in AI processing, they are not perfect and have some features that make it easier to process AI models. GPUs need to process multiple function strings in parallel when processing two-dimensional or, in some cases, three-dimensional graphics. And AI neural networks also require parallel processing, so the GPU can do that part of the job well. However, AI neural network nodes are much like neurons in an animal brain, and neural networks require convolution, whereas GPUs fall short. So, in effect, the GPU is only optimized for graphics, not for neural networks. Another critical factor to consider is the current pace of AI development. Researchers and computer scientists worldwide are raising the bar for AI and machine learning at an exponential rate, and CPUs and GPUs, as hardware, cannot keep up with the pace of AI development. The number of transistors in dense integrated circuits (ICs) doubles every two years, but even at their best, they cannot keep up with the pace of AI development. As a result, the AI industry needs specialized processors to process AI algorithms and modeling efficiently. Chip designers are now working to create processors (Processing Units) optimized to execute these algorithms. These processors go by many names, such as NPU, TPU, DPU, SPU, etc., but a general term for them is AI Processing Unit (i.e., AIPU). AIPU is created to perform machine learning algorithms by operating on predictive models such as artificial neural networks. They achieve greater efficiency and speed in AI-specific computing by using “AI chips” instead of traditional computer chips. Some of the applications we have seen in the real world are security systems involving real-time facial recognition, such as for IP cameras, door cameras, etc., retail or enterprise chatbots for customer interaction and voice assistants using natural language processing technology. The speed of AI development will ultimately depend on AIPU. AIPU can increase the computational speed of machine learning tasks by nearly 10,000 times compared to GPU and, compared to GPU and CPU, can reduce the power consumption of machine learning tasks to improve resource utilization. Various chips can be subdivided for the AI chip market according to different technology types and application scenarios. The kind of architecture can be divided into System on Chip (SoC), System In a Package (SIP), and MultiChip Module (MCM): SoC chip is used to determine the system function, SIP can package a variety of functional chips to realize a chip with complete functions, and MCM can integrate large-scale integrated circuit chips, and the technology can improve not only the chip function but also reduce the size of the whole electronic machine. According to the type of integrated circuit technology, there are two main types: one is based on Application Specific Integrated Circuit (ASIC) technology chips, and the other is based on Field Programmable Gate Array (FPGA) technology chips. According to the computing method, there are mainly cloud-based and edge-based

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Fig. 2.11 Market segmentation of AI chips

chips. AI chips are widely used in natural language processing, robotic process automation, computer vision, and cyber security (Fig. 2.11). Artificial intelligence is essentially a simulation of the human brain using artificial neural networks designed to replace the biological neural networks in our brains. A neural network consists of a bunch of nodes that work together and can be called upon to execute a model. This is where AI chips come into play. They are particularly good at handling these artificial neural networks and aim to do two things with them: Training and Inference. Raw neural networks are initially underdeveloped or undertrained, so we need to train AI chips designed to process vast amounts of data quickly and efficiently. The more powerful the chip, the faster the network will learn. Once the neural networks are trained, inference chips need to be designed for real-world use, such as facial recognition, gesture recognition, natural language processing, image search, spam filtering, etc. One can think of training as a dictionary and inference as analogous to finding words and understanding how to use them; the two interact. It is worth noting that inference can be performed on a training chip but not an inference chip. We must know whether the AI chip is designed for cloud or edge computing and whether we need to train the chip for these computations. In cloud computing, there is no need for a chip on the device to process any inference, which can save power and cost. However, because the data is stored on cloud servers, it can be hacked or mishandled and leak data. In contrast, chips for edge computing are more private and secure than chips for cloud computing because all data is stored on the device, and the chip is usually designed for its specific purpose. For example, facial recognition cameras will use chips that are particularly good at running models for facial recognition. They also have drawbacks: adding additional chips to a device increases cost and power consumption. The following main AI chips are currently available on the market.

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AI Chip Based on Training Under Cloud Computing The purpose of this pairing is to develop AI models for reasoning. These models are eventually refined into use case-specific AI applications. These chips are powerful and expensive to run and are designed to be trained quickly. For example, NVIDIA’s DGX-2 system, which has a total processing power of 2 Peta FLOPS.6 It consists of 16 NVIDIA V100 Tensor Core GPUs. Another example is Intel Habana’s Gaudi chip. Everyday life requires much training for applications such as Facebook photo recognition and Google Translate. And the complexity of these models increases every few months. AI Chip Based on Inference Under Cloud Computing This pairing is intended for when inference requires such mighty processing power that it is impossible to perform such inference on the device. This is because applications need to use larger models and process large amounts of data. Examples of chips include Qualcomm’s Cloud AI 100, a large AI chip for processing massive amounts of cloud data. Then there is Alibaba’s Ringlight 800 or Graphcore’s Colossus MK2 GC200 IPU. The training chip trains Facebook photos or Google Translate, while the cloud inference chip processes the input data needed to create the model. It is typically used in AI chatbots or most other AI services. AI Chip Based on Inference Under Edge Computing Using an edge chip on the device for inference can eliminate network instability or latency issues and better protect the data’s privacy and security. The bandwidth required to upload large amounts of data is minimal, especially visual data such as images or video, so it can be cheaper and more efficient than cloud-based reasoning as long as it balances cost and energy efficiency. Examples include Enable’s KL520 and the recently introduced KL720 chips, low-power and cost-effective chips designed for devices, and Intel’s Movidius and Google’s Coral TPU. These chips can be used in facial recognition surveillance cameras, cameras in vehicles for pedestrian and hazard detection or driver awareness detection, and voice assistants. These different types of chips and their different use cases are critical to the future of the Internet of Things (IoT). Artificial intelligence will help optimize manufacturing, network routing, security, materials science, and many other areas needed to build the future. Artificial intelligence is rapidly becoming an essential part of our lives, and the field of AI chips will quickly evolve to accommodate our increasing reliance on technology.

6 Peta, used as a unit of measure, represents .1015 , or trillions of operations; FLOPS (FLoating-point

Operations Per Second) is a unit of computational speed for giant computers, i.e., the number of floating-point operations in one second.

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2.4.2 Building the Virtual Environment Artificial intelligence technology is one of the critical development areas in the current Internet field. The development of artificial intelligence technology is crucial for building metaverse worlds. It can be applied not only in training chips with higher arithmetic power but also help to enhance the participants’ experience in the metaverse world. By combining AR/VR and other technologies to optimize the virtual experience, participants can get a stronger sense of immersion in the virtual world. And the robust deep learning algorithm of AI can free people from repetitive work when building a metaverse and automatically extend the boundaries of the metaverse world. Virtual Experience Optimization Artificial intelligence can assist in human–computer interaction (HCI). When you put on a sophisticated, AI-enabled VR headset, its sensors will read and predict your muscle patterns to know precisely how you want to move in the virtual world. AI can help reproduce the real sense of touch in VR. In addition, computers improve gesture recognition, allowing us to interact more naturally with computers. AI technology can enable computers to understand human emotions and body language more accurately. Eye-tracking is another crucial aspect of immersive interfaces for virtual reality: photoreceptors in the human eye are most dense in the central concave area, allowing humans to perceive the highest resolution and the other regions for peripheral vision. Virtual reality must render the best information where the human eye is focused. AI predicts where the human eye will look next to help prepare the best rendering in advance. This is important to provide a highly immersive experience (Fig. 2.12). Everyone’s brain is different, so the role of AI is to learn and adapt to the uniqueness of each individual. Researchers have trained the Neuralink device to

Fig. 2.12 Brain implantable device

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read the monkey’s mind, which is done by using artificial intelligence to learn and interpret data received from hardware implanted in the monkey’s brain. In 2021, language models will begin to be applied to the visual world. Text can convey much information about the world, but it is incomplete because we also need the vision to access information. The next generation of AI language models will be able to edit and generate images based on textual input. At the same time, the visual space contains complex information to create appropriate textual narratives, which will improve the accuracy of machine understanding. Massive Expansion of Virtual Worlds When given historical data, the AI engine learns from previous results and attempts to generate its results. The AI output will improve with new input, human feedback, and machine learning reinforcement. Eventually, the AI will perform the task and produce results nearly as good as those made by humans. Companies like Nvidia are training AI to create entire virtual worlds. This breakthrough is critical to ensuring the metaverse’s scalability, as it automatically enables machines to widen the boundaries of metaverse worlds without human intervention.

2.4.3 Virtual Identity Artificial intelligence technologies are utilized to mimic and replace human behavior. Artificial intelligence predicts a user’s personality, intelligence, and economic level by analyzing their text, message, and other behavioral patterns in the metaverse. The metaverse uses AI to create human-like voices and unique content. Creating content that mimics human behavior using AI technology and the metaverse’s vast amount of data required is possible. Accurate Virtual Avatar Creation Users are at the heart of the metaverse, and avatars and virtual identities will determine the quality of the participant’s experience. Artificial intelligence technology can analyze 2D user images or perform 3D scans to create highly realistic simulated avatars. To make avatars more dynamic, they can draw various facial expressions to express emotions and facial features such as wrinkles and age spots caused by aging. Artificial intelligence has been used by companies such as Ready Player Me to help users create avatars in the metaverse. Meta is developing its technology for creating virtual avatars. Humanity in the Digital Age In the metaverse, digital humans are 3D versions of chatbots. They are not exact replicas of other people; instead, they are AI-enabled non-player characters (NPCs) in video games that respond to the actions of users in the virtual reality world. Digital humans are created entirely with AI technology, from NPCs in games to automated assistants in virtual workplaces, and many tech companies have invested in this direction.

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Fig. 2.13 Virtual human by MetaHuman

Epic Game’s MetaHumans project, which just entered its sneak preview phase in April 2021, aims to reduce the time it takes to create realistic characters from months to minutes. In addition to the shape of the characters, it brings them to life through realistic movements and performances. Figure 2.13 shows a virtual human created using Epic Game’s MetaHuman Creator. Multilingual Conversion One of the main ways digital humans use artificial intelligence is in language processing. Artificial intelligence can help break down natural language, convert it into a machine-readable format, perform analysis, produce results, and then convert the results into human language and send them to the user. The whole process takes a fraction of a second, just like a human conversation in the real world. And, depending on how well trained the AI is, conversations can be converted to any language so that users worldwide can communicate without barriers in the metaverse. Today, we have seen how AI can assist humans with everyday tasks such as helping with checking, testing, coding, and even automating the generation of entire story segments. As more and more people become digital content creators, we want AI to take on the role of creative assistant, working alongside human creators to automate the tedious, repetitive, or complex tasks of the creative process. The AI system will learn from previous examples and patterns in the metaverse and use the information to assist in the new creative process. These predictions can then be used to customize and adapt the experience to the player’s most engaging content and interactions on a personal level. Imagine having an AI system that can combine or even generate content and experiences tailored specifically to the user. From boosting the arithmetic power to handle vast amounts of data in the metaverse world to generating digital environments and shaping more realistic AI characters, the potential applications of AI are almost limitless. As for the metaverse, AI technology is undoubtedly one of the most critical technologies for building it, regardless of its final form.

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2.4.4 Artificial Intelligence and the Digital Twin The digital twin enables the metaverse and the real world to interact. Changes in either one of them will lead to corresponding changes in the other world. Chapter 3 will provide a more specific introduction to the digital twin in the context of virtual reality technology, where we first discuss the application of artificial intelligence techniques to the digital twin. A digital twin is a digital clone of a physical entity or system with high integrity and the ability to interact with the physical world in real-time. Achieving all the functions of a digital twin for the physical world requires a large amount of reading, processing, and analyzing data, in which human operations are undoubtedly inefficient. Therefore, it is necessary to automate this process. Deep learning of artificial intelligence technology can train machines to automatically extract valid information from large amounts of complex data and analyze it. Thus, deep understanding has excellent potential to facilitate the implementation of digital twins. A study has proposed a generic deep learning algorithm that can be applied to the digital twin, as shown in Fig. 2.14. In the training phase, historical data from the metaverse and the physical world are fused for deep learning training and testing. If the test results meet the requirements, an automated system is implemented. In the implementation phase, real-time data from the metaverse and the physical world are fused for model inference.

Fig. 2.14 AI algorithms applied to digital twins

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Bibliography 1. Alsop T (2021) T. Global artificial intelligence (AI) chip market revenue 2017–2027. Statista. https://www.statista.com/statistics. Cited Oct 2021 2. Garibay T (2018) Artificial intelligence chips: past, present and future. Semiengineering. https:// semiengineering.com. Cited Oct 2021 3. Lee J, Azamfar M, Singh J, Siahpour S (2020) Integration of digital twin and deep learning in cyberphysical systems: towards smart manufacturing. IET Collab Intell Manufact. https://doi. org/10.1049/iet-cim.2020.0009 4. Tianyi D (2021) What is IPFS? Zhihu. https://zhuanlan.zhihu.com/p/32615963. Cited Dec 2021

Chapter 3

Metaverse and Immersive Interaction Technology

The rise of the metaverse concept is an opportunity and a challenge for developing its core technologies. Among the many technologies, immersive interaction technology is a significant one. This technology has been widely used in paramedicine, industrial design, VR games, and 3D movies. This chapter mainly introduces the concepts, theoretical foundations, and applications of immersive interaction technologies.

3.1 Introduction of Immersive Interaction Technology As the concept of metaverse spreads, more people are looking at the field of immersive interaction technology. Immersive interaction technology can make the metaverse more realistic, thus allowing people to experience the world better; therefore, immersive technology is the core technology of the metaverse. Immersive interaction technologies include many aspects, and currently commonly used technologies include Virtual Reality (VR), Augmented Reality (AR), Mixed Reality (MR), and Extended Reality (XR). VR can realize the input and output of information in the metaverse by taking over the complete sense of sight, hearing, touch, and motion capture to bring people an all-around immersive experience. AR technology superimposes a layer of virtual information on top of the real world, but interaction is not yet possible at this stage. MR mixes the virtual with the real, creating virtual objects that can interact with the real environment by projecting a light field on the retina, enabling partial retention of the virtual image and the ability to switch freely with reality. At last, XR includes all three kinds of “reality” (AR, VR, and MR), and it is also increasingly mentioned. Humanity’s mental expansion of the real world is constantly evolving, from handwritten words and hand-drawn pictures in the past to movies, TV, and today’s PC games and VR games. Virtual reality compensation theory and world simulation © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Cheng, Metaverse: Concept, Content and Context, https://doi.org/10.1007/978-3-031-24359-2_3

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theory are important foundations that support this expanded journey. Virtual reality compensation theory means that what a person lacks in the real world will try to make up for in the virtual world. When possible, they will achieve compensation in the virtual and real worlds. On the other hand, the world simulation theory assumes that a civilization’s impulse to create virtual worlds to be compensated is eternal, so long-term development will inevitably create a virtual world, and a higher level designer may create the world in which it is itself located. Jean Baudrillard’s simulacrum theory divides the history of human simulation into three stages: counterfeit, production, and simulation. Counterfeit The real and the virtual are still distinguishable, and the real is higher than the virtual. This stage follows the law of natural value, believes that things in the real world are valuable, and pursues to make imitations that simulate and replicate nature and reflect nature. Production The status of real and virtual things gradually tends to be equal. This stage follows the laws of the market and aims to win market value. The massproduced imitations form a similar relationship with the real copies. Simulation Real and virtual are confused with each other. This stage follows the law of structural value and aims to make the simulation and the real give an indistinguishable experience. In the simulation stage, the simulacrum is produced through reproducible technology, and the real object is thus defined as “something that may produce an equivalent copy.” As the replication process advances, the simulacrum assimilates reality into itself, and the boundary between the two disappears. From this theory, it is clear that the human quest for virtual reality is constantly moving forward, and Fig. 3.1 is ample evidence of the continuous spiritual expansion of virtual reality in the way humans themselves.

Fig. 3.1 Stages of mental expansion to the real world

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3.1.1 Virtual Reality (VR) Virtual Reality (VR) technology involves mainly computer, electronic information, and simulation technologies. VR creates an entirely virtual environment by isolating all real-world images through the device. Users can experience 3D virtual immersion through VR head-mounted displays. Virtual reality technology uses computers to generate simulated environments and immerse the user in them. It uses electronic signals generated by computer technology, combined with various output devices, to transform real-life data into virtual images that people can see. These images can be real objects in reality or substances that are invisible to our naked eyes, and 3D models will represent these images. Because these images are not something we can see directly but are simulations of the real world through computer technology, they are called virtual reality. Virtual reality enables users to be fully immersed in a virtual world. A proper virtual environment should be able to simulate the five human senses (taste, sight, smell, touch, and hearing), but this is not yet entirely possible with current technology. Since the Homo sapiens brain has evolved over 200,000 years, the human instinct to react to the outside world has largely taken shape, so trying to use virtual reality to trick the eyes is a very challenging task. If we put our eyes close to the screen, we may still see the real world outside the screen through peripheral vision, while if the eyes are too close to the screen, they cannot focus and thus cannot see objects. VR devices have also undergone several iterations of updates: CardBoard To allow the left and right eyes to see the standard picture, the image is split on the left and the right, and the images seen by the two eyes are slightly different after the split screen, which can produce a sense of three-dimensional distance, and the screen can be pushed up to a distance of one meter through a convex lens, but doing so distorts the picture and creates colored edges. This negative effect is well offset by making the image anti-distortion and the edge anticolor. To solve the problem of other objects in the field of view, a cardboard box can be used to cover the lens to obscure the excess vision. Based on the above principle, Google launched the first generation of simple VR devices, CardBoard. VR All-in-One Headset Although the CardBoard has met the basic needs of a VR, this simple box does not meet the needs of consumers to wear. For this reason, some researchers began to improve the CardBoard, replacing the cardboard box with a sponge and rubber. Due to the different facial structures of men and women and to meet the needs of near-sighted people, the new box added the eye distance adjustment function. But this box requires the phone as part of the VR, also known as all in ones, such as Xiaomi VR eyes and Storm Magic Mirror. However, this technology has many shortcomings. First, the GPS accuracy of the phone is too low; after the person is wearing VR glasses, the picture cannot change in real-time according to the person’s movement. Second, this stage uses air pressure sensors to measure height, which will lead to too much deviation, and the size of the person cannot be known in the virtual world, which leads to the height of the

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person cannot be measured with the phone. When a person squats or stands up, it is impossible to know how far the ground is from the person and to see the movement of the person’s limbs. The only thing the phone knows is the direction determined by the gravity accelerometer and compass, as well as the change in angle through the gyroscope, allowing real-world objects to change according to the movement of the player’s head. When a person wears VR, a shift in the curve occurs at a fixed position, and the phone needs to perform calculations to render a real-time picture. This has a slight delay from when the human brain thinks the change should occur, and the resulting vertigo is enough to make the person feel uncomfortable. VR Splitter Some manufacturers detached the phone from the VR device and this improved the portability of the device, but in terms of performance, it still belonged to the lightweight products, as its play and VR all-in-one machine are almost the same. Some examples are products such as the Piconeo, GearVR of Samsung, etc. PC VR VR all-in-one and VR splitters are based on the mobile processor; to get a higher resolution, refresh rate, and more accurate tracking accuracy, it is necessary to add a high-performance PC, not only that but also need to use multiple high-speed cameras to track the player’s movements, and the most famous products are HTC VIVE. HTC VIVE is equipped with a Valve controller and Lighthouse positioning system and provides two screens with 1200Œ1080 pixel resolution and 90 Hz refresh rate, bringing users ultra-low latency and a fast gaming experience. The steam platform offers a rich game ecology, giving consumers an excellent experience. Still, PC VR is usually the choice of high-end gamers and some players with professional needs; relatively speaking, its price is also costly. Home Mainframe VR Microsoft and Nintendo have not launched products in the field of home consoles, Sony relies on years of technical accumulation, and the game ecology launched PS VR. With the support of the performance of the game console, the camera monitors the colored light ball held by the player’s hand to track its position and movement. But unlike the PC platform, the independence of Sony’s game ecosystem dictates that game content is not as rich as PC VR. Figure 3.2 shows the VR products launched by each company.

3.1.2 Augmented Reality (AR) Augmented reality (AR) technology combines virtual objects with the real world by superimposing images on the real world and using holograms. Google first developed AR glasses, and each lens has a built-in projector that combines reality with the virtual. It functions similarly to a smartphone placed on glasses. Essentially, AR and VR are similar; in the long run, they are products that overlap and interact with reality and the virtual. Unlike VR, AR is an augmentation of the real world. On the other hand, the core structure of VR is mainly based on

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Fig. 3.2 VR products: (a) CardBoard, (b) Xiaomi Split VR box, (c) Samsung Gear All-in-One VR, (d) HTC VIVE, and (e) PS VR

the environmental simulation system, which completely abandons the real world and strives to construct the perfect virtual world that can deceive human senses. However, it is not yet possible to completely confuse the virtual world with the real world at the optical level. However, they cannot be confused at the optical level, and there is a transition phase. From a technical point of view, in the roadmap of VR and AR, it can be seen that the underlying chip is Qualcomm, the algorithm is a combination of visual technology AI, and the content engine is Unity. AR has higher requirements for optics and algorithms. Optically, lens semiconductor optical technology must be implemented, and algorithms require technologies such as large-scale positioning. Popular AR applications include Pokemon Go and Snapchat’s AR bit-emojis. Compared to VR, which is a cumbersome device to wear, AR has a more extensive user base and more application scenarios. Various practical applications in medicine, education, and industry have proven that AR has a more profound impact on humans as a tool. AR devices are divided into two categories: AR phones and AR smart glasses. Apple has been in the AR space for a long time, acquiring Metaio in 2015 and developing it into ARKit. At the WWDC 2017 developer conference, the WWDC2017 developer conference, Apple provided an interface for iOS 11 through ARKit. Its software solution using computer vision technology enables intelligent understanding of the real environment by combining cameras, gyroscopes, and accelerometers. After two iterations, a live demo of the Minecraft AR game was completed at WWDC2019 on ARKit3, which supports live capture and full-body motion capture. In a subsequent update, LiDAR was added to reduce the hardware configuration requirements.

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Fig. 3.3 AR cell phone and AR smart glasses devices: (a) Apple AR Cell Phone App and (b) ODG’s AR Glasses

AR smart glasses, such as ODG, Darqri, Vuzix, Epson, and Snapchat, have launched their products in the enterprise or consumer space. Osterhout Design Group is one of the major U.S. military companies, founded in 1999 as a technology incubator. It currently focuses on AR headsets with Snapdragon processor’s 1080 pixel OLED displays. Its stand-alone computer glasses and “see-through” 3D displays have a broad market. The navigation system and inertial sensing technology allow users to experience telepresence, remote maintenance, and repair and perform well in industrial production (Fig. 3.3).

3.1.3 Mixed Reality (MR) Mixed reality (MR) is a new visualization environment resulting from the fusion of real and virtual worlds, where real and data entities coexist while being able to interact in real-time. In other words, “images” are placed in real space, and these “images” can interact with familiar objects to some extent. MRs key feature is that virtual and real objects can interact in real-time. MR is between augmented and virtual reality, blurring the boundary between virtual and reality, integrating digital virtual objects into the real world for interaction. In the virtual world, real objects appear in the form of virtual reality. Conceptually, MR is similar to AR, but MR allows interaction with the real world and instant access to information. Traditional AR technology mainly uses prism optics to refract real images, but the perspective is not large, and the clarity is not high enough. The new MR technology, to bring a better immersive interactive experience, may choose helmets, mirrors, transparent devices, etc., as the carrier of its technology in addition to glasses and projectors. One of the more technologically advanced and versatile MR devices available today is Microsoft’s HoloLens line, which includes HoloLens 1, released in 2015, and HoloLens 2, to be released

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Fig. 3.4 MR devices: (a) HP MR, (b) Samsung Genron MR, and (c) HoloLens 2

in 2019. Users can interact with holograms through gaze, voice, and gestures. In addition to Microsoft’s HoloLens family of MR devices, there are well-known MR devices such as the Samsung Gentoo MR and HP MR (see Fig. 3.4). HoloLens 1 is the first holographic computer that is completely cable-free. HoloLens 2 builds on HoloLens 1 by increasing the field of view, enhancing camera clarity, and adding eye-tracking capabilities. HoloLens primarily targets the Bside of the market and offers a military version for the U.S. military. HoloLens 2 is available in the UUSA, Canada, China, Japan, Korea, and several European countries. The main development plan for Microsoft’s next generation, HoloLens 3, is to improve immersion, reduce its weight and power, and thus increase social acceptance.

3.1.4 Extended Reality (XR) Extended reality (XR) refers to the combination of real and virtual through computers to create a virtual environment that can be interacted with by humans and machines, which is also the collective name for various technologies such as AR, VR, and MR. XR is a rapidly growing field and can be used in many applications such as environmental, marketing, real estate, education and training, and remote work. The specific relationship between XR and various technologies such as AR, VR, and MR is shown in Fig. 3.5. Integrating the visual interaction technologies of the three provides users with a sense of “immersion” that seamlessly transforms between the virtual world and the real world. XR technology is mainly capable of visual, auditory, tactile, olfactory, and gustatory sensory stimulation, as well as somatosensory stimulation (operating interaction through changes in body movements) and brain–computer interface (establishing a new communication and control channel between the brain and the external environment that does not rely on peripheral nerves and muscles, thus enabling direct interaction between the brain and external devices). XR technology can benefit some emerging fields, such as virtual digital humans, simulation robots, brain–computer interfaces, etc.

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Fig. 3.5 The relationship between XR, VR, AR, and MR

3.2 Support and Development of Immersive Interaction Technologies Immersive interaction cannot be achieved without the technology development and support behind it, such as image display principles, as well as data visualization (expressing data graphically), computer graphics (3D models, building more realistic models), and other supporting technologies (backend infrastructure, 5G/algorithms and algorithms/cloud computing, underlying architecture, etc.). The principles and implementation of these technologies are described below.

3.2.1 Image Display Principle The image display principle relies on a head-mounted device, the core of which is the head-mounted device screen, containing two basic elements: optics and image display. 1. Optics The total angle of the image both eyes see is called Field of View (FoV). The human horizontal binocular field of view is 200 degrees, with binocular overlap accounting for 120 degrees. Binocular overlap is significant for the establishment of stereo vision. Unlike the horizontal field of view, the vertical field of view is about 130 degrees, as shown in Fig. 3.6.

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Fig. 3.6 Horizontal and vertical Field-of-View angular maps for human

Fig. 3.7 Immersion effects when using different devices

Interpupillary Distance (IPD) is the distance between pupils and is related to race, gender, and age. An improper IPD may cause lens distortion or lead to eye strain and headaches. The minimum IPD for children is about 40 mm, while the average adult IPD is about 63 mm. As shown in Fig. 3.7, each human eye obtains depth of field and a sense of immersion by combining two separate views, but it requires the brain to consume a large amount of computational power for image shaping. The optical device of the eye solves three main problems: first, aiming content of the field of view so that it presents a greater distance, second, magnifying the content of the field of view for easy viewing by the user, and finally, the refraction of light delivered to the user’s field of view. The optical design system is divided into two structures or infrastructures for augmented reality and virtual reality: pupil forming and non-pupil forming. The observed effect of these two structures is shown in Fig. 3.8. The individual lenses are combined to form a non-pupil forming, designed to be projected directly onto the display through a magnifying glass. When rendering light, there is an obvious

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Fig. 3.8 Viewing effects in non-direct and direct view structures

drawback: pincushion distortion.1 In a pupil forming, after a single lens produces cushion distortion, the second lens produces barrel distortion2 which offsets the aberrations produced by the first lens, resulting in a more realistic and clear image. This design is widely used in devices that do not require a high degree of immersion, such as HoloLens and Google Glass. When light encounters an obstacle or a small hole in the propagation process, the light deviates from the straight path and travels to the back of the obstacle. This phenomenon is called the diffraction of light. The finer the grating, the higher the resolution. The diffracted image is propagated on the optical path, and then the image is restored by the diffraction grating for high-quality image transmission. The optical waveguide is a dielectric device that guides the propagation of light waves, also known as a dielectric optical waveguide. It achieves low transmission of light in the optical path through the principle of total light reflection. The optical waveguide application takes up little space and is conducive to the thinness of AR glasses. Still, the optical design is complex due to its complicated fabrication, high cost, and the different refractive indices of different colors of light that produce rainbow effects. A waveguide is a physical optical structure that allows light to curve into the human eye. It is used for internal reflection and control light entering and

1 Pincushion distortion: the phenomenon of contraction to the center of the picture caused by the lens. 2 Barrel distortion: the phenomenon of expansion around the screen caused by the lens.

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Fig. 3.9 The principle of operation of holographic waveguides

Fig. 3.10 Full immersion, optical see-through, and video see-through presentation diagrams

exiting. The industry has four waveguide structure designs: holographic waveguide, diffractive waveguide, polarized waveguide, and reflective waveguide. Holographic waveguides are a relatively simple type of waveguide used in optical elements. For example, for coupling and external coupling through a series of internal reflections, its principle of operation is shown in Fig. 3.9. 2. Image Display There are three current display technologies: fully immersive, optical see-through, and video see-through. The presentation diagrams of these three types are shown in Fig. 3.10. The fully immersive display is combined with sensors that completely block the user’s view. In the “optical see-through glasses,” the user can view reality directly through the optical components. HoloLens and Google Project Glass are recent examples of optical fluoroscopy through smart glasses. With video see-through smart glasses, users can view images captured by cameras and combine these camera views with computer-generated images to enhance user perception. Image display technology is developing very rapidly. There are four major display technologies: liquid crystal display (LCD), light-emitting diode (LED), organic light-emitting diode (OLED), digital light processing (DLP), and LCoS.

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Fig. 3.11 LCD structure diagram

LCoS is also an LCD and complementary metal-oxide-semiconductor (CMOS) integrated organic circuit combination of reflective new display technology. a. Liquid Crystal Display Liquid crystal display (LCD) is standard in HDTVs and consists of an array of cells containing liquid crystal molecules sandwiched between two polarizers. This unit is placed between a thin glass substrate with millions of transistors. A single RGB liquid crystal unit is called a sub-pixel, and three sub-pixels form a single pixel. For color LCDs, additional substrates containing red, green, and blue filters are placed on top of each substrate cell. The structure of an LCD is shown in Fig. 3.11. Current flows through the glass material, and changing the current allows the LCD to adjust the passage of light to produce precise colors. If all sub-pixels are fully turned on, it will produce white light. Since the LCD unit does not emit light, a backlight is required to achieve that. The LCD unit can only vary the passage of light to produce the desired color and, subsequently, the image. b. Light-Emitting Diodes Organic light-emitting diode (OLED) is based on organic (carbon and hydrogenbonded) materials, which emit light through carrier injection and compounding, and the light intensity is proportional to the injected current. Light-emitting diode (LED), under the action of an electric field, the anode-generated holes and cathodegenerated electrons will move to the hole transport layer and electron transport layer injection, migrating to the light-emitting layer. When the two meet in the light-emitting layer, energy excitons are generated, which excite the light-emitting molecules and eventually produce visible light. OLED can be made very thin compared to LCD due to its relatively simple structure, as it does not require an external backlight. Besides, the device consumes much less power, the screen image refreshes faster, has a higher contrast ratio, better color reproduction, and higher resolution. Most fully immersive head-mounted displays use this technology.

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c. Digital Light Processing Texas Instruments first developed the microdisplay digital light processing (DLP) chip. The display consists of approximately 2 million individually controlled micromirrors, each displaying a single pixel. The size of each micromirror is about 5.4 micrometers. RGB light is reflected on the micromirrors. Due to the nature of the micromirror, it can be redirected thousands of times in any direction in 1 s so that different shadows can be created on the retina depending on the color of the LEDs. DLP microdisplays are one of the fastest display technologies available. The ultra-fast color refresh rate, low latency, low power consumption, and extremely high resolution make it an excellent choice for building head-mounted displays. d. Liquid Crystal on Silicon Liquid crystal on silicon (LCoS) is in between LCD and DLP displays. Unlike the transmissive technology of LCD, DLP is a reflective technology in which micromirrors reflect individual sub-pixels. As the light source passes through the reflective surface, it will pass through a series of sub-filters to modulate the light intensity and color. Similar to DLP displays, this technology is used in the Magic Leap One, which offers considerable flexibility when integrating with smaller devices due to its small size. With display technologies currently under development requiring extremely high resolution, flat-panel head-mounted displays may have become the history of AR devices. Through the screen, users can observe the colorful virtual world. If display technology is the cornerstone, then data visualization is the booster that delivers multiple dimensions, levels, and spaces of data more simply to the user’s view, greatly enriching the user experience.

3.2.2 Data Visualization Data visualization transforms abstract data into graphics and images that are easier for humans to perceive. Through computer technology, data visualization transforms complex, abstract data into images that the human brain can more easily perceive by combining graphics, symbols, colors, etc. The data transformed into visual images can more intuitively convey the information it contains. The data information obtained by visualization is then used by users to form conclusions or decisions and disseminate and apply helpful information. Data visualization focuses on the visual presentation and analysis of data. The visualization is closely related to the metaverse, and the process is shown in Fig. 3.12. The complete visualization process is mapping data space to visual space, from the raw data collected through data analysis to get the preliminary data, filtered to get the focus data (the more critical data after filtering). The focus data is converted into geometric data by mapping, and finally, the image data is obtained by rendering.

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Fig. 3.12 Visualization process

The purpose of data visualization is to read three main aspects of information from the data: • Patterns in the data: visualization allows effective presentation of important features of the data and discovers the objective patterns of the data • Demonstrate relationships and correlations between different data • Represents outliers in the data Data visualization has three branches: scientific visualization, information visualization, and visual analytics. Scientific Visualization American computer scientist Bruce McCormack first introduced the concept and role of scientific visualization in his 1987 definition: “the use of computer graphics to create visual images that help people understand the intricate and often large-scale digital representations of the results of scientific and technical concepts.” Scientific visualization is oriented toward scientific and engineering data, such as 3D spatial measurements with spatial coordinates and geometric information, computer simulation data, and medical imaging data, focusing on the geometric, topological, and shape-based features to render the laws in the data. Scientific visualization focuses on the visualization of 3D phenomena in various systems such as architecture, meteorology, medicine, or biology. It is an interdisciplinary field of research and application that focuses on the realistic rendering of bodies, surfaces, and light sources and includes some dynamic (temporal) components. Scientific

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Fig. 3.13 Different examples of scientific visualization

visualization mainly uses computer graphics to convert textual information such as mathematical equations into objective visual images, thus helping the viewer quickly understand the situation and make better and faster judgments. The 2007 ACM SIGGRAPH Symposium on Scientific Visualization identified visualization technology approaches involving 2D, 3D, and multidimensional visualization. Examples include color transformation, symbols for high-dimensional datasets, visualization of gas and liquid information, stereoscopic rendering, isoline and isoplanes, shading, particle tracking, animation, virtual environment techniques, and interactive steering. Further topics include interactive techniques, existing visualization systems and tools, esthetic issues in visualization, and related topics include mathematical methods, computer graphics, and general computer science. Figure 3.13 illustrates several different examples of scientific visualization. Data Visualization Information visualization was introduced by Stuart K. Card, Jock D. Mackinlay, and George G. Robertson in 1989. It is mainly used to study the visual presentation of large-scale non-numerical information resources, in other words, to transform data information and knowledge into a visual form. Information visualization deals with unstructured, non-geometric abstract data, such as financial transactions, social networks, and textual data. Its central challenge is reducing the interference of visual obfuscation with information for large-scale high-dimensional complex data. Ben Shneiderman, a professor at the University of Maryland, classifies data into seven categories: 1D, 2D, 3D, multidimensional, temporal, and network data. Information visualization methods can also be classified into the following seven categories according to different data: 1D, 2D, 3D, multidimensional, time series, hierarchical, and network information visualization. There is a difference between

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information visualization and scientific visualization. Scientific visualization is the visualization of spatial data fields, which focuses on how to display threedimensional data fields in a realistic and fast manner. Information visualization, on the other hand, refers to the visualization of non-spatial data, which mainly uses images to display multidimensional non-spatial information, so that users can deepen their understanding of the meaning of information and, at the same time, use the intuitiveness of images to guide the retrieval process and speed up the process. Information visualization can handle a wide range of types of Big Data, and this section classifies them into the following categories according to their characteristics: categorical data, time series data, spatial data, hierarchical data, and text data. Categorical data are variables with two or more categories, with no intrinsic ordering of the categories and no temporal trends, and are usually analyzed visually using a one-dimensional scalar approach; time series data refers to data with temporal attributes that change over time, which in turn contains temporal attribute data that need to be analyzed based on past temporal data and stream data that need to focus on changes in real-time; spatial data refers to data containing spatial dimensions, point data objects in spatial data are usually discrete points in geographic space with coordinates of longitude and latitude but without size dimensions, line data in spatial data usually refers to line segments or paths connecting two or more locations on a map, surface data (area data) in spatial data is generally described by the area of each geographic region to illustrate different object data corresponding to geographic locations; hierarchical data is a kind of data that focuses on expressing hierarchical relationships between individuals, abstracted into a tree structure, and defining relationships such as inclusion and subordination; and text data is a variety of textual data, such as item lists, personnel information, etc. Figure 3.14 illustrates several different examples of information visualization. Visual Analytics Visual analytics is the science of analytical reasoning based on interactive visual interfaces, which integrates technologies such as graphics, data mining, and human– computer interaction to form a complementary and mutual enhancement of the advantages of human brain intelligence and machine intelligence. Data visualization can be static or interactive: static visualization provides users with a single view in front of them. Interactive data visualization large screens enable users to drill down into the data and extract and examine various perspectives of the same dataset, selecting the specific data points they wish to view in a visual format. A seamless combination of visual analytics and data visualization is required to derive the best insights from the data and get the most out of data analysis. Figure 3.15 illustrates a variety of different visual analytics examples. Data visualization is mainly implemented with the help of programming. There are many standard programming libraries for visualization, such as D3.js, Recharts, Victory, React-vis, V Charts, Trading Vue.js, Chartkick, Flexmonster, Webdatarocks, ApexCharts, Chart.js Echarts, Frappe Charts, Nivo, Google Charts, amCharts, CanvasJS, Highcharts, and Zoomcharts, all of which are based on JavaScript. In addition, there are Python-based exploratory visualization libraries

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Fig. 3.14 Different examples of information visualization

Fig. 3.15 Different examples of visual analytics cases

such as Matplotlib, Seaborn, Pyecharts, Missingno, etc. Some Python-based interactive visualization libraries also include Bokeh, HoloViews, Plotly, pygal, plotnine, Altair ggplot, and Gleam. In addition, popular visualization software such as Tableau, Power BI, Dagoo, etc. makes visualization easy to do. For those with zero programming skills, you can

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also use graphing tools such as RAWGraphs, ChartBlocks, QlikView, Datawrapper, Visme, Grow, and iCharts, infographic tools such as Infogram and Visual.ly, map tools such as InstantAtlas, relational network graph tools such as Geiph, and mathematical graph tools such as Wolfram|Alpha. If you use visualization software as a developer, you can use programming libraries such as ECharts, D3.js, Plotly, Chart.js, Google Charts, Ember Charts, etc. For more information on visualization, follow the journal IEEE Transactions on Visualization and Computer Graphics, the major conference IEEE VIS, the conference website for biology at www.biovis.net, and the website for visualization in economics at www.econvis.cn.

3.2.3 Computer Graphics Computer graphics is the science of converting two- or three-dimensional graphics into the raster form of a computer display using mathematical algorithms. Simply speaking, computer graphics is the study of how to represent graphics in a computer and how to use computers to compute, process, and display graphics. Virtual reality is called the “next-generation Internet” and the “next-generation mobile computing platform.” Computer graphics is the most important technology to realize virtual reality. Unlike data visualization, computer graphics deals mainly with modeling, drawing, and rendering 3D objects. But there are also many connections between data visualization and graphics. Many sub-fields intersect, such as scientific visualization and graphics. This science technology is now widely used in computer-aided design and manufacturing (CAD/CAM), scientific computing visualization, computer games, and virtual reality. Computer graphics mainly includes modeling, rendering, animation, and human–computer interaction techniques. These four areas are described below. 1. Modeling To represent a 3D object in a computer, it is first necessary to have its geometric model representation. Modeling is a technique for representing, controlling, analyzing, and outputting geometric entities by computer, describing a form based on geometric and topological information. As shown in Fig. 3.16, geometric modeling can reflect the static characteristics of a virtual object. The scope of geometric modeling is comprehensive, and several concepts in geometric modeling are introduced here, including triangle sets, mesh reconstruction, smoothing, and subdivision. Set of Triangles The set of triangles is used as an expression for the geometry. Mesh Reconstruction It generates a mesh to process the 3D coordinates of the discrete vertices obtained by the 3D scanner. Smoothing It makes the triangle mesh look smoother by adding vertices.

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Fig. 3.16 Geometric modeling concept drawing

Subdivision It renders a smooth surface and makes the mesh show a hierarchical structure. 2. Rendering Rendering is a technique for drawing 3D geometric models, which uses computer assistance to improve modeling realism. Current rendering techniques have been able to render various objects in a very realistic manner, including skin, trees, flowers, water, smoke, hair, etc. The main techniques are local illumination model, ray tracing, radiometric, global illumination model, Photo Mapping, BTF, BRDF, GPU-based rendering, etc. Modeling and rendering are the two core technologies that enhance immersion and realism in the metaverse, and the current GPU-based imaging combines geometric modeling and rendering. The imaging process starts with geometric processing of the vertex data using geometric modeling techniques, then rasterization of the geometrically processed data using raster graphics techniques, and finally, exporting the image. As shown in Fig. 3.17, the modeling and rendering are coherent, which is the primary step of imaging. The workflow of image rendering in computer graphics is shown in Fig. 3.18. The details are described below. a. GPU Application Stage • • • •

Prepare scene data (model, lighting, etc.). Clear out-of-field data. Set model rendering information (textures, materials, etc.). Output rendering elements (data such as points, lines, triangulated surfaces, etc.)

b. GPU Rendering Stage Geometry Processing Manipulate rendered graphics elements, transform coordinates (e.g., transform vertex coordinates to screen coordinates), vertex information configuration (e.g., depth values, coloring for each vertex), and then output the coordinates, depth values, coloring, and other data for 2D vertices in screen space.

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Fig. 3.17 Rendering comparison chart

Fig. 3.18 Image rendering workflow diagram in computer graphics

Rasterization It converts vertex data to slice elements. Each element in the slice element corresponds to a pixel in the frame buffer. The essence of this is to turn geometric elements into two-dimensional images. As shown in Fig. 3.18, the orange mark means programmable, unmarked means not programmable but configurable, and the green mark means not programmable and not configurable. The developer must compile vertex shaders, whereas the rest of the shaders are optional.

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Fig. 3.19 Comparison of 2D and 3D

3. Animation Animation is a technique that produces the effect of object movement by using continuous playback of still images. It mainly includes human animation, joint animation, physics simulation, motion animation, script animation, etc. It can also perform environment rendering. In computer graphics, animation is divided into two categories: real-time animation and frame-by-frame animation. Real-time animation achieves the animation effect by modifying the pixel points on a frame. Still, the prerequisite is that the generation frequency of real-time animation and the frame refresh frequency of the device should finish matching. Frame-by-frame animation is similar to a movie projector, where each frame overlaps with the previous frame, each screen (frame) is a complete picture, and the coherent action effect is achieved by playing the screen quickly. In terms of dimension, as shown in Fig. 3.19, animation can also be divided into two-dimensional animation and three-dimensional animation. Traditional twodimensional animation requires the artist to draw one by one, and then the camera shoots one by one to form a coherent picture. After the emergence of computers, the production time of 2D animation can be shortened, and the process can be simplified. In the digital era, 3D animation can show the characteristics of objects in all aspects. Compared with 2D animation, it can reuse the material, reduce the cost, and use computer technology to simulate the movement of real objects and display them clearly in front of people’s eyes. Commonly used animation tools include 3DMAX, AutoCAD, MAYA, OpenToonz, etc. Fig. 3.20 gives some demonstration examples. In the metaverse, 3D animation greatly satisfies the consumer’s imagination of the virtual world. 4. Human–Computer Interaction Human–Computer Interaction (HCI) is a key technology in graphics and is also commonly used in data visualization. It mainly refers to technology transferring tasks and information between humans and computers through effective interaction.

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Fig. 3.20 Examples of common software used to create animations

The current mainstream interactive interface is a graphical user interface (GUI) based on WIMP (Window, Icon, Menu, Mouse). While new interaction ideas and fields such as language, 3D interaction technology, pose input, head tracking, visual tracking, stereoscopic display, sensory feedback, and natural language interface have been generated in recent years. For example, Microsoft launched the XBOX360 physical peripheral Kinect in 2010, which does not require any controller. It only relies on the camera to capture the player’s movement in 3D space and can import instant motion capture, image recognition, microphone input, voice recognition, social interaction, and other functions. Kinect is useful not only in the field of games but also in the field of medical rehabilitation to assist in physical rehabilitation training. In the area of space, NASA uses it to help space station personnel manipulate robotic arms. In the field of research, it has also significantly accelerated the development of hardware applications. A demonstration of Kinect is shown in Fig. 3.21. There are also gestural interaction devices like Leap Motion and MYO wristbands that only listen to body parts (such as arms and legs). They can precisely recognize the movement of each joint of the hand and deftly grasp objects in virtual scenes. Unlike other somatosensory devices, these devices have a high degree of hand recognition due to their lightness and small size.

3.2.4 Other Supporting Technologies In addition to virtual reality, augmented reality, data visualization, and computer graphics-related technologies, other technologies are needed to support superior

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Fig. 3.21 Demonstration of Kinect

Fig. 3.22 Three major application scenarios for 5G

immersive interaction technology, such as communication technologies to achieve high synchronization, cloud computing technologies to solve the problem of a large number of users online simultaneously, and GPU for image rendering and algorithms as the infrastructure of the virtual world. Other supporting technologies related to immersive interaction technologies are described below. Communication Technology: 5G Immersive interaction technology requires high synchronization and low latency. Among them, 5G is the core technology to achieve high synchronization and low latency. The three major application scenarios of 5G are shown in Fig. 3.22. Enhanced Mobile Broadband (eMMB) for VR can improve the resolution and bit rate of the panoramic video, thus bringing a better viewing experience to users; ultra-

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Reliable Low Latency Communication (uRLLC) can enhance the quality of image through cloud gaming technology solutions, thus reducing network latency in cloud gaming technology; and massive Machine Type of Communication (mMTC), i.e., massive machine type of communication, is mainly used in the Internet of Things, and the current Wi-Fi and Bluetooth are technologies that achieve connectivity in a small area. In the era of IoT, such connectivity technologies can no longer meet the demand. At the same time, 5G can achieve large-scale connectivity and provide technical support for the further development of IoT. Meanwhile, edge computing is often regarded as a key fundamental technology in the metaverse. By using an open platform close to the data source, the closest end of the service can be provided directly to the user, thus helping users replenish local computing power, improve processing efficiency, and minimize the risk of network latency and congestion. According to test data from Open Signal, an independent third-party network testing organization, 4G LTE has an end-to-end latency of 98 ms, which can meet the interaction needs of scenarios such as video conferencing and online classrooms, but this is far from meeting the strict requirements of the metaverse for low latency. A major problem with VR devices is vertigo caused by transmission latency. 5G bandwidth and transmission rate increases can improve latency and reduce vertigo. According to Thales, 5G end-to-end latency can be controlled within 1 ms. A comparison of end-to-end latency with different communication technologies is shown in Fig. 3.23. In the metaverse, large amounts of data need to be transmitted quickly, which requires a robust communication infrastructure. However, the actual transmission rate of 5G may be challenging to reach its design level due to the limitation of the number of base stations. According to the vision of 6G network technology in Japan and Korea, 6G latency is expected to be reduced to one-tenth of

Fig. 3.23 Comparison of End-to-End Delay (milliseconds) with different communication technologies

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5G, and the transmission rate is expected to be 50 times that of 5G. This technology is expected to achieve low latency in the metaverse truly. Computing Technology: Cloud Computing Cloud computing is a kind of distributed computing with powerful computing capacity, which is expected to solve the problem of a large number of users online at the same time. The metaverse needs to monitor data and perform massive computations in real-time so that users can log in with any device and be immersed anywhere, anytime. It is difficult for a single or a few servers to support the massive computation in the metaverse. With the powerful computing power of the cloud, cloud games can move processes such as rendering to the cloud. Compared with games running on terminals, cloud games significantly reduce the game’s dependence on terminal device performance, and its fast gameplay meets the characteristics of a metaverse that can be accessed anytime and anywhere. VR devices require high-performance CPUs, storage, and transport components to support computing, resulting in heavier devices that are difficult for users to wear for long periods. With the clouding of VR device arithmetic, VR terminal equipment is expected to achieve lighter weight, lower costs, and smoother graphics. Image Rendering: Arithmetic For virtual world simulation, GPU is the leading computing power base hardware, and the computing power of GPU is essential for a realistic virtual experience. As of November 2021, NVIDIA, AMD, and Intel are the only companies capable of mass-producing GPUs in the consumer PC space. Integrated GPUs dominate Intel, AMD has both integrated and discrete GPUs, and discrete GPUs dominate NVIDIA. The sophisticated hardware architecture of GPUs results from a long evolution of technology. It enables GPUs to support many advanced graphics processing steps, including vertex processing, rasterization, texture mapping, and more. Infrastructure: Algorithms The engine defines the basic rules and presentation in the virtual world through algorithms. These rules include “lighting effects,” “animation system,” “physics system,” and so on. The role of the engine is to reduce the duplication of development and lower the development threshold. Typically, machines perform physical model calculations, AI calculations, image rendering, and sound and animation system rendering. Unity and Unreal are some of the famous engine platforms on the market today.

3.3 The Application of Immersive Interaction Technology The metaverse is inseparable from virtual reality, visualization, and graphics technology. Bringing high immersion to users is one of the core functions of the metaverse, and the support for this technology lies in immersive interaction technology. XR (VR, AR, and MR) and other devices can present realistic artistic

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special effects on the one hand and allow users to enter the virtual world as avatars and realize various interactions such as gestures on the other, so these devices are the entrance to the metaverse. Hardware and operating system as the entrance to the metaverse directly determine the scale of users. The underlying architecture determines the stability of the metaverse operation, and the grounded applications demonstrate the charm and prospect of the metaverse, as well as the motivation and purpose of studying these technologies. This section focuses on the grounded applications of various immersive interaction technologies.

3.3.1 Digital Twins The concept of the “digital twin” first appeared in 2003 in a course on product lifecycle management taught by Professor Grieves at the University of Michigan. The interactive mapping of digital models constructed in virtual space to physical entities faithfully describes the trajectory of physical entities throughout their lifecycle. In 2010, digital twin was formally introduced in a NASA technical report and defined as “a system or vehicle simulation process that integrates multiple physical quantities, scales, and probabilities.” By reviewing numerous pieces of literature, we conclude that the physical object will be transformed into data in the digital twin. The data and principles will be modeled, then the mechanism model and data-driven model in the model will realize self-learning and dynamic adjustment, and finally, the model will be loaded into the software, and the software will recognize the functions of describing, diagnosing, predicting, and deciding on the physical object. The whole process is shown in Fig. 3.24. A digital twin is a digital dynamic twin that creates things from the real world in virtual space. With the help of sensors, the operating state of the body and data Fig. 3.24 Digital twin definition

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Fig. 3.25 Digital twins and metaverse: cloned universes and multiverses

from the external environment can be mapped to the digital twin in real-time. The essence is to create a digital version of a “clone,” also known as a “digital twin.” The digital twin realizes the feedback from the real physical system to the digital model in virtual space. Various simulations, analysis, data accumulation, exploration, and even artificial intelligence applications based on the digital model apply to the real physical system. The technology was initially used in industrial manufacturing, where the metaverse required digital twins to build realistic environments with rich detail and create immersive clinical experiences. The digital twin can replicate the physical elements of the real world, and its end product is a “clone universe” that mirrors the real world. The metaverse is a copy and modification of the real world based on the logic of reality or illusion (e.g., surrealism, science fiction, etc.). It presents the “multiverses” in an open mode. The relationship between the digital twin and the metaverse is shown in Fig. 3.25. Characteristics of the Digital Twin There are many characteristics of the digital twin, which are not uniformly stated in various literature. The characteristics of the digital twin can be summarized as interoperability, real-time, scalability, fidelity, and closed loop, as shown in Fig. 3.26. Interoperability The digital twin’s physical objects and digital spaces can be mapped, dynamically interacted, and connected in both directions. Thus, the digital twin can map physical entities to various digital models and transform and fuse between different digital models. Real-Time Because the digital twin is going to reproduce physical entities that change with the timeline, the data needs to be managed so that computers can recognize and process, namely, digitized. Scalability Digital twin technology can integrate, add, and replace digital models and extend model content. Fidelity The digital twin requires virtual objects to maintain a high degree of simulation not only in terms of solid geometry but also in terms of state, phase,

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Fig. 3.26 Schematic diagram of the characteristics of the digital twin

and temporal state, making every effort to ensure the similarity between the digital virtual model and the physical entity. Closed Loop The digital virtual body in the digital twin is used to describe the visual model and internal mechanisms of the physical entity, thus monitoring the state data of the physical entity, performing analytical reasoning, optimizing process parameters and operational parameters, and implementing decision-making functions, in other words, using a closed-loop system for both the virtual body and the physical entity. Application Scenarios for Digital Twins Currently, the application scenario of the digital twin is mainly for B-side users. In recent years, with emerging technologies such as artificial intelligence, the digital twin has been widely used in aerospace, power, shipping, agriculture, health, and medical fields. Especially, in the areas of smart manufacturing and smart cities, a digital twin is considered to be an effective means to integrate manufacturing information/urban information with the physical world, especially in the areas of smart manufacturing and smart cities. From 2017 to 2019, the digital twin was selected as one of Gartner’s Top 10 Strategic Technology Trends for three consecutive years. Currently, the main application areas of the digital twin include digital design, virtual factories, equipment maintenance, smart cities, smart healthcare, etc. (as shown in Fig. 3.27). Digital Design The digital twin technology is used to create a digital twin of the product design and perform system simulation in the virtual space to achieve feedback design, iterative innovation, and continuous optimization. Currently, digital design practices in prototype design, process design, engineering design, and digital prototyping have been commonly carried out in automotive, marine, aerospace, and precision equipment manufacturing.

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Fig. 3.27 Digital twin application areas

Virtual Factory Virtual factory refers to the digital virtual workshop and digital factory based on the combination of digital twin technology and MES. It can realize the dynamic data interaction between physical entities and digital virtual entities and forecast production in real-time according to the changes in the virtual space. Equipment Maintenance Develop and design the devices digital twin and interact with the physical entity synchronously to achieve digital management of the device lifecycle. Smart City By building a digital twin of the city, we simulate the interaction of weather, infrastructure, population, land, industrial transportation, and other elements in the digital world in a combination of quantitative and qualitative forms and draw a “city portrait” to help decision-makers improve urban planning in the physical world. Smart Healthcare The digital twin is combined with medical services to achieve dynamic monitoring, simulation, and modeling of the human body’s operating mechanism and medical devices, accelerate the transformation of scientific research innovation into clinical practice, improve the efficiency of medical diagnosis, and optimize the control and supervision of medical device quality.

3.3.2 Other Applications Immersive interaction technology is currently applied more often. In addition to the digital twin, several typical applications are introduced here, such as holographic projection sandbox, immersive interactive experience room, holographic transparent screen, and holographic live broadcast, as shown in Fig. 3.28. Holographic Projection Sandtable Holographic projection sandtables are commonly available as portable holographic sandtables and holographic interactive tables.

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Fig. 3.28 Application of immersive interaction technology

Portable holographic sandtables can realize desktop floating 3D sandbox image and support Aerial gesture interactive operation and a variety of three-dimensional format file import and editing. Users can touch the 3D virtual image in the sky. It has a stronger sense of “real” experience than other traditional holographic products and supports external display. Users only need to wear lightweight holographic 3D glasses to synchronize the desktop image content, as shown in Fig. 3.29. The holographic interactive table uses 4K HD projection, and the projection equipment is often mounted on the ceiling. It projects 3D images from top to bottom without blocking the rear. It can be paired with a large screen to launch and interact simultaneously to display 3D view images from different locations accurately. Other features are the same as the portable holographic sandbox. This device is more suitable for fixed venue applications, as shown in Fig. 3.30. Immersive Interactive Experience Room The immersive interactive experience room includes a holographic screen, a 2D interactive projection experience room, and a 3D holographic projection experience room. The holographic screen uses wall 3D projection and spatial tracking and positioning technology. Users can wear holographic 3D glasses to move freely in space, watch 3D images jumping out of the wall from different positions and angles, and combine with gestures, handles, and other interactive functions for a virtual interactive experience, as shown in Fig. 3.31. The 2D interactive projection experience room uses a different approach. Interactive projection uses a capture device (sensor) to capture the target image (such as a participant) and then is analyzed by an image analysis system to generate the movement of the captured object. This motion data is combined with a real-time image interaction system to create a tightly integrated interactive effect between the participant and the screen. The 2D interactive projection experience room is a surrounding immersive first-person simulation experience space created by

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Fig. 3.29 Portable holographic sandtable

seamlessly stitching together multiple projection screens, which support human– computer interaction such as handles and gestures, as shown in Fig. 3.32. 3D holographic projection experience room uses holographic projection technology, bringing a more robust immersion than a 2D interactive projection experience room. Holographic projection technology is a virtual imaging technology that uses the principles of interference and diffraction to record and reproduce the real threedimensional image of an object. It uses the interference principle to record the light wave information of the object and then uses the diffraction principle to produce the light wave information of the object to get a three-dimensional image almost identical to the original object. The 3D holographic projection experience room can provide a large immersive holographic 3D interactive experience by stitching together four sides of 3D images, thus realizing live 3D stereoscopic images and enhancing realistic live immersive experience, as shown in Fig. 3.33. Holographic Transparent Screen The holographic transparent screen realizes aerial naked-eye 3D image playback, creating a display environment that combines virtual and reality. Various virtual interaction functions such as gestures, voice, and touch screens can be added to enhance the display and interaction experience. The unique optical material on the transparent screen can reflect the image of the projection device and present the projected 3D image on the transparent display. The area where the image is not

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Fig. 3.30 Holographic interactive table

Fig. 3.31 Holographic screen concept diagram

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Fig. 3.32 Immersive interactive projection experience room (2D immersion)

Fig. 3.33 3D holographic projection experience room

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Fig. 3.34 Museum holographic transparent screen

displayed is the transparent glass effect, which can see through the real environment behind it, thus showing the naked-eye 3D, virtual, and real three-dimensional image effect. It can also meet the demand for multi-person naked-eye 3D viewing and interaction, as shown in Fig. 3.34. Holographic Live The holographic live broadcast is a new way and development direction of the live broadcast. Through holographic projection technology, viewers can see clear, three-dimensional, realistic live images and feel the “immersive” live interactive experience. It adopts broadcast-grade 4K ultra-high-definition production and broadcasting system, easy and intelligent operation, green screen system, real-time GPU keying function, holographic transparent screen, and real-time processing and transmission of the holographic human image to the display site. As shown in Fig. 3.35, it also provides a virtual scene editor so that users can create their virtual scene backgrounds. Combined with the low latency of 5G, it realizes a smoother holographic live interactive experience.

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Fig. 3.35 Holographic live

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Chapter 4

Metaverse and Blockchain

Having a built-in economic system is one of the characteristics of the metaverse. A perfect financial system guarantees the smooth operation of the creators’ economy in the metaverse. It is also the core driving force to realizing the concept of co-creation, co-rule and sharing among the participants in the metaverse. The blockchain technology-based digital currency system guarantees the stability and transparency of the economic system through smart contracts and a decentralized settlement platform, which supports the regular operation of the metaverse and realizes the value transfer of the whole digital world. This chapter will systematically introduce the concept, principle, and application of blockchain and the types and characteristics of digital currencies to show the appearance of an economic system within the digital world.

4.1 Blockchain Blockchain is one of the prevalent technologies of the past few years. Digital currencies are unique and non-fungible units of data stored using blockchain technology that can assign real-world value to digital objects. The use of blockchain in real-life applications is also steadily growing. In a recent Deloitte survey, 76% of the respondents believe that digital assets such as blockchain-based digital currencies could be a powerful alternative to fiat currencies or even replace them within the next decade. However, until now, discussions related to blockchain, digital currencies, and crypto have revolved around real-world investments and cryptocurrency transactions. Facebook’s launch of Meta-universe has changed that. After Facebook announced its name change to Meta, the price of cryptocurrencies such as MANA, which are used for trading in the metaverse, rose by about 400%. What does this mean in the long run? How does blockchain fit into Facebook’s meta-

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verse initiative and the global metaverse? We first need to understand blockchain, digital currencies, and their applications to answer these questions.

4.1.1 Concepts, Principle, Characteristics, and Application Scenarios of Blockchain Blockchain is a concatenated textual record. Each block in a blockchain contains the cryptographic hash of the previous block, the corresponding timestamp, and transaction data. The blockchain aims to implement a distributed ledger of data records that verifies the history of prior transactions using digital digests. The transaction history is not allowed to be deleted and can be checked permanently. The legitimacy of a transaction in a block can be quickly checked by calculating a hash value. A new block can be added to a node in the network, but a consensus mechanism must reach confirmation of the block. Blockchain technology is a scheme where participants collectively maintain a database (ledger) through a decentralized, de-trusted approach. While one person does traditional bookkeeping, blockchain technology allows everyone in the system to compete to participate in the bookkeeping. Suppose any data is inconsistent; in that case, the system will write the record of the person who has kept the best bookkeeping for that period to the ledger and synchronize the contents of the ledger to everyone in the system for backup. This way, everyone in the system has a complete copy of the ledger. To understand blockchain technology, let us introduce a few related concepts. Related Concepts 1. Hash Functions A hash function is a function that can compress a message of any length into a message digest of some fixed size, and it can save data in the form of a fixed-length string. A hash function is highly secure and allows users to send messages securely on the Internet. It is part of the cryptocurrency currently available in the market. Since the hash function can convert data of any length to a fixed size, the final output hash value is much smaller than the input data. Therefore, the hash function is sometimes called the compression function. Generally, the hash function will generate a hash value between 160 and 512 bits. Hash functions are supposed to be conflict-free, so it is almost difficult to encounter cases where two randomly entered data of different lengths get the same hash value. However, when the amount of data is large enough, likely, that h(x) = h(y) for different data x and y, and this situation is called a hash conflict. If a hash conflict occurs, then the security of the data will be significantly threatened. The hash function is the core of implementing a hashing algorithm. Data of different lengths are input to obtain a hash value, usually called data blocks. Hashing algorithms typically process the information in the data in fixed-length blocks, the size of which varies from algorithm to algorithm but remains constant for a given

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Fig. 4.1 The mechanism of hash function operation

algorithm. For example, the algorithm SHA-1 only accepts 512 bits of data, so if the input data is exactly 512 bits long, then the hash function only needs to be run once. If the data is 1024 bits, it will be divided into two 512-bit blocks, and the hash function will be run twice. But the reality is that the input data cannot be exactly a multiple of 512. Therefore, the input data is divided into fixed-size blocks based on the padding technique in cryptography, and the hash function is repeated as many times as the number of blocks. As shown in Fig. 4.1, the hash function processes one block of data at a time, and the final output is the combined value of all the blocks, and if the data is changed at any position, the entire hash value is changed. 2. Block A block generally contains a block header and a block body, and the block header typically consists of the hash value of the parent block, a timestamp, and a Murk tree (also called a hash tree) (see Fig. 4.2). The hash value uniquely identifies the block, and the hash value and block height can be used to distinguish different blocks. The hash pointer (hash pointer is a pointer to a data storage location and the hash value of its location data) in the block header is connected to a chain, which is what we call a blockchain. 3. Murk Tree (Hash Tree) The hash tree is a tree-like data structure in cryptography and computer science. With hash trees, blockchain data can be encoded more efficiently and securely. Ralph Charles Merkle patented the hash tree in 1979, so the hash tree is also known as the Merkle tree. Figure 4.3 illustrates a binary hash tree with a transaction data layer at the bottom, where a hash function computes the transaction data to generate a leaf layer hash. The intermediate hash values belong to the branch layer, while the top hash is called

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Fig. 4.2 Block structure

Fig. 4.3 Binary hash tree

the root hash. The hash tree structure consists of hashes of various data blocks, allowing users to verify individual transactions without downloading the entire blockchain. The hash tree is calculated in a bottom-up manner, repeating pairs of hashes on nodes until there is a root hash left, so the tree requires an even number of nodes at the leaf level. If there are an odd number of transactions, the last hash must be copied once to create an even number of leaf layer nodes to complete the computation. 4. Blockchain Blockchains are distributed databases shared between nodes of a computer network. As databases, blockchains store information in digital format and electronically.

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Blockchain is known for its key role in cryptocurrency systems such as Bitcoin, used to maintain security and handle decentralized transaction records. Blockchain ensures the fidelity and security of data records innovatively. A critical difference between a typical database and a blockchain is the structure of the data. Blockchains collect information in groups (called blocks) containing sets of information. Blocks have a specific storage capacity and are closed and linked to previously filled blocks when populated, forming a blockchain data chain. All new information after a newly added block is compiled into a newly formed block, which is also added to the chain once it is populated. While databases typically construct data as tables, a blockchain is the construction of data as blocks strung together. When implemented in a decentralized nature, this kind of data structure inherently creates an irreversible timeline of data. When a block is filled, it is fixed and becomes part of this timeline. Each block in the chain is given an exact timestamp when it is added to the chain. 5. Miner Miners create new blocks on the chain through a process called mining. In the blockchain, each block has its unique random number and references the hash of the previous block in the chain, so mining a block is not easy, especially on large chains. Miners use special software to solve the highly complex mathematical problem of finding a random number that generates an acceptable hash value. Since the nonce (nonce is a value that can only be used once in cryptographic communication) is only 32 bits and the hash is 256 bits, about 4 billion possible nonce-hash combinations must be mined before the correct combination is found. To change any block earlier in the chain, it is necessary to maintain the modified block and all blocks afterward. When a block is successfully mined, all nodes on the network accept the change, and the miner receives a financial reward. 6. Node A node can be any electronic device that maintains a copy of the blockchain and keeps the network up and running. Each node has its copy of the blockchain, and the network must algorithmically approve newly mined blocks to update, trust, and verify the chain. Since the blockchain is transparent, every action in the ledger can be easily checked. Each participant has a unique alphanumeric identification number used to display the transaction. 7. Smart Contract The term “smart contract” is somewhat misleading, as it is neither “smart” nor a “contract” as it is usually interpreted as a legal document. A smart contract is a term first introduced by cryptography researcher Nick Szabo in 1994 to refer to a script or software code written by a developer and deployed on a blockchain. It is usually written as a transactional instruction triggered by an event. For example, if a shipment arrives at a customer’s warehouse by a specific date, payment is made to the supplier. This allows the company to update shipment records and receipts

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automatically, eliminating the need to manage time-consuming and costly manual business processes. A smart contract is a digital program that automatically executes business logic, obligations, and agreements. Smart contracts represent almost anything—electronic warehouse receipts, bonds, invoices, power units, currency units, futures contracts, risk-sharing, and more. These encrypted and unique assets can be created, traded, and settled in real-time by users on the network. Each smart contract can be written to contain virtually any type of business logic that can be automatically executed according to the terms and conditions of the agreement. When input occurs, the contract responds by executing any type of obligation or condition specified by the contract logic. For example, a smart contract for payment to a seller is automatically triggered when GPS coordinates indicate that a ship has arrived at the correct port. Entering the current price of an item may trigger a smart contract to sell that item. A buyer’s signature on an invoice can create a payment obligation automatically executed on a specified date when other conditions are met. The vending machine may pay the replenished drone upon completion of the replenishment based on the inventory already in stock. After the court filing system receives a request to process an event of default, the collateral is transferred to the creditor. As mentioned earlier, a smart contract is usually not a legal agreement but can enforce terms based on an agreement between the parties. Moreover, since legal agreements tend to follow a logical format similar to code such as if-thisthen-that, in some procedures, paper-based legal agreements can also be replaced by computer-based programs that automatically enforce the terms of the contract. Thus, smart contracts play an important role in the operation of blockchain models. Specifically, processes between parties can be automated through automated rules and embedded smart contracts to achieve the parties contractual intent quickly, clearly, and efficiently. Principle of Operation Now that we understand the concept of blockchain, how does blockchain work? The following is an example of the Bitcoin system to explain how blockchain (also known as distributed ledger technology) works. Bitcoin buying and selling are fed and transmitted to a powerful computer network of thousands of nodes worldwide competing to confirm transactions using Bitcoin mining computer algorithms. The first miner to successfully complete a new block is rewarded with Bitcoins for their work. These rewards are paid through a combination of newly minted Bitcoins and network fees that are passed on to the buyer and seller. Prices may go up or down depending on the volume of transactions. After a purchase is cryptographically confirmed, the sale is added to a block on the distributed ledger. The majority of people in that network must then secure the deal. The block is permanently linked to all previous Bitcoin transaction blocks using a cryptographic fingerprint called a hash and processes the sale action. To better understand blockchain technology, Chen Chun, an academician from Zhejiang University, gave a simple example. Suppose Zhang San lent Li Si 1000

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Fig. 4.4 The principle of blockchain transaction

yuan one day and notified everyone, so everyone recorded the incident in their ledgers. If Li Si wanted to renege on the debt, everyone could come forward and collectively denounce Li Si with their ledgers, and there was no need for other institutions to intervene. At this point, a decentralized system is established, in which the ledger is the block, and the ledger connected is the blockchain. If a quickwitted Wang Er takes the lead in recording “one day Zhang San lent Li Si 1000 yuan” in his ledger and announced to everyone that this matter had been recorded. Everyone should stop recording, and then everyone can verify whether Wang Er’s record is correct. If it is, everyone will get the exact and real-time updated ledger, Wang Er will also get a gold coin as a reward, and this gold coin has a unique number, easy to check. This gold coin is the valuable virtual currency generated by the blockchain. Figure 4.4 illustrates a complete transaction process on the blockchain. When a transaction is initiated, it is propagated through the P2P network, and the miners verify its authenticity. The verified transaction is then recorded in a block, and the transaction is credited to the ledger, i.e., a new block is added to the existing blockchain. The cryptocurrency is credited to the trader’s account, and the transaction is completed.

4.1.2 Characteristics of Blockchain After introducing the basic concept of blockchain and how it works, we discuss the features of the blockchain (see Fig. 4.5).

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Fig. 4.5 The features of blockchain

Decentralization Decentralization is arguably the most basic feature of blockchain, which realizes distributed recording, storage, and updating data. All blockchain network nodes can keep accounts, so they can no longer rely on centralized institutions and avoid the drawbacks of centralized operation. Everyone’s daily shopping online is a centralized mode of operation. The money we pay in the shopping process does not go directly to the seller but is temporarily held by an organization like Alipay. This not only facilitates our transactions and avoids unnecessary disputes but also faces some disadvantages, such as once Alipay’s server is attacked or destroyed, our account records and transaction records may be destroyed and become untraceable. The funds in the account cannot be recovered, which will cause incalculable losses. In addition, once personal information is leaked, it may also cause incalculable damage to individuals and society. In addition, in some exceptional cases, the funds in individual accounts may face freezing or control. These are the disadvantages of the centralized operation model. Unlike the centralized operation mode, the decentralized operation mode supported by blockchain technology is simpler and more convenient. The decentralized operation model supported by blockchain technology is simpler and more convenient. It can realize direct transactions between buyers and sellers without any third-party payment platform, and there is no need to worry about the leakage of one’s information. And when there is too much transaction data, the decentralized processing method also saves a lot of resources, making the whole transaction more autonomous and straightforward without the risk of being controlled by the center. Global Circulation No country in the world has issued a currency that can be circulated globally, but virtual currencies based on blockchain technology can be freely traded in all parts of the world. Because blockchain technology is based on the Internet, we can change and circulate blockchain assets as long as there is a network, and the transfer speed is extremely fast, usually within one hour.

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Anonymity Anonymity is also one of the most fundamental characteristics of blockchain that emerges during its application. Blockchain is not based on personally identifiable information for transaction flow but on algorithms that enable addressing by address. This way, no one else can know your true identity, how many assets you have in the blockchain, what transactions you have done with which people, and so on. On the blockchain network, we can only find out the transfer records, not who is actually behind the address of both parties to the transfer. However, once we know who the person behind the address corresponds to, we can also find out all their related transfer records and assets. Open and Transparent The transactions in the blockchain are open and transparent, except for the personal and private information of both parties to the transaction, which is encrypted and not available to the public and other transaction data. In other words, anyone involved can check the data records of the blockchain or develop related applications. The blockchain’s data records and operation rules are fully reviewable and traceable. They, therefore, have a high degree of public transparency, which is the basis of the trustworthiness of the blockchain system. Immutable The information in a blockchain system is tamper-evident, which means that once the information in a blockchain system is verified and added to a block, it is stored permanently and cannot be changed. However, there are two exceptional cases: first, a private blockchain with special change requirements can be changed, and second, if more than 51% of the nodes in the system can be controlled at the same time, 51% of the nodes can be changed at the same time. Otherwise, the modification of the database by a single node is invalid. Therefore, it can be said that blockchain’s data stability and reliability are extremely high. Traceability The blockchain system is traceable mainly because its mechanism sets that the later blocks must have the hash value of the previous blocks. In other words, the last blocks can be linked to the earlier blocks only if they identify the hash of the earlier blocks, thus forming a traceable blockchain. One of the significant advantages of blockchain traceability is that it is easy to query data. Because each block is uniquely identified, for example, if we want to query a record in the blockchain, we can use the time node to determine the block for that period and address it later, which is much more convenient. Autonomy The autonomy of the blockchain system is reflected in its use of consensus-based specifications and protocols, such as a set of open and transparent algorithms, which allows all blocks and nodes in the entire system to exchange data freely and securely in a trusted environment. This leaves it entirely up to the machines to run and supervise, reducing human intervention.

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Fig. 4.6 Blockchain applications

4.1.3 Applications of Blockchain Based on the above characteristics, blockchain has features that the traditional central operation mode cannot realize. It has been increasingly applied to various scenarios (see Fig. 4.6) to realize the free transmission of value, especially in digital currency, transaction settlement of financial assets, digital government, anticounterfeit data services, etc. It has broad prospects. Financial Field 1. Trading Many companies offering decentralized cryptocurrency transaction services have sprung up in the past few years. Sending money using blockchain can be cheaper and faster than the existing money transfer services. This is especially true in cross-border transactions, which are often slow and expensive. Even in the modern financial system, making a cross-border fund transfer can take days, while transactions via blockchain take only minutes. In addition, decentralized transactions do not require investors to keep their assets in a centralized institution, which means they can have greater control. 2. Lending Lenders can use the blockchain to execute mortgage loans through smart contracts. Smart contracts built on the blockchain allow certain events to automatically trigger actions such as servicing payments, margin calls, full loan repayment, and release of collateral. As a result, loans are processed faster and at a lower cost, and lenders can offer better interest rates. 3. Insurance Using smart contracts on the blockchain can provide greater transparency for customers and insurance providers. Recording all claims on the blockchain can

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prevent customers from filing duplicate claims for the same event. In addition, using smart contracts can speed up the process of receiving payments from claimants. 4. NFT (Non-Fungible Token) NFTs are often thought of as a way to own rights to digital art. Because the blockchain prevents data from existing in two places, placing an NFT on the blockchain ensures that only one copy of the digital art exists. An NFT allows digital art assets to be traded or invested just like real art assets and solves the problematic preservation and maintenance of real art. NFT can have different applications; fundamentally, it is a way to convey ownership of anything that can be represented in data. These things might be a deed to a house, broadcast rights to a video, or tickets to an event. Real Estate Field Validation and Transfer of Ownership Real estate transactions involve a lot of paperwork to verify financial information and ownership and then transfer ownership to a new owner. Using blockchain technology to record real estate transactions can provide a more secure and accessible way to verify and transfer ownership. This can speed up transactions, reduce paperwork, and save money. Information Security Field Network Information Security Keeping data such as your identification number, date of birth, and other identifying information on a public ledger, such as a blockchain, may be safer than keeping it in a system that is currently more vulnerable to hacking. Blockchain technology can protect access to identifying information while improving the access experience for those who need to use it in industries such as travel, healthcare, finance, and education. Government Field 1. Voting for Election If personally identifiable information is stored on the blockchain, we are one step away from voting using blockchain technology. Blockchain technology would ensure that no one could vote twice, that only eligible voters could vote, and that ballots could not be tampered with. More importantly, it could make voting as easy as pressing a few buttons on a smartphone. As a result, the cost of holding elections would be significantly reduced. 2. Government Benefits Another use of digital identities stored on the blockchain is to manage government benefits such as welfare programs, Social Security, and Medicare. Using blockchain technology can reduce fraud and lower operating costs. Also, beneficiaries can receive funds faster through digital payments on the blockchain. Health Field Medical Information Sharing Keeping medical records on the blockchain can give doctors and medical professionals access to accurate and up-to-date patient

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information, ensuring that patients receive the best care. It can also speed up the extraction of medical records, which in some cases can lead to more timely treatment for patients. And, if insurance information is kept in the database, doctors can easily verify that patients have insurance and that their treatment costs are covered. Cultural and Entertainment Field Artwork Copyright Using blockchain technology to track music and movie files distributed on the Internet can ensure that artists get paid for their work. Since blockchain technology was invented to ensure that the same file is not saved in multiple places, it can be used to help reduce piracy. More importantly, using blockchain to track playback on streaming services and processing payments using smart contracts could provide greater transparency and ensure that artists receive the payment they deserve. IoT Field 1. Logistics and Supply Chain Tracking The use of blockchain technology for tracking items in a logistics or supply chain network has multiple advantages. First, it provides greater ease of communication between partners, as data is available on a secure public ledger. Second, it offers greater security and data integrity because data on the blockchain cannot be altered. This means that logistics and supply chain partners can work together more efficiently. 2. Cybersecurity The Internet of Things (IoT) has made our lives easier, but it has also opened the door for unscrupulous individuals to access our data or take control of vital systems. Blockchain technology can provide greater security by storing passwords and other data on a decentralized network rather than on centralized servers. In addition, it protects against data tampering because the blockchain is effectively immutable. Data Field Data Storage Adding blockchain technology to a data storage solution can provide greater security. Because data can be stored decentralized, it is more difficult to hack and erase, whereas centralized data storage providers may only have a few points of redundancy. In some cases, using blockchain for data storage may also be cheaper.

4.1.4 Development of Blockchain On October 31, 2008, Satoshi Nakamoto sent an email titled “Bitcoin: A Peerto-Peer Electronic Cash System” to all mailing list members. This email had extraordinary significance, marking the dawn of the blockchain era. Since then, after more than a decade of development, blockchain technology has hugely impacted

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the world’s politics, economy, culture, and even education. Melanie Swan, the founder of the Institute for Blockchain Studies, has divided the development stages of blockchain into Blockchain 1.0, Blockchain 2.0, and Blockchain 3.0 according to the development line of blockchain. We can see blockchains past, present, and future along this lineage. On January 3, 2009, Satoshi Nakamoto generated the first Bitcoin block on the Internet, the Bitcoin Genesis Block, which marked the arrival of the blockchain 1.0 era. The development and application of blockchain technology in this period were generally focused on the transfer, exchange, and payment of currency. In other words, they were helping people to decentralize their currency and payments. After that, Satoshi Nakamoto and a few developers exchanged ideas online to develop and iterate on Bitcoin blocks. However, as the blocks matured and their activity decreased, the Bitcoin system gradually became self-running. In July 2010, Mt. Gox, a Bitcoin exchange founded by Jed McCaleb, was launched in the Shibuya district of Tokyo, Japan, followed by a surge in new users and increased prices. After November 2011, Satoshi Nakamoto ceased to appear. He became an anonymous legend, and no one knew who he was; he only left his creation behind. In February 2011, the price of Bitcoin reached $1 for the first time, after which trading platforms became operational where Bitcoin was interchangeable with real currencies such as the British pound, the Brazilian real, and the Polish zloty. In 2012, a digital currency Ripple was released, and its use as a digital currency was to transfer foreign currency from country to country using the blockchain. In 2013, Bitcoin skyrocketed. The U.S. Department of the Treasury issued regulations governing virtual currencies, explaining for the first time the scope of application of virtual currencies. In 2014, “Blockchain 2.0” became a term for a decentralized blockchain database. Thanks to the open-source programming environment and smart contracts, blockchain has increased in this period. Its application extends to financial derivatives such as futures, bonds, hedge funds, private equity, stocks, annuities, crowdfunding, and options. In addition, tangible or intangible assets have found possible operating environments on the blockchain as the process of electronically integrating notarized documents, intellectual property documents, and asset ownership documents with the blockchain. On January 20, 2016, the People’s Bank of China’s Digital Currency Symposium announced the milestone results of its research on digital currency. The meeting affirmed the value of digital currencies in reducing the issuance of traditional currencies and other aspects. It indicated that the central bank is exploring the issuance of digital currencies. FinTech Research Institute was formally established. The blockchain 3.0 era will be when blockchain is fully applied to all aspects of life. It will push the Internet from simply delivering information to an age where it provides the information and has value. Blockchain 3.0 will help people build a massive collaborative society connecting finance, economics, government, health, science, culture, and the arts. The evolution of blockchain can be reviewed again in Fig. 4.7.

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Fig. 4.7 The history of blockchain development

4.1.5 Blockchain and Digital Currency Digital currencies are arguably the most important and widespread application of blockchain. In recent years, digital currencies have been increasing, and by the end of 2020, there will be more than 8000 digital currencies in the world, with a total market value of more than $860 billion. By the end of 2020, there will be more than 8000 digital currencies worldwide, with a total market capitalization of more than $860 billion, ranking 18th in the world’s GDP in 2019. Among them, the supply of Bitcoin (i.e., the number of Bitcoins mined), which ranks first in market share, has exceeded 18 million, and the total market capitalization has surpassed $500 billion. Digital currencies based on blockchain technology are gradually becoming an important foundation of modern digital society. We will explain more about digital currencies in the next section.

4.1.6 Digital Currency Digital currencies are changing our monetary system. Since the introduction of the first cryptocurrency, Bitcoin, in 2009, the rapid growth of digital currencies has challenged traditional payment instruments and financial contracts. The rise of Bitcoin, Ether, and thousands of other cryptocurrencies has prompted central banks worldwide to actively participate in the research and testing of central bank digital currencies (CBDCs). This section introduces digital currencies, covering the concept, types, and characteristics of digital currencies.

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4.1.7 Concepts of Digital Currency Since Satoshi Nakamoto generated the first Bitcoin Genesis block on the Internet on January 3, 2009, the digital currency has increased and has generated worldwide interest. According to Wikipedia, digital currency is a currency or related asset managed, stored, and traded on digital computer systems and the Internet and is an alternative to electronic money, a virtual currency. But unlike virtual currency in the traditional virtual world, its value is affirmed, which allows it to be used for real transactions of goods and services and is not limited to online games. Early digital currencies (digital gold currencies) were electronic currencies named after the weight of gold. Today’s digital currencies, such as Bitcoin, Litecoin, and Dotcoin, are electronic currencies that rely on checks and cryptography to create, issue, and circulate, which are derived based on specific algorithms, issued in limited quantities, and encrypted for security. It is characterized by using peer-to-peer (P2P) network technology to issue, manage, and circulate, theoretically to avoid the approval of official institutions and to give everyone the right to issue currency. Currently, most countries worldwide have conducted research and discussed the possibility of future issuance or have conducted testing of issuance. Among them, the People’s Bank of China is the first official institution in the world to say it wants to issue a digital currency.

4.1.8 Types of Digital Currency Up to now, globally recognized digital currencies are mainly divided into three categories (see Fig. 4.8): first, cryptocurrencies represented by Bitcoin, second, stablecoin represented by Libra or Diem, and third, central bank digital currency (CBDC) represented by the People’s Bank of China’s digital currency. Next, we will introduce these three currencies in detail.

Fig. 4.8 Types of digital currency

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Cryptocurrency is a medium of exchange that uses cryptographic principles to secure transactions and control unit creation. Among them, Bitcoin is the earliest and most representative cryptocurrency created. Jan Lansky, an academic studying cryptocurrency, mentioned in his article that cryptocurrencies are systems that meet the following six conditions: • The system does not require a central authority and its state is maintained through a distributed consensus mechanism. • The system enables the recording of cryptocurrencies and their ownership. • The system defines whether new cryptocurrencies can be generated. If it can, the system needs to explain the origin of the new coins and how to determine the owner of these new coins. • The system can only be used to prove ownership of cryptocurrencies using cryptography. • The system allows to change the ownership of cryptocurrencies through transactions. • Transactions can only be issued from entities that can prove current ownership of the cryptocurrency. If two orders to change ownership of the same cryptocurrency are generated at the same time, then the system can only execute one of them. In March 2018, the term cryptocurrency was added to Wechsler’s dictionary, defined as any cryptocurrency that appears only in the digital sphere, is usually not issued by a central agency or regulator, but it uses a decentralized system to record transactions, as well as manage the supply of new money, and relies on cryptography to avoid fraudulent and spurious transactions. Bitcoin is the world’s first digital currency created using cryptographic algorithms and blockchain technology. Today, Bitcoin is the first thing that comes to mind when people mention digital currencies. Wikipedia defines Bitcoin as a cryptocurrency based on decentralization, using a peer-to-peer network with consensus initiative, open-source code, and blockchain as the underlying technology. It is currently accepted that a currency should have three primary functions: a medium of exchange, a unit of account, and a store of value. Bitcoin’s value fluctuates wildly and does not have the basic functions of a unit of account and store of value; therefore, many scholars consider Bitcoin a virtual commodity rather than a real tradable currency. Bitcoins can be acquired through trading or mining, and to avoid inflation, the number of Bitcoin agreements is capped at 21 million. Bitcoin has an irreplaceable advantage over cash payments in that it uses a private key as a digital signature and can be paid directly by individuals to others without going through third-party institutions such as banks, clearing houses, and electronic payment platforms, thus eliminating the need for cumbersome transfer and remittance processes and high fees. The emergence of Bitcoin has challenged the current monetary and banking systems, and Bitcoin can be traded internationally as long as there is a network. Stablecoin is a blockchain digital currency that achieves relative stability of currency prices by anchoring with properties such as legal tender, mainstream digital currencies, and commodities or by regulating the money supply through third-

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Fig. 4.9 Classification of stablecoins

party entities. According to a research report by Guosheng Securities Research Institute, stablecoins can be divided into off-chain-backed stablecoins, on-chainbacked stablecoin, and algorithmic stablecoin, as shown in Fig. 4.9. On-chain asset-backed stablecoins are backed by assets such as fiat currency, gold, or other pledged commodities. The central entity guarantees the issuance and redemption of the stablecoin with its assets, including USDT, TUSD, GUSD, PAX, etc. An onchain asset-backed stablecoin is one in which the collateral backing the stablecoin is itself a cryptocurrency. Blockchain users pledge their digital assets, such as cryptocurrencies, and issue a certain number of stablecoins based on the value of the pledged assets. Such stablecoins include DAI, STEEM, Alchemint, etc. Algorithmic stablecoins are not secured by any external collateral and whose value is maintained based on an algorithm, including Terra, Ampleforth, Basis, Carbon, etc. Compared to cryptocurrencies, stable currencies are less volatile and relatively stable, have a hedging function in the process of market decline, and can be used in various fields such as remittance, value storage, medium of exchange, a unit of account, and derivatives. As for Central Bank Digital Currencies (CBDCs), the Bank of England, the central bank of the United Kingdom, defines it in its study on CBDC as an electronic form of central bank money that households and businesses can use to make payments and store value. The Chinese version of CBDC is described as a digital renminbi, a controlled and anonymous payment instrument issued by the People’s Bank of China, operated with the participation of designated operators, and redeemed to the public based on a comprehensive system of accounts, supporting a loose coupling function of bank accounts, equivalent to banknotes and coins, and with value characteristics and fiat value. In simple terms, a central bank digital currency is a digital currency issued by the central bank of a country, which uses an electronic form of money instead of paper money, so that the value ratio of digital currency to existing money is 1: 1.

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A central bank digital currency can be created and issued directly by the central bank to enterprises or households without the need to go through the commercial banking system as a medium, so it is similar to the national debt to some extent, except that the issuing body is different. The central bank digital currency can be created and issued directly by the central bank to businesses or households without going through the commercial banking system as a medium. While a country’s finance ministry issues treasury bonds, digital currencies are issued by the country’s central bank. The digitization of central bank currency can help improve the effectiveness of central bank monetary policy, optimize the central bank currency payment function, and thus enhance the status of central bank currency. In addition, the central banks digital currency can become an interest-bearing asset that meets the needs of currency holders for asset security, a floor for bank deposit rates, and a new monetary policy tool. At the same time, the central bank can influence bank deposit and lending rates by adjusting the interest rate of the central bank digital currency while helping to break the zero-interest rate floor. From an economics perspective, there are three main issues it addresses: eliminating illegal cash transactions and money laundering, making it possible to impose negative interest rates, and making helicopter drop1 to be possible. There are strong similarities between the targeted issuance of central bank digital currencies and fiscal policy transfers. It is easy to see that digital currencies may sometimes confuse central banks and fiscal boundaries. Based on these characteristics, central banks have now opened studies on the issuance and regulation of digital currencies. According to a survey published by the Bank for International Settlements in January 2020, at least about 80% of the world’s central banks have started research on digital currencies, 40% of the countries are in the experimental stage, including the Netherlands and Italy, while 10% of the countries have started pilots, including China, South Korea, Uruguay, Sweden, etc. At present, the development of China’s central bank digital currency is relatively advanced in the global context. However, China’s central bank digital currency is currently issued in a traditional two-tier way, i.e., the central bank gives the digital currency to commercial banks, which then transfer the digital currency to individuals or enterprises. Thus, it seems that the current role of China’s central banks digital currency is to replace cash rather than to create a new currency. This model maintains the creditor–debtor relationship in the currency circulation process, the original currency delivery system, and the binary account structure in China and therefore does not pose a threat to the basic business of commercial banks and enhances the convenience and security of payments and has the credit advantage of central bank endorsement. In addition to China, Ecuador launched a new crypto payment system and an Ecuadorian coin based on this system in February 2015, 1 Helicopter drop is an extreme monetary policy in which the central bank of a country issues money directly to households or consumers in the form of tax rebates or other. It is a radical monetary policy in which the central bank of a country gives money directly to households or consumers in the form of tax rebates or other payments to stimulate consumption, reduce unemployment, and overcome deflation.

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the Swedish central bank started the e-krona project in 2017, Venezuela announced in February 2018 the launch of a “petrocoin” whose value is linked to the price of oil, the U.S. Digital Dollar Foundation also launched a digital dollar initiative in early 2020, and the Singapore Monetary Authority (MAS) and the Bank of Canada jointly launched an experiment in May 2020 to use central bank digital currencies for cross-border cross-currency payments. Several central banks worldwide have made substantial progress in developing “central bank digital currencies,” including France, Sweden, Saudi Arabia, Thailand, Turkey, the Bahamas, Barbados, Uruguay, and others. The central bank’s digital currency may emerge shortly. How do you compare the three typical digital currencies: cryptocurrency, stablecoin, and central bank digital currency? In his “Digital Currency Talk,” Sina Finance opinion leader columnist Zhang Ming says: in terms of creativity alone, cryptocurrencies are a disruptive monetary innovation, central bank digital currencies are the mildest monetary innovation, and stablecoins are somewhere in between. However, in terms of path dependency and network externalities, central bank digital currencies are the most acceptable form of digital currency. At the same time, Bitcoin does not function as a currency yet. Once stablecoins are put into use, the prospects for their use are optimistic due to their strong value stability and the availability of private Internet platforms to support the scenario.

4.1.9 Characteristics of Digital Currency There are three main characteristics of digital currencies (see Fig. 4.10). The first feature is the speed of transactions. Digital currency relies heavily on computers and network transactions, and its underlying technology is blockchain so that it can Fig. 4.10 Three major features of digital currencies

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process data centrally and efficiently, with relatively high timeliness. The second feature is low transaction costs. Traditional financial transactions rely on interbank transfers and remittances, bank settlements, etc., which may incur high fees. At the same time, digital currencies can be traded directly between users, avoiding high fees, and saving transaction costs. The third feature is anonymity. Because there is no need for third-party institutions to be involved in the transaction process and both parties can complete the transaction anonymously, it has a higher degree of anonymity and can protect the trader’s privacy. However, a high degree of anonymity is also a double-edged sword; while it brings convenience to users, it also creates conditions for financial crimes (e.g., money laundering).

4.2 Digital Currency in the Metaverse The metaverse has existed for decades in the form of multiplayer online games. Still, we may soon enter an era of immersive experiences virtually indistinguishable from the real world—fostering new modes of interaction for gamers and non-gamers. In virtual worlds, we can head to the mall, drive through town, meet friends at cafes, and connect with other users, thanks to the rapid development of virtual reality and 5G communications. Metaverse concept companies such as Decentraland have demonstrated the beginnings of a metaverse world: where participants can buy virtual land, perform social activities, and exchange goods. Any society (physical or virtual) needs an economic system as a foundation. In a metaverse, the economy relies on the authentication of digital assets, including a person’s metaverse home, car, farm, books, clothing, and furniture. In addition to this, it needs to be capable of free trade. Digital currencies will be the key to guaranteeing the proper functioning of the economic system in the virtual world. Because each digital currency is protected by an encryption key that cannot be deleted, copied, or destroyed, it enables decentralized verification of a person’s virtual identity and digital property. This is a critical factor necessary for the success of the metaverse society.

4.2.1 The Role and Application of Digital Currency in the Metaverse As the underlying facility for metaverse transactions and settlements, blockchain assumes the role of securing users’ virtual assets and virtual identities and is an essential part of realizing value exchange in the metaverse and guaranteeing the transparent implementation of system rules. If blockchain technology ensures the regular operation of the metaverse economic system, then digital currency directly

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serves the value exchange in the metaverse. Once blockchain and digital currencies were in the limelight and under realistic rules, it was difficult for them to find practical application scenarios and take advantage of them. But in the virtual world of the metaverse, blockchain and digital currency can be said to support the economic system of the whole metaverse and bring their advantages to the utmost. In the real world, money is indispensable, and its applications are everywhere. Digital currencies also have a wide range of application scenarios in the metaverse, such as commodity trading, property investment, financial investment, game services, etc. As long as the application scenarios in the metaverse are large enough and wide enough, digital currencies will have the same social creditability as the currencies in the real world and may even penetrate the real world and circulate in the real world, thus affecting the monetary and financial rules and systems in the real world. The financial system between the metaverse and the real world has been partially opened in individual areas. Some digital currencies, virtual assets, and virtual goods can correspond to a certain percentage of real assets, goods, or services. For example, digital currencies held by users can be used to exchange for dollars, bonds used as real estate mortgages, real estate investing by users online can correspond to some properties in some regions of the real world, and users can watch a singer’s concert directly online by purchasing online tickets, etc.

4.2.2 Building the Currency of the Metaverse The metaverse is a parallel world, a virtual real-world mapping. Just as money is ubiquitous in the real world, digital currencies guarantee the regular operation of the entire economic system in the metaverse. Almost all virtual reality platforms have created digital currencies, such as MANA, AXS, SAND, ILV, ALICE, SLP, TLM, etc. (see Fig. 4.11). Next, we will introduce a few of these representative digital currencies. MANA MANA is the token circulating in Decentraland, a virtual reality platform based on the Ethereum blockchain for decentralized 3D virtual reality (see Fig. 4.12), which opens to the public in February 2020 and is overseen by the non-profit Decentraland Foundation. Users can browse and discover content on the platform, interact with other people and entities, purchase land on the platform, or publish content on their purchased land, including creating static 3D content and games, hosting concerts, organizing group events, and more. Land in the platform is a rare asset and can be purchased using MANA tokens. In addition to being used to purchase land, MANA can also be used to purchase goods and services on the platform. In addition, MANA can also be used as an incentive for developers to encourage more users to participate and create content, thus making the virtual world even better.

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Fig. 4.11 Currency in the metaverse

Fig. 4.12 Decentraland virtual reality platform

AXS AXS is a token for Axie Infinity, released in November 2020. Axie Infinity plays like Pokémon Go, a digital pet world built on the Ethereum blockchain (see Fig. 4.13). Users can collect, train, and breed pets on the platform, allowing realtime interaction between users. Users can be rewarded with tokens by participating in games and contributing to the game world. Users with AXS tokens can participate

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Fig. 4.13 Axie Infinity virtual reality platform

in voting in the game world, pledge tokens to receive in-game rewards, and use tokens to make in-game payments. SAND SAND is the token of The Sandbox, a mobile gaming platform launched by Pixowl in 2011 (see Fig. 4.14). In 2018, its co-founders, Arthur Madrid and Sebastien Borget, decided to enter the blockchain space in an attempt to build a 3D metaverse. In 2020, the new The Sandbox game was released. Gamers can create avatars, virtual objects, and even new games through VoxEdit and Game Maker. SAND can be effectively traded in The Sandbox, including customizing avatars, purchasing land assets, pledging SAND for platform rewards, buying and selling virtual products on the marketplace, and suggesting updates to the platform through the platform’s decentralized autonomous organization (DAO). SAND can be earned by playing different games and competitions on the platform or purchased on cryptocurrency trading platforms.

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Fig. 4.14 The Sandbox virtual reality platform

Bibliography 1. Chen YC, Chou YP, Chou YC (2019) An image authentication scheme using merkle tree mechanisms. Future Int. 11:149. https://doi.org/10.3390/fi11070149

Chapter 5

Metaverse and Social View

The social experience is not only one of the six characteristics of meta space but also one of the elements of the industry chain involving the experience layer. After human beings entered the Internet era, the social model and social experience underwent a qualitative change. Internet technology and communication technology enable people to communicate and exchange anytime and anywhere. Along with the iteration of Internet technology, social Internet technology and communication technology would allow people to communicate and exchange anytime and anywhere. Social networking services have emerged as a way for people to share information, content, and interests and build social relationships with others on the Web. Social networking sites provide a space for interaction beyond the traditional face to face, expanding the boundaries of the human social experience. In addition, computer-mediated interactions and computer-mediated interactions can connect diverse online individuals and create. Connecting various online individuals through computer-mediated interactions also has the potential to develop new social and professional relationships. Facebook has become one of the most important applications in people’s daily and working lives, with 2.13 billion WeChat per month. WeChat is one of the most important applications in people’s daily and active lives; Zoom has created an online environment that allows schools, companies, and other organizations to continue their work in the face of an epidemic. Zoom has created an online environment that enables schools, companies, and other organizations to continue their work in the face of an epidemic. The emergence of digital life in the metaverse will further break the boundaries of human social experience. This chapter will start from the development trajectory of Internet socialization and combine it with the introduction of digital life to show the social experience scenario in virtual space (as shown in Fig. 5.1).

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Cheng, Metaverse: Concept, Content and Context, https://doi.org/10.1007/978-3-031-24359-2_5

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Fig. 5.1 Metaverse and social view

5.1 Real-World Views of Community and Socialization Socialism is a philosophy that emphasizes the connection between the individual and the community, i.e., that community relations largely shape one’s social identity and personality. Still, in a broader philosophical sense, socialism is often understood as a collection of interactions between groups in a particular location (geographic location) or between groups with common interests or interests. Within communitarianism, there is often opposition to extreme individualism and extreme liberalism that ignores the stability of the community. Socialism combines support for liberal economic policies, such as the mixed economy and social conservatism. Communitarian thought has a long history in the West, China, and elsewhere. Still, modern communitarianism began in Anglo-American academia in the form of a critical response to John Rawls’ landmark 1971 work, A Theory of Justice. With the development of technology, people are gradually moving from traditional communities to Internet communities.

5.1.1 The Concept of Community A community is simply a group of people, but it needs to have some expression. The community here refers to location-based communities such as local communities, villages, towns, cities, regions, or even countries or identity-based communities such as geo-groups, sub-cultures, races, religions, multiculturalism, or even multiple civilizations. Community members have consistent behavioral norms, ongoing interactions, and a division of labor among members with the ability to act in concert.

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Fig. 5.2 Community classification

5.1.2 Classification and Structure of Communities To put it simply, a traditional community is a group or organization formed by people with unified values, a group of people with shared pursuits, common ideals, shared goals, and common interests. The Internet community is a group of consumers who need certain commercial products and is a fixed group of consumers with the same interests and values. This is shown in Fig. 5.2. There are many types of traditional communities, such as communities of interest, communities of practice, local communities, and environmental communities. Communities of Interest As the name implies, communities of interest are composed of members who share a common interest or are passionate about achieving similar goals. For example, a love of sports or film may bring community members together. Since members of these communities may not be confined to a specific location, they may only meet occasionally or use online communication channels to facilitate ongoing community interaction. Communities of Practice The concept of communities of practice was first introduced by academics and referred explicitly to groups of people with similar educational backgrounds coming together to achieve a common goal. Massive open online courses, also known as Coursera, are excellent examples of communities of practice. Although these groups are somewhat limited in direct interaction among their members, the sense of community is brought about by a common goal. Local Communities A local community is made up of members who live together. Such communities often include neighbors, family, friends, or a group of businesspeople from the same town. In most local communities, members may be familiar with each other because they are in the same place.

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Environmental Communities Ideally, environmental communities are members brought together by a situation or circumstance. In most cases, such communities are designed to share experiences, not necessarily common interests. Such communities may include people who are both fighting cancer or retirees who are both trying to cope with a new life outside of work. An emerging Internet community is a community in which members communicate with each other mainly through the Internet. Community members often share common interests. For many people, an Internet community is like home, except that it is a family of “invisible friends.” Those who wish to become part of an Internet community usually must become members of a specific website to access certain content or links. An Internet community can also be considered an information system where members can post comments, offer advice, or collaborate. Typically, people communicate through social networking sites, chat rooms, forums, email lists, and discussion boards, which are everyday social media platforms, including Facebook, Twitter, Instagram, WeChat, and others. People can join Internet communities through video games, blogs, and virtual worlds and may meet new significant others on dating sites or virtual worlds. The popularity of the Internet has made it easier to communicate and connect with others in real-time and has facilitated the introduction of new ways of exchanging information. However, these interactions may also decrease people’s real-world interactions, and content such as racism, bullying, and sexism may also be present in Internet communities. An academic definition of an Internet community is a collection of individuals or business partners interacting around a common interest. The interaction is partially supported by technology, conducted through technology, and guided by some protocol or norm. A typical community structure is shown in Fig. 5.3.

5.2 Socializing in the Internet Age Social activities emerged with the birth of human society, and the medium of human communication has been innovated throughout history. Thus, human social activities have also been constantly reshaped with the change in the medium of interaction. With the rise of the Internet era, the way people socialize has changed, from the prolonged carriage and horses and distant letters in the past to various platforms where people can socialize nowadays, and people’s socialization has become colorful.

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Fig. 5.3 Community structure

Fig. 5.4 New socialization in the Internet era

5.2.1 The New Social in the Internet Era The term “Human Relations” was first used by J. A. Barnes in 1954, which led to the emergence of the term social networking. Four waves of social network development followed, as shown in Fig. 5.4.

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The First Wave In 1971, the world’s first email was sent by Advanced Research Projects Agency (ARPA) project scientists. This marked the beginning of socialization in the Internet era. People made the milestone leap from primitive letter writing and face-to-face chatting to sending emails over the Internet. The Second Wave In the beginning of the twenty-first century, social networks entered a new era of development. 2001 saw the launch of Meetup.com, a website focused on offline dating, with approximately 10,000 groups holding offline events each month. Meetup.com was an interest-based dating site that encouraged people to get out of their isolated homes to meet and chat with like-minded people. 2002 saw the launch of Friendster, the world’s first social networking site to reach 1 million users. In 2003, Myspace was launched, and the development of social networking was once again driven by the emergence of Friendster, the world’s first social networking site to reach 1 million users. The Third Wave Facebook was born in 2004 and has increased to become one of the world’s most popular social platforms in just a few years, with 543 million active users per month on the mobile platform. YouTube was born in 2005, and with over 1 billion users, it is now one of the world’s most popular video sites. In 2006, Twitter was born. As a social application platform for micro-blogging, its convenience has been welcomed by many users, and now there are more than 500 million users worldwide. These three iconic social networking products catapulted social networking into a period of rapid growth. Over the next few years, social networking has grown exponentially. Social networking had entered its heyday from a dark period. After several years of explosive growth, its development has taken on a more diverse form. In the third wave, China’s social networks also entered a period of rapid development. Early products such as Tianya and Captor started a social trend in China, and then came Sine Weibo in 2009 and WeChat in 2011, which reached more than 900 million users worldwide by 2017. The Fourth Wave On April 13, 2021, Epic Games announced a $1 billion investment to build a metaverse. On May 18, 2021, the Korea Information and Communications Industry Promotion Agency (KICTPA) joined with 25 organizations and companies to establish the Metaverse Alliance, which aims to build a metaverse ecosystem under private leadership through cooperation between the government and companies to realize an open metaverse ecosystem in various fields of reality and virtualization. It aims to realize an open metaverse ecosystem in multiple real and virtual fields through cooperation between the government and companies. On July 27, 2021, Facebook announced the establishment of a metaverse team that will transform into a metaverse company within five years. The development of the metaverse will change people’s lifestyles in the future.

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5.2.2 Innovation of Social View in the Internet Era China’s social network has gradually matured from its germination, start-up, and development to full-scale popularity. The mobile social field has attracted the attention of many entrepreneurs due to its wide range of users, high viscosity, and long life cycle. As the influence of Internet technology on communication gradually deepened, people’s attitudes toward the way of communication also apparently changed. When Internet technology entered the social field and broke the traditional face-to-face communication mode, people were curious and full of expectations for the function and future development of the new mode. When Internet technology changed the social mode more profoundly and reshaped people’s communication and even lifestyle, people gradually felt that the traditional face-to-face social mode could no longer meet their daily needs. However, the technology-led communication mode brings high efficiency, fast-paced life, and social anxiety and panic. The reflection on face-to-face social interaction has become the focus of people’s thinking. While people actively define its meaning and value, they also look forward to the warmth and delicacy of the traditional social model. However, the attachment to tradition has not dispelled people’s reliance on and identification with new technologies and modes of social behavior. People tend to prefer convenient and fast virtual social methods in actual communication, with microblogs, WeChat, and QQ becoming almost essential tools for communication nowadays. As a result, people face psychological anxiety about the development of virtual social networking, while behaviorally they tend to rush to virtual social models. People cannot give up the superior and convenient modern communication methods. Still, they depend on traditional social methods, so in their daily life, they rely on contemporary social methods and worry about the discomfort caused by modernization. Still, they must use modern social methods due to inertia. This is not the only subversion that everyday people are facing. The ever-changing technology makes people’s traditional thinking more and more incompatible with real development, reflecting the alternation and renewal of social concepts in the context of the dramatic changes in the social environment. This pattern of “dependence—anxiety—more dependence” is a way to feel the difference in social life with inner tentacles and a way to settle oneself. Take mobile applications as an example; many applications in daily use have interactive functions. For instance, NetEase Cloud Music, which has music playback as its core function, allows its users to comment on songs and existing song reviews. Also, in the app, you can follow your friends, view their song lists, recommend songs, and even send messages. And now, there is also Cloud Village Square, where you can share your favorite music or videos and find friends who share your interests, as shown in Fig. 5.5. Alipay, with its core function of online payment, allows users to transfer money to each other and send messages to each other after adding friends. Taobao, which has online shopping as its core function, will enable

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Fig. 5.5 Social function of a music app

users to contact customer service, buyers who have already bought, Ali Xiaomi, etc. Taobao has also developed the function of adding friends to share and chat with. At the same time, mobile applications with social networking as their core function also have a variety of other services and extended functions, and their extended functions involve all aspects of life. Some of this social software has not only social functions but also developed richer additional functions. For example, WeChat’s convenient and fast payment function has attracted many users. Users can open micro-stores and recommend shopping on WeChat, which has become a new way for online shopping and business promotion. On the other hand, unlike the above, Internet technology can directly simulate specific real-life scenarios, enabling communication and exchange by creating virtual spaces. Typical examples are the many emerging applications for classroom interaction in the education field, such as Classroom Micro Assist, ZOOM, PIAZZA, etc., based on virtual classroom scenarios for teacher–student interaction. This shows that virtual social mode not only changes people’s social style and habits but also changes people’s social concepts and lifestyles. To put it simply, virtual society is no longer satisfied with the reshaping of social objects but focuses on the space and environment of society, that is, the construction of social space and the simulation of the social environment through technology, thus changing and reshaping the way of social to a deeper extent. This transformation implicitly shapes the social environment in a broader context, subtly changing people’s definition of social interaction. Take the virtual classroom as an example; it breaks the foundation of social interaction based on realistic scenarios and accomplishes actual communication in a simulated space through the Internet. In this sense, social interaction has been redefined, and virtual social interaction has given unlimited possibilities for social interaction.

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5.3 Digital Life and the Metaverse For example, in real life, it may take you a week or even half a month to travel from Antarctica to the North Pole, but in the metaverse, you do not need to consider the distance; you can be there in a snap of your fingers. In addition, the digital identity in the metaverse is unique, and the metaverse will be an immersive platform that people can participate in, socialize with, and be a part of.

5.3.1 Digital Life in the Metaverse Digital life is a new form of life created using a computer medium, an artificial system with natural life characteristics or behaviors. Digital life studies are those artificial life studies that use computers as a medium and computer programs as living individuals. In the metaverse, people participate in the digital world as digital identities. It is not the real world but a virtual world of space-time and numbers. The digital identity in the metaverse is unique. The identification module will be built into the protocol, and complementary applications will be developed. Users will have autonomy over their self-independent identity, meaning they fully control their personally identifiable information and therefore do not need to rely on any third party for identity verification. With a truly autonomous identity, users can create, sign, and verify statements on their own, and parties interacting with them will be able to verify their identity. In addition, users will be able to disclose their information selectively. Digital identities are integral to the virtual world and can take many forms, such as individuals or value intermediaries (institutions and entities). Thus, users can have different digital identities in other contexts (e.g., workplace identity and personal identity), but they are ultimately based on the user’s real identity (as shown in Fig. 5.6). Virtual digital humans’ current industrial applications are divided into servicebased and identity-based application models. The service virtual human’s primary function is to replace real people’s services and provide daily companionship. It is the virtualization of realistic service-oriented roles, including virtual anchors, virtual teachers, virtual customer service, virtual assistants, etc. Its industrial value is mainly to reduce the cost of the existing service industry and to reduce the cost and increase the efficiency of the service industry. In sectors such as healthcare and retail, AI digital assistants have great potential. For medical professionals, digital assistants can help improve training and procedures. Doctors can operate in realistic simulations and run hundreds of simulations to ensure the best results before performing procedures in real life. In retail, AI digital assistants can enhance customer service by providing a more personalized experience. To do this, AI digital assistants need to understand verbal communication well. This is key to helping people better interact and talk with digital assistants, so they can complete tasks accordingly. Digital Life assists teams in simulating workers in large environments

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Fig. 5.6 Metaverse digital life imagination

such as factories and urban buildings for companies in the construction and manufacturing industries. With the help of Digital Life, companies can assess risks and predict environments through accurate simulations to ensure the best design for physical buildings. In the entertainment and social space, a digital life can be used as a virtual IP/virtual idol for content production or as a clone of an individual’s virtual world for social interaction. It is the second clone of an individual in a virtual world (or meta-world). Its industrial value is reflected in providing human core interaction intermediaries for the future virtualized world and creating new value growth points in the incremental market. According to the “Virtual Digital People Indepth Industry Report,” virtual digital people replacing virtual anchors in real-life services and virtual idols in virtual IP are the current market hotspots. For example, virtual singer Luo Tianya is a virtual image based on Yamaha’s VOCALOID3 voice synthesis engine. After the virtual idol is produced, it needs IP creation and operation. After accumulating a certain number of fans, it can be realized through concerts, music, advertising endorsement, live broadcast, etc. Media companies participate in the virtual digital person business by investing in M&A technology companies, purchasing technology services, and commercializing at the application level by cultivating virtual idols. According to Quantum Bits’ forecast, the overall market size of the virtual digital person in China will reach 270 billion RMB in 2030, including about 175 billion RMB for digital identity persons and about 95 billion RMB for service virtual digital persons. Digital life consists of three major components: the upstream foundation layer, the midstream platform layer, and the downstream application layer.

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Upstream Base Layer The upstream foundation layer provides the basic hardware and software support to produce digital life. The hardware includes display devices, optical devices, sensors, chips, etc. The basic software includes modeling software and rendering engines. Modeling, artificial intelligence, motion capture, and rendering are the key technologies for developing virtual humans. At present, data accumulation and modeling can achieve millisecond high-speed photography and scanning to meet the needs of digital human scanning and reconstruction, which has become the mainstream way of current character modeling. However, 3D digital human modeling still requires a lot of manual participation, and the overall production efficiency is low. The technology leaders of the basic layer are overseas giants with profound technical barriers. Typical representatives such as NVIDIA, Meta, Epic Games, Unity, and other companies have begun to extend their technical advantages to the midstream production technology service platform. Among them, the chip giant NVIDIA launched Omniverse, which can simulate the digital world with great details in real-time and has become an important leader in building virtual worlds and empowering the real world. Midstream Platform Layer The Digital Life midstream platform layer includes software and hardware systems, production technology service, and artificial intelligence capability platforms. The hardware and software system company obtains data from the foundation layer and reproduces the character actions through software algorithms. The production technology service platform provides one-stop virtual human solutions, and the artificial intelligence platform provides interactive technology capabilities. The hardware and software system mainly includes modeling and motion capture systems; the production technology service platform mainly includes rendering and solution platforms; the artificial intelligence capability platform includes artificial intelligence technology, natural language processing, and voice recognition technology. The core technology of virtual digital humans is mainly provided by midstream technology service providers, including integrated/Internet technology vendors, professional AI vendors, CG vendors, and XR vendors. The players of digital life computing power mainly include ZTE, New Ease, Centric Group, Guanche Tong, and MG Smart. Downstream Application Layer From the perspective of the downstream application layer, digital life can be applied to film and television, media, games, cultural travel, retail, and other fields, as shown in Fig. 5.7. Realization methods include live bounty delivery, commercial performance, brand endorsement, film and TV groups, etc. From the downstream market, the leading players of digital doubles in film and television are the Digital Kingdom and Novartis; the top players in the field of virtual hosts and virtual hosts include SMG and Bili; the leading players of digital characters include Internet majors such as NetEase and Tencent; the pioneers of digital talents in the financial field include Pudong Development Bank, Industrial and Commercial Bank of China,

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Fig. 5.7 Digital life in the metaverse

and Agricultural Bank of China; and some players of virtual tour guides include Tencent and Shang Tang.

5.3.2 Virtual vs. Physical Distances Physical distance is generally the shortest connecting length between two points in space simultaneously. Under physical distance, people usually consider many factors when traveling, including distance, time, money, weather, etc. Distance is the prominent factor people think about. But in the metaverse, people do not have to consider the distance, just like in the movie “Top Gun,” when the player enters the “Oasis,” where you want to go, need to say to the personal VR in the metaverse where to go, directly to the destination, very convenient. The core of the metaverse is not only to be visually infinitely close to reality but, more importantly, to the real universe in terms of laws as well. In the real universe, living and non-living bodies change over time, appearing to be separate wholes. Still, their essence is composed of smaller units, so the modeling means as the underlying facilities need to consider whether they can meet the demand. The current modeling means are mainly 3D modeling and voxel modeling.

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Fig. 5.8 PC Internet era to the metaverse era

Since its inception, the Internet has undergone three important changes (as shown in Fig. 5.8). The first was in 1998, when people finally got rid of their doubts about the success of the Internet, and the Internet was no longer just a concept in the experimental stage. A significant era began when the Internet entered all walks of life, making people’s lives more convenient, and their work efficiency increased dramatically. The second time was in 2008 when the Internet changed people’s habits with the rapid development of smartphones and replaced traditional paper media with easy access to news. This phase can be called the mobile Internet era. The third time is 2021, when the metaverse takes shape, and people can travel freely in the metaverse, breaking the previous limitation of geographical distance. The metaverse is a full-sensory and human–computer interaction all-real Internet system supported by four important elements: blockchain, games, network, and virtual devices. The Internet at this stage will be three-dimensional, and people will no longer browse the web through the display screen but shuttle through the Internet universe. The impact brought by games satisfies human fantasy and allows humans to try things that cannot be done, and the metaverse will further satisfy and expand this demand. The space-time view of the real world can be broken in the metaverse, and all the scenes in science fiction movies can be reproduced in the metaverse.

5.4 Games and Socialization Under the Concept of Metaverse Modern life has gradually become inseparable from games and social networking, which can enrich our spiritual world and even accompany us for a long time in the metaverse. With the development of technology, games are becoming more and more creative, and we can create our worlds and communities in games and social software.

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Fig. 5.9 Roblox

5.4.1 Game Experience Under the Concept of Metaverse One of the most successful games in the metaverse world is Roblox, which was created in 2004 and now has 47 million daily active users and 9.5 million developers developing “experiences” (i.e., user-created worlds and games) worldwide. Part of Roblox’s success is its bottom-up reliance on a community of creators that develops all game experiences, from DJ parties to playing cops and robbers. Roblox currently has more than 4000 human moderators who work to police the platform and ensure that experiences in games do not violate community standards. Roblox also uses machine learning algorithms to scan and review content that it deems inappropriate and filters content by age level. On the Roblox platform, avatars represent a player’s identity in the virtual world, and Roblox has built a social ecosystem and its virtual economy (as shown in Fig. 5.9). Players can trade goods using an in-game currency called “Roux.” In addition to facilitating in-game purchases, community developers are paid through Roux, and Roblox’s most significant operating cash comes from players who buy Roux. More than half (54%) of Roblox’s $509 million in revenue in Q3 2021 came from Roux sales in Google Play and the Apple App Store (source Roblox financial results). Roblox itself is free. Compared to Roblox, Fortnight has a high reputation abroad for its unique gameplay and perfect drawing style. It currently has three game modes: Guardian Home, Operation Airborne, and Hippie Island (as shown in Fig. 5.10). In Guardian Home mode, players must constantly expand the barrier and build forts and traps to deal with the various monsters at night. Players can also acquire gun drawings, traps, and character cards to enhance their defenses and forts by breaking into levels and raffles. In Operation Airborne mode, a player can compete with ninety-nine other players and team up in pairs or quads to fight against other teams. With the approach of the eye of the storm, players must keep collecting supplies and building houses to carry out confrontations between players until they eliminate all opponents and become the sole survivor. In Hippie Island mode, players can create their islands, build maps, and invite friends to play with them. It is also possible to play maps built by other players in this mode, provided that a code is required.

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Fig. 5.10 Fortnite mode

5.4.2 Social Experience Under the Concept of Metaverse In addition to games, social is also an important battleground. PixSoul, a product called “PixSoul” that focuses on AI face painting, has been launched in Southeast Asia. In short, PixSoul can help users create personalized virtual images and use them for social purposes. The application description of PixSoul says “You can turn yourself into cool virtual characters ...... and share them with your family.” Another high-profile app in China is the Tencent-invested Soul, which focuses on the “social metaverse for young people” label. Users can find people with similar interests by completing a 30-second “soul test” to freely express and share their interests. The soul is an app launched at the end of 2016, and by 2020, Soul’s revenue will be 498 million yuan, up 604.3% year on year. By the first quarter of 2021, its monthly activity will exceed 33 million, and revenue will be $238 million, up 260% year over year (source: Soul’s prospectus). When users enter the Soul App, they can create their avatar to create a new Internet persona and maintain a comfortable separation from their real-world appearance and identity. Next, users must complete a “soul test” (personality quiz). Like the Hogwarts branching hat, the soul test assigns users to different “planets”—planets where like-minded people meet. Newcomers can then begin their journey through the metaverse, where they can use text, voice, or video to have conversations. For a more personalized way to highlight their self-identified

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profile, the Soul App has innovative features, including interest tags and recorded introductions. The application provides users with privacy from the pressures of the intricacies of real-world social relationships. When anonymous, some users see Soul as an online “tree hole” where they can express themselves freely, authentically, and safely. To enhance interaction and connection between users and to improve the gamification experience, Soul has introduced features such as group chat parties. With its powerful algorithms, the social platform can recommend chat rooms that are likely to attract users based on their profiles accurately. The platform also offers a wide range of value-added services, another key element in the social metaworld. Not surprisingly, most players receive the instant, immersive, and alternative universe-like social experience well. Data shows that the Soul App is in the top 10 free app charts in the App Store. Active users almost double every month, with 35% of them falling into the daily active user category. On average, Soul users use the app 21 times a day for 49 minutes. The platform records an average of 66 peer-topeer messages per person daily, which is higher than even some instant messaging products. Soul has become a popular social app for young people by building connections around interests and hobbies. “Our long-term commitment is to reduce social isolation.” says Soul App founder Lu Zhang, “This goal remains close to our hearts, and loneliness is the core challenge we strive to address.” These words vividly reflect Soul’s ambition to build a “soulful” meta-world for the younger generation. What is certain is that a new future has arrived. With players as diverse as Roblox, Fortnight and Soul exploring, a “metaverse” is taking shape.

Bibliography 1. Lucatch D (2021) Digital identity in the metaverse. https://www.forbes.com/sites/ forbesbusinesscouncil/2021/12/28/digital-identity-in-themetaverse/?sh=6d344e661fb6. Cited Dec 2021 2. New Media Research Center (2021) Metaverse development research report 2020–2021 report. Tsinghua University 3. Stanford Encyclopedia of Philosophy (2020) Communitarianism. https://plato.stanford.edu/ entries/communitarianism/pagetopright. Cited Oct 2021 4. Yuen S (2021) An era of digital humans: pushing the envelope of photorealistic digital character creation. Nvidia https://developer.nvidia.com/blog/an-era-ofdigital-humans-pushingthe-envelope-of-photorealistic-digitalcharacter-creation/. Cited Nov 2021

Chapter 6

Metaverse and Digital Asset

Thanks to the development of VR/AR, application 5G, and artificial intelligence technologies, the improvement of hardware facilities supporting wearable devices, blockchain technology has revolutionized the traditional economic system, and the virtual world in the novel Snow Crash and the movie Top Gun is coming to us. This emerging world has a unique new order: it can provide users with a highly immersive experience based on virtual reality and interactive technology, generate a mirror image of the real world based on digital twin technology, and build an economic system based on blockchain technology. In the metaverse world, it is possible to closely integrate the virtual world with the real world regarding economic, social, and identity systems, allowing each user to produce and edit content. In real life, each person has to work and contribute to get recognition and receive direct and indirect benefits. The same is true in the virtual world, where people can work together for metaverse governance, participate in social activities, buy assets using an exclusive currency, and buy and sell assets to earn currency. The digital financial system is an integral part of the metaverse world, a key factor in enhancing the user experience, and an important driver to attract more people to participate in building the metaverse.

6.1 Holding Patterns and Ownership of Digital Assets-NFT A non-fungible token (NFT) is a block of data stored on the blockchain. NFT is recorded in the blockchain and cannot be copied, substituted, or split and is the only credential used to verify the authenticity and ownership of a specific digital asset. NFT serves as a license and proof of ownership for digital assets and is usually associated with one particular digital asset. In the metaverse world, the emergence of NFT as a proof of ownership allows digital assets to circulate in the virtual world, enhancing the feasibility of establishing an economic system. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Cheng, Metaverse: Concept, Content and Context, https://doi.org/10.1007/978-3-031-24359-2_6

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6.1.1 Concept of NFT Today, the way people transact has shifted from the traditional model to a digital approach that allows the use of legal tender and cryptocurrencies. Digital currency is an electronic form of legal tender issued by the government. On the other hand, cryptocurrency is a non-physical currency issued by a decentralized private system, not regulated by any governing body, and operates on blockchain technology. The concepts of NFT and digital currency are easily confused, and although they are both built on blockchain technology, NFT is not a digital currency. Because NFT is unique and irreplaceable, it does not have the fungible characteristics of a digital currency. Figure 6.1 compares NFT, cryptocurrencies, and central bank digital currencies. NFT is an ownership certificate associated with a digital asset, while cryptocurrencies and central bank digital currencies are all digital currencies. The core difference between these three is substitutability. Substitutability means that an object can be replaced with another object of equivalent value, e.g., one RMB 100 can be replaced with another RMB 100. Similarly, a bitcoin can be replaced with a bitcoin. However, 1 NFT changes with the value of the digital asset it is associated

Fig. 6.1 Comparison of NFT, cryptocurrency, and central bank digital currency

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with. A digital currency is like exchanging currencies from one country to another based on the exchange rate, while buying an NFT is more like buying a phone with an exclusive serial number. All three are based on blockchain technology, which prevents counterfeiting and facilitates traceability. The difference is that NFTs and cryptocurrencies are completely decentralized, and their values are almost entirely market-determined and more volatile. On the other hand, central bank digital currencies are regulated by the government and, therefore, relatively stable in value. China is the first country to issue a legal digital currency officially. The NFTs available in the market can be divided into six categories, namely gaming NFTs, metaverse NFTs, art NFTs, DeFi (Decentralized Finance) NFTs, collectible NFTs, and utility NFTs, which include licenses for accessing specific areas and emojis, avatars, and personal identities that can be used in social networks. While NFT was gaining more attention than ever in 2021, it has been around since 2012. After understanding the concept of NFT, we will dive into the history of NFT.

6.1.2 History of NFT 2012 Colored Coin Appeared Colored Coins emerged in cryptocurrency circles in 2012, describing a method that could be used to create, mark ownership, and trade external assets outside of Bitcoin and real-world assets, where external assets refer to digital assets that cannot be stored directly on the blockchain. The concept of Colored Coins laid the foundation for the formation of NFT. A Colored Coin is made of small denominations of bitcoins, which can be as small as one satoshi,1 which is equal to 10−8 bitcoins, or one hundred millionth of a bitcoin. The Colored Coin can represent various assets and has many uses, such as coupons, issuing your cryptocurrency, issuing shares in companies, access licenses, and digital collectibles. The process of making a Colored Coin is called issuance, and when a Colored Coin is issued, the asset is recorded on the blockchain, and an asset ID is generated. Once a Colored Coin is issued, the asset can be traded. The creation of Colored Coin has brought to light the great potential of associating assets with blockchain technology. However, due to the lack of practical solutions, the concept had to be put on hold for the time being. 2014 Counterparty Was Born Counterparty is a peer-to-peer financial platform built on top of the blockchain. It is based on a distributed open-source Internet protocol that allows users to create and trade various digital tokens. It will enable anyone to write specific digital protocols or programs called smart contracts and execute them on the blockchain.

1 Satoshi

is the smallest unit of Bitcoin.

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Using Bitcoin’s decentralized ledger network and Counterparty’s built-in scripting language, digital assets can be created without intermediaries. In 2015, the creators of the blockchain card game Spells of Genesis pioneered the association of assets with the blockchain by issuing in-game assets to the blockchain through Counterparty. 2016 saw Counterplay partner with Force of Will party, the number four selling card game in the North American market. In 2016, Counterplay partnered with Force of Will, the number four selling card game in North America, to distribute the cards in the game on the blockchain. Subsequently, users have issued meme2 assets on Counterplay in addition to game assets. The issuance of meme assets made Counterplay realize that users wanted to have their unique digital items in a virtual environment. Since then, Counterplay has built more and more asset items. 2017 CryptoKitties Was Born The first project to use the NFT technology standard was the famous CryptoKitties, a blockchain-based virtual game that allows players to adopt, breed, and trade virtual cats. With cats being placed on the blockchain as personal assets and some virtual cats selling for over $100,000, this incredible project was the subject of major media coverage. After witnessing the madness of virtual trading cats within the CryptoKitties community, people got a taste of the true power of NFT. The industry ecosystem for NFT grew massively from 2018 to 2019. More than 100 projects have emerged in the space, and more are in development. Led by OpenSea and SuperRare, the NFT market is thriving and growing rapidly. As blockchain technology improves, it is becoming easier to join the NFT ecosystem. NFT Market by 2021 In 2021, the NFT market traded approximately 2.04 billion NFTs, with a total volume of $1491.572 billion. Figure 6.2 shows the NFT transactions in 2021 based on NonFungible’s data: (1) Game NFTs account for the largest number of transactions in 2021, accounting for 67.380% of the total market NFT transactions, followed by collectible NFTs at 23.296%, metaverse NFTs at 2.038%, and DeFi NFTs at the lowest; (2) According to the changes in the number of NFT transactions of each type in 2021, the number of NFT transactions surged since August, and after a brief decline in November, it showed an upward trend, with a total of about 306 million game NFTs and 4,013,200 metaverse NFTs in December; (3) For the transaction amount of NFT, different from the transaction quantity, because the unit price of collectible NFT is higher, so although the transaction quantity does not account for the most, the transaction amount accounts for the largest proportion, about 56%, and the transaction amount of metaverse NFT accounts for 3.339%; (4) The change of transaction amount is the same as the transaction quantity, both surged after August, as of December, the transaction amount of collectible NFT

2 Meme is a unit in the transmission of cultural information, referring to the process of cultural transmission of ideas, behaviors, or styles from one person to another.

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Fig. 6.2 NFT transactions in 2021 (data source: NonFungible)

reached 206.858 billion, $71.646 billion for gaming NFTs, about $17.516 billion for metaverse NFTs, and the least for DeFi NFTs at about $610 million as of December.

6.1.3 NFT’s Transaction Process The Ethereum blockchain has developed various technical standards for different types of tokens on its network to allow transactions to occur correctly. NFTs are typically created using the ERC721 standard written in the Solidity language, “ERC” standing for “Ethernet Request for Comments.” Using ERC721, the ownership and destination of individual tokens in a block can be tracked, which allows the chain to identify NFTs. Essentially, the NFT protocol provides an underlying distributed ledger for recording and combining it with transactions so that digital assets can be exchanged across the network.

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Fig. 6.3 The process of NFT transaction

The transaction involves two actors: the NFT creator or owner and the NFT purchaser. The NFT owner digitizes the raw data in work into the correct format and sends it to the NFT smart contract. The smart contract processes the data and places it on the blockchain as a transaction. When a transaction request is sent, the transaction is broadcast to the nodes of the P2P network. The node network validates the transaction data using a known algorithm, and once the data are confirmed, the NFT is linked to the unique hash, and a new block is generated. The latest block is then added to the existing blockchain and is permanently recorded and immutable. Purchasers can obtain their preferred digital asset (see Fig. 6.3).

6.1.4 NFT and Metaverse With the rapid development of NFT, digital assets are constantly evolving and improving. NFT serves as a value carrier for digital assets of massive scale in the metaverse, and it is foreseeable that it will become an important part of building the metaverse. Open and Fair Trading Environment With NFT, everyone can participate in building the metaverse and be rewarded based on the value of their contributions. This allows the Play-to-Earn (P2E) concept to be realized. The metaverse requires an open and fair economic system, and NFT is a decentralized network protocol based on the blockchain. In addition, blockchain’s

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inherently transparent, open, and traceable nature makes NFT a powerful tool for building a digital financial system. Extension of Identity and Social Experience The NFT will also play an integral role in the identity and social experience of the metaverse, where the NFT avatar represents the player’s real or imagined self. Players can use the NFT avatar as an “identity” to access the community, enter the metaverse, and move between areas. In this case, the NFT avatar acts as an extension of our real-life identity, and we are free to curate and build our own virtual identity or purchase an avatar NFT in the metaverse. People who create or purchase certain specific NFTs share some degree of the same hobbies, so NFTs can help users quickly find people with similar interests and build their communities. In addition, certain NFT holders have exclusive rights to access closed communities with locked content and even private offline events. This will significantly enhance the social experience of participants in the metaverse.

6.2 Digital Assets With the birth of Bitcoin, blockchain technology has also entered the public eye. After more than a decade of development, blockchain technology has become increasingly mature. The scale of the digital currency market has been expanding, laying the foundation for the flourishing development of the digital economy. As an inevitable product in the era of Big Data, digital assets have become an important kernel for developing the digital economy. With the increasing popularity of cell phones and e-wallets, by the end of 2025, nearly 60% of the World’s population is expected to use digital assets.

6.2.1 Concept of Digital Assets There is no uniform and precise definition of digital assets at home and abroad. Still, according to the definition of “digital assets” by the MBA think tank, digital assets are non-monetary assets in the form of electronic data owned or controlled by enterprises, which are held for sale in daily life or the production process, and usually include data assets, digital currency assets, and digital intellectual property assets (see Fig. 6.4). They typically have data, digital currency, and intellectual property assets (see Fig. 6.4). With the development of blockchain and other network information technology, the scale of digital assets will grow even faster. Along with the acceleration of the Internet of everything, network data no longer belong only to the virtual space of the network but are deeply integrated into every aspect of enterprise production,

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Fig. 6.4 Classification of digital assets

family, and personal life, and the scenes and platforms where digital assets exist are becoming more and more diverse and rich. Focusing on the digital assets in the metaverse, based on the wealth aggregation and circulation effect of blockchain technology, most assets in real life can be migrated to the blockchain, digitized and encrypted through blockchain technology, and eventually circulated in a decentralized, peer-to-peer blockchain network. Therefore, in a virtual world like the metaverse, where everyone participates, each item has uniqueness and can be uniquely held.

6.2.2 Value of Digital Assets There are various kinds of digital assets commonly found in our life. The “2020 China Game Industry Report” shows that the total marketing of China’s domestic game market reached 278.687 billion yuan in 2020, up 20.71% year-on-year. The number of game users has also maintained steady growth, with the scale has reached 665 million people, up 3.7% year-on-year. The trading scale of digital assets such as game equipment or account trading exceeded 100 billion yuan. Although the value of some digital assets (such as social accounts, online stores, etc.) is not apparent at the beginning of registration, after users’ operation, their influence range or reputation level, etc., will be transformed into corresponding market value in different degrees. Companies such as Tesla, PayPal, Xbox, and Amazon are driving the acceleration of digital assets as cryptocurrencies become more accepted as an efficient way to pay. The objects and land people own in the metaverse will also be included in people’s assets, as they possess economic and spiritual values. Economic Value Digital assets have economic value in their own right. Digital assets can unleash the vitality of poorly circulated assets, thus integrating assets within various industries so that these assets can circulate and generate more value. The value of digital assets

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is mainly reflected in two aspects: internal value and external value. The internal value is reflected primarily by the data generated by individuals or enterprises in their production and operation, such as the long-term consumption data of individuals or the production and operation data of enterprises, which can reflect consumer preferences and be used to build “consumer portraits” and precisely position the market; the external value is mainly based on the precipitation of existing data to develop new. External value primarily refers to the precipitation of data to create new business models, associate new markets, or conduct a risk assessment. Spiritual Value Digital assets themselves also have spiritual value. In addition to creating a specific economic value, digital assets also bring indispensable spiritual comfort to modern people because data are the crystallization of labor, containing the fruits of public work and wisdom. This is especially true for the various social accounts among digital assets, whether the daily sharing of WeChat’s circle of friends or the health, sports, and entertainment data on different online platforms, all of which witness each individual’s life trajectory. Especially in the information age, people have poured a lot of time, money, labor, and even feelings into the network world, and digital assets are the digital traces left in the network space, which are precious memories for the owners of digital assets or friends and relatives. They can even be treasured as a kind of “heirloom,” which is suitable for creating a good family style and continuing the family soul. Apple is launching a new digital asset program on December 14, 2021. Apple officially launched the Digital Legacy program on December 14, 2021, allowing users to set up five digital legacy contacts who will have access to all data in the phone holder’s Apple ID upon the phone holder’s death with proof of death.

6.2.3 The Great Potential of Digital Assets With digital currencies, digital assets are theoretically interchangeable and given liquidity. However, in the field of NFT virtual asset lending services, there is no mainstream lending platform with a specific scale-like AAVE and Compound, to provide professional services for NFT virtual assets, which is a waste of assets with near-zero liquidity for holders. Still, on the other hand, it also means that there is excellent potential for NFT virtual assets that are currently in a dormant state. The metaverse world has a fully decentralized model that includes various functions such as decentralized trading platforms, mortgage lending, lending platforms, leveraged trading, synthetic assets, prediction markets, and payment networks. Combined with the execution of smart contracts, cosmic assets effectively circumvent some of the potential risks caused by centralization in traditional financial markets, which explains why metaverse assets can unlock liquidity potential. However, there are bottlenecks in the development of NFT assets. The inherent indivisi-

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bility, uniqueness, and scarcity characteristics of NFTs determine that NFTs are less liquid than token assets and cannot be standardized, scaled, and delivered without differentiation, making NFT pricing difficult. The difficulty in pricing, the high operating cost, and low performance under the complex contract logic, the limited combination of advantages of the Ethereum ecosystem, the low number of collateralizable assets, and the high collateralization rate all lead to the inability of NFT to form a mature pledge lending market in a short period. XCarnival platform introduces collateralized lending to the metaverse world as metaverse infrastructure and then uses the borderless, permissionless, and combinable features of decentralized finance (DeFi) to solve the pain point of the difficult pledging of metaverse assets. The first version of XCarnival is deployed on the BSC chain, but to support more users and assets, there are plans to promote R&D on Ether or ETH Layer 2 and Solana afterward. This layout not only balances the high-quality assets of Ether ecology and DeFi combinability with high performance and low Gas cost but also effectively reduces the competition elimination of public chain ecology. The risk of competition elimination in the public chain ecosystem is effectively reduced. As collateral, NFTs are similar to art transactions, and the value of NFTs is determined by a game between the buyer and the seller. In this regard, XCarnival chose to build a peer-to-peer platform for pledgers and funders to “negotiate” and finally reach an agreement, including the specific NFT price, repayment time, and lending interest, because NFT is more uncertain than homogeneous tokens, requiring buyers and sellers to negotiate according to their subjective judgment, risk appetite, and market conditions, rather than having the platform set the price for NFT. The price of NFT is not set by the platform but by the buyers and sellers based on their subjective judgment, risk appetite, and market conditions. With time as the only liquidation condition, the collateralized party can get back the corresponding collateralized metaverse assets after paying off the loan and interest on the repayment date. If the mortgagor does not pay off the corresponding loan principal and interest by the repayment date, then the collateralized metaverse assets will be auctioned off. Figure 6.5 illustrates the auction process of the XCarnival platform. If the auction proceeds are less than the loan amount, then all the proceeds will go to the lender. Conversely, if the auction proceeds are higher than the loan amount, the lender recovers the loan amount, and the premium is split between the lender and the platform.

Fig. 6.5 The process of XCarnival platform auction

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Fig. 6.6 XCarnival platform and components

A synthetic asset is a portfolio of assets with the same value as another underlying asset. Investors can gain income by trading the corresponding synthetic asset without actually owning the asset. To lower the participation threshold of synthetic assets and solve the current problems of high threshold, low liquidity, and complex operation of NFT asset-backed lending platform, XCarnival pinpoints the pain and difficulties of metaverse asset-backed lending and designs four components, XBroker, Megabox, XArena, and XAdapter, to provide comprehensive exposure to multiple assets and realize the possibility of giving liquidity to metaverse assets. Figure 6.6 illustrates the XCarnival platform and its components. Megabox focuses on sub-mainstream token collateralized lending. Its unique sub-pool collateralization rate-setting model and risk control system effectively provide liquidity to users holding various long-tail asset tokens and expand their revenue exposure. Users can negotiate interest rates and loan amounts and pledge their NFT assets in exchange for a liquidity loan. Using collateralized loans to liquidate NFT assets in a time-limited auction, more illiquid tokens or even NFTs that cannot be directly priced can be reintegrated into XCarnival’s metaverse asset ecosystem. Figure 6.7 illustrates the XCarnival platform’s risk-averse process, much like the traditional pawnshop model: if the principal and interest amounts are returned when due, the collateral will be returned, and if not, the auction process will be followed. In other words, as long as the lender pays off the loan in time, he can get back the collateral in time. Otherwise, the platform will automatically auction the collateral NFT, and the whole process is based on the friendly negotiation between the mortgagor and the lender. With the boom in NFT, the NFT collateralized lending function provided by XBroker, one of the key components of the XCarnival synthetic asset protocol, will play an even more significant role in the future. With XBroker’s model, the liquidity of NFT can be significantly enhanced. At the same time, NFT will attract more users

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Fig. 6.7 The process of XCarnival platform risk avoidance

to participate deeply in the content creation cycle and digital transactions. This is highly connected to the underlying logic of the metaverse world.

6.3 Virtual Real Estate that Took Off in the Metaverse While the metaverse is on fire, virtual real estate in the metaverse is also “flying” on the cusp of the blockchain hotspot. In the real world, real estate refers to property consisting of land and buildings. It has historically proven to be a thriving market over time—depending on the geographic, political, and economic landscape.

6.3.1 Concept of Virtual Real Estate Virtual real estate is the real estate created in the metaverse project based on blockchain’s NFT technology, which has a maximum number and distinctions such as location and size. Buyers have real ownership and can build houses, showcase their products, conduct business, and social activities, etc., on virtual land after purchasing it, just like in the real world. The ownership of virtual real estate is recorded through the blockchain land ledger, which proves the holder of the digital asset of the relevant plot of land, similar to the “real estate certificate,” and all the information is stored in the Ethereum smart contract, which is an irreplaceable and non-transferable digital asset. In the metaverse, players can use digital currency to purchase land and then develop it to create exclusive content and applications according to their needs, such as advertising and events. The land is unique in each platform and is designed as a transferable NFT asset. The explosion of virtual real estate projects has attracted many celebrities who have taken the plunge. Singaporean singer JJ Lim has purchased three virtual land parcels on the Decentraland platform: Prime Gallery 1, Prime Gallery 2, and the parcel closest to GENESIS PLAZA (see Fig. 6.8). The

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Fig. 6.8 Virtual property

three plots were purchased on the OpenSea NFT marketplace for 6000 MANA (Decentraland’s cryptocurrency) each, or about $30,000 (190,000 RMB), for a total cost of about $123,000 for the three virtual plots.

6.3.2 Valuation of Virtual Properties Metaverse real estate is very similar to real-world real estate. It is available for users to create, invest, own, lease, sell, or buy, whether to house a business, create a social space to host events, etc. Location and amenities affect the price of metaverse real estate (see Fig. 6.9). At the same time, real estate prices can exhibit a unique selection logic due to differences in the actual environment and conditions in each metaverse. Most users buy virtual land for investment purposes. Players buy a property in the metaverse, renovate it, maintain it, and then sell it at a price higher than the purchase price when it becomes a scarce “prime location” or “property to be developed” in the game. The property is sold higher than the initial purchase price for a profit. A “scarce” piece of virtual land in the crypto game Axie Infinity (see Fig. 6.10) was sold for 550 Ether, valued at over $2.48 million, the largest transaction ever for a single piece of digital land. Axie Infinity is a Play-to-Earn game in which players collect and breed small Pokémon-like creatures called Axie, and let them fight each other to get Smooth Love Potion (SLP) cryptocurrency. In-game items (including plots and axes) are represented by NFT, a cryptocurrency that provides clear digital content ownership. But some users buy virtual land to build their own virtual houses, self-market, or display NFT collections for users to see and enjoy because of the intimacy of the virtual environment. Some users also see the metaverse as a “paradise” to escape from the real world. People seek development in the virtual world for various reasons, and more and more people are exploring the digital world to achieve

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Fig. 6.9 Main factors affecting the price of metaverse properties

Fig. 6.10 Genesis blocks in blockchain game Axie Infinity

spiritual fulfillment and self-worth in the metaverse. Virtual real estate is booming as people buy land and property in virtual worlds. A post-95 couple bought a digital property as their “wedding home” at the Taobao Maker Faire event held in Shanghai from July 19–25, 2021.

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The metaverse has generated a remarkable land rush, with sales exceeding $2 million and still breaking the ceiling, reflecting the enthusiasm of players worldwide to experience shopping, playing, and working in virtual worlds. It could be argued that buying land in the metaverse is like buying Fifth Avenue or creating Rodeo Drive in the nineteenth century—it means early access to a market with trillions of dollars’ worth of potential, with incredible value-added potential. So, how is virtual real estate valued? The digital land value estimation metrics are similar to those used in the physical real estate market. Real-world real estate appreciates because it is finite. In the metaverse, a similar principle of scarcity is followed, and Metaverse Group states on its website that land in the sandbox is scarce, with 166,464 parcels available. Each base unit is 96 meters by 96 meters in size. Similarly, Decentraland is managed by a decentralized autonomous organization and contains 90,601 plots, but only about 44,000 are available for private purchase and sale. We can think of Decentraland as an island or community. If Decentraland wants to open new properties, it must obtain the consent of all money holders and property holders to protect the holders from damage to their values, property, and money. Each Decentraland parcel is an NFT measuring 16 meters by 16 meters. Plots are priced in the platform’s native token, MANA, which has spiked over 4300% in 2021 and is trading at around $3.41. Sandbox’s SAND coin has blasted up nearly 14,000% in 2021, trading at around $5.15. As with all cryptocurrencies, Metaverse Coin’s coin value is not stable and subject to significant price fluctuations. Investment firms value virtual real estate in the metaverse concerning “comps” (i.e., comparables), considering its location, foot traffic, and revenue when viewing prices using OpenSea and other marketplaces. Because of the unknown nature of metaverse real estate, only traditional real-world metrics can be used to determine prices in the metaverse at this time. The metaverse is in the initial stage of development, the number of people entering the metaverse life is still small, there are not many monthly active users in the metaverse, and the number of monthly active users cannot point to any result, so some real-world metrics, such as foot traffic, are not fully applicable to the metaverse. Another way to measure the value of digital real estate is to track the early feedback voices on social media about the metaverse project. Suppose there is a very strong willingness among the user community to buy land in the metaverse and build buildings there. In that case, it means they have things to do, people to interact with, and a variety of places to go in the metaverse, which is evident enough that the metaverse is a fascinating new world.

6.3.3 Big Events and Classic Projects in Virtual Real Estate Traditional Internet giants are also participating in the metaverse project. On July 22, 2021, Facebook founder Mark Zuckerberg elaborated on his vision of a metaverse where people experience immersion and presence through VR and AR, making social interaction more natural. In the next five years, Facebook is expected to

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transition from being seen as a social media company to a metaverse company. The future of the metaverse is full of possibilities, and understanding the virtual land may be the first step into the metaverse world. In Decentraland, a virtual land in the form of NFT sold for over $900,000; Christie’s sold Beeple’s NFT digital artwork for $69 million; the World’s first virtual house sold in the NFT market was Mars House, which sold for $512,000; a piece of land on Cryptovoxels called “9 Robotis Route” started at $101.2 and has now sold for $9570.8. The initial price of a piece of land on Cryptovoxels called “9 Robotis Route” was $101.20, and it has now sold for $9570.80. The land has only been resold three times, and the price has increased 93 times; the 310 digital real estate NFTs released by artist Huang Heshan sold out in two days, totaling more than $360,000 in sales. According to the NonFungible website, the virtual lands in Decentraland and The Sandbox are in the top 10 with over $66 million and $31 million, respectively. Dream Card, Roblox, Axie Infinity, and Somnium Space, among which The Sandbox, Decentraland, and Cryptovoxels are the most mature. The Sandbox The Sandbox (see Fig. 6.11) is dedicated to building engaging virtual game worlds, a virtual game ecosystem based on blockchain technology where players can build, own, and earn exclusive benefits. Each piece of land in The Sandbox virtual world can be considered a small world, and once you purchase a piece of land, you have full ownership and control over everything. Not only are you free to publish, design, and run your games on the land, deciding what games can be run, game mechanics, available assets, and whether players can join, but you can also rent the land to

Fig. 6.11 Home page of TheSandbox

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Fig. 6.12 Home page of Decentraland

game creators to earn revenue. To date, The Sandbox has a total of 12,750 NFTs, with 501 in the physical category—values usually fluctuating from tens to thousands of dollars, and 4635 in the land category—worth tens of thousands or even millions of dollars. Decentraland Decentraland is a virtual reality (VR) platform running on the Ethereum blockchain (see Fig. 6.12) that allows users to create, experience, or develop rich, interactive 3D content on a published platform. Decentraland provides users with complete control and ownership of their digital spaces, assets, and experiences. Decentraland’s land is divided into parcels, distinguished by Cartesian coordinates (x, y), which can be purchased with MANA. The token of each parcel includes information such as coordinates and owner. Users can build scenes on their parcels ranging from static 3D scenes to interactive applications or games. Some plots are further organized into thematic communities and become shared spaces. Since the emergence of Decentraland, there have been 50,125 users, with a maximum of nearly 4900 people online at the same time. Cryptovoxels Crypovoxels is called the “blockchain version of My World” (see Fig. 6.13), and its simple pixelated style provides players with a sense of indoor 3D space in which to see exhibitions, meet online, and other activities, and is an entirely open sandbox game in which users can explore freely. After purchasing a valuable NFT, users naturally desire to collect and display it. Cryptovoxels explores the following needs for this purpose: the 3D display of one’s encrypted NFT collection online, open live interactive VRchat or concert, self-creation on one’s land, investment in scarce land,

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Fig. 6.13 Purchase page of CryptoVoxels

Fig. 6.14 Purchasing virtual items on the Roblox website

etc. In Cryptovoxels, plots are randomly generated by a city generator—random in size—which also creates streets. Each plot has at least two streets, so players can freely walk from one plot to another, interact, and visit other people’s buildings. Roblox Roblox is considered to be a trailblazer in metaverse gaming. It creates a very open platform and incentives for creation, a decentralized world led by the player (see Fig. 6.14). In Roblox, creators can participate in game creation through Studio, an intuitive and simple editing tool. It provides creators with a rich character customization system, sophisticated character modeling, and a diverse gameplay matching system. By lowering the barriers to content creation, Roblox is attracting

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Fig. 6.15 Axie Infinity website virtual item transaction real-time data

many young people. Today, Roblox has 90 million monthly active users worldwide, including more than 5 million teen developers and more than 40 million maps created by players and developers online. Tens of millions of immersive 3D games built by a global community of developers provide a space for users to imagine, create, and have fun with their friends. In 2021, Roblox rose in value by 9.35% to an opening price of $78.85 and a market capitalization of $45.351 billion. Axie Infinity Axie Infinity is a digital pet world built on the Ethereum blockchain (see Fig. 6.15). It is essentially an NFT game based on the metaverse concept, where anyone can participate in the game and earn game tokens to spend or trade through ingame battles, breeding, and other gameplay. As the popularity of Axie Infinity has increased, it has now surpassed $12 million in revenue in a single day and has over a million daily active users. Each Axie is an NFT, which can be used for battles, sold in the trade market, and paired to breed new Axies, which can also be used for battles or sold. Axie trading and breeding require interaction with the blockchain. According to Axie Infinity’s official website, on January 14, 2022, Axie Infinity sold 36,384 Axies in just one day, generating $4.53 million in sales.

6.4 The Relationship Between Metaverse and Real-World Assets What does a metaverse look like? From Facebook founder Zuckerberg’s speech, it seems that the metaverse and the real world are mapped to each presented in digital form in the real world (such as photos, movies, videos, and games) and can both

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be brought into the metaverse and projected into the metaverse as omnidirectional projections in the real world; things in the virtual world can also have reverse hooks to the real world. The metaverse should essentially contain various behaviors of the real world, such as eating, dressing, living, and walking. Although they exist in a gamified way in the virtual world, they serve as a mapping of people’s real world.

6.4.1 Metaverse Changing Real-World Business Models The metaverse will empower all industries in the real world to carry out metaverse innovation based on existing business models, promote value chain and industry chain upgrading, and create new business models, new customers, and new markets with new technologies and new ideas; many fields in the real world also need to stimulate development potential further and release new vitality by integrating with the metaverse, particular industries or organizations, such as enterprises with limited development space, enterprises with reusable resources, enterprises with convenient digitalization of existing products and services, obsolete industries, industries that will be eliminated by AI, cyclical industries, and light asset industries. In particular, specific sectors or organizations, such as enterprises with limited development space, enterprises with reusable resources, enterprises with convenient digitalization of existing products and services, obsolete industries, industries that AI will eliminate, cyclical industries, asset-light industries, etc. The metaverse is a scenario where the real world and the virtual world are combined, a simulated world that exists in parallel with the real world, interconnected and excellent. The metaverse exists not only online but also offline. In the future, there will be seamless integration and organic connection between online and offline, the real world, and the simulated world. In the short term, the breakthroughs for the metaverse are gaming, social and immersive content. The content sector is expected to be the first to benefit because the metaverse can bring an immersive experience to users and significantly enhance their experience. Due to hardware and software constraints, the initial metaverse prototype appears in the game field. LiveTopia is a massively multiplayer open role-playing game (see Fig. 6.16) in which players have a colorful world stage, can play any character they like, have experience-rich life with other players, and create their own stories. The game has a realistic city system, including subways, airports, highways, aquariums, parks, etc. Players can own a piece of their area and build various houses, plus countless costumes, props, pets, vehicles, airplanes, and cruise ships. Currently, LiveTopia is ranked in the top 10 worldwide and has been widely recognized by users worldwide, which is also a representative product made by Century Huatong on the content side of the metaverse. Metaverse will initially start

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Fig. 6.16 Metaverse game “LiveTopia”

online, and in the future, it may gradually transform the online and offline worlds from partially connected to fully connected by creating various offline immersive experiences. Integrating the real world, the digital twin world, and the virtual world will become closer and closer and even enter a state where the real and virtual worlds are entirely connected.

6.4.2 Realization of Assets in the Metaverse If blockchain lays the foundation for the operation of the economic system of the metaverse, the native digital currency in it carries the function of value transfer in this world. Digital currencies enable the interoperability of buying and selling items between the metaverse and the real world and can be used to exchange value between the two parties. The metaverse creates a closed-loop economic system where any weak contribution related to data can be traced through blockchain technology. With the native digital currency as an incentive, the whole value transfer process in the digital world is smooth and unhindered. The currently laid out metaverse fully satisfies the needs of users to produce content and use digital currency to trade virtual goods. Players can work in the virtual world and earn income through various types of assets, and virtual assets can be exchanged with each other and become a source of income for players. It not only connects virtual assets with real values but also provides rule carriers for the operation of the economic system in the virtual world and the identity and property of users.

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If the Internet has built a virtual world, then the metaverse is the further development of the virtual world after the Internet was brought by computer technology. The metaverse is distinguished from the Internet world by two major breakthroughs— somatosensory technology and blockchain technology—that mark a leap forward in the virtual world beyond the familiar Internet world. Somatosensory technology blurs the line between the real world and the virtual world. Blockchain technology can clarify the property rights of virtual items and digital assets that were difficult to identify in the past, which is the basis of exchange and the necessary way to be economically active. Blockchain lays the foundation for value exchange in the virtual world, and a sound and transparent economic system is a prerequisite to ensure that the metaverse ecology can operate sustainably.

Bibliography 1. Cornelius K (2021) Betraying blockchain: accountability, transparency and document standards for non-fungible tokens (NFTs). Information 12:358. https://doi.org/10.3390/info12090358 2. Shaohua G (2021) Content area will be the first to benefit from the “meta-universe” concept industry still need to cross the triple challenge. http://news.xinhua08.com/a/20210917/2001573. shtml. Cited Oct 2021 3. WebX Lab (2021) Read about metaverse asset-backed lending platform in one article. https:// www.webxlab.net/article/detail/Qv25413.ywL. Cited Oct 2021

Chapter 7

Metaverse Security

Security is a state of being “free from danger,” which in the real world usually means that people are free from danger. In the field of information technology, the concept of security extends to information security, with the core three components of confidentiality, integrity, and availability (see Fig. 7.1). 1. Confidentiality Others cannot obtain information in clear text without authorization. Imagine an ATM withdrawal service where the confidentiality of the information is not protected. If the confidentiality of the information is not protected, network hackers can eavesdrop on the transaction information, who can then know the user. The hacker can then see the amount of money withdrawn by the user and thus commit further robbery or fraud. 2. Integrity Information should be able to be immediately detected if it has been tampered with. Suppose the information’s integrity is not protected, then in the process of user transfer. In that case, hackers can modify the transfer amount or the receiving account, thus cheating the banking system and gaining. This can be used to gain illegal benefits. 3. Availability Information will not become inaccessible when access is authorized. If the availability of information is compromised, users may not be able to withdraw or transfer money, which may hinder their urgent needs and affect the quality of banking services. The importance of information security is self-evident, and once the concept of “metaverse” was proposed, its security received widespread attention from the industry. It can be said that metaverse information security is an important prerequisite for the development and prosperity of the metaverse. The metaverse integrates the virtual and real worlds and maps various real-world elements into the digital virtual world. In the data-dependent virtual world, there is nothing without © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Cheng, Metaverse: Concept, Content and Context, https://doi.org/10.1007/978-3-031-24359-2_7

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Fig. 7.1 Three elements of information security

data, and without information security, social production and life in the metaverse cannot be carried out normally and orderly. The metaverse is still in its initial stage, and the factors affecting information security include technical risks and the degree of individuals’ and enterprises’ awareness of data risks. Therefore, building a basic framework for data security governance and raising public awareness of privacy protection are crucial to enhancing the security of the metaverse, an essential part of the metaverse that can be applied smoothly.

7.1 Metaverse Technology Risk In recent years, people have gradually gained a deeper understanding of the metaverse concept with the increasing maturity of the technology. The metaverse is not one technology but a combination of multiple technologies, including 5G technology, AR/VR technology, cloud computing, and blockchain technology. It can be said that the development and prosperity of the metaverse cannot be achieved without the support of these underlying technologies. 5G security, AR/VR security, cloud computing security, and blockchain security have also become stumbling blocks to the metaverse development (see Fig. 7.2).

7.1.1 Metaverse and 5G Security Issues The arrival of 5G heralds the advent of the Internet of Everything era, and 5G has become a vital network technology facility for the metaverse. Its comprehensive connectivity, ample bandwidth, and low latency characteristics naturally fit the metaverse’s requirements for login and ultimate experience anytime, anywhere. Along with the continuous development of virtual reality technology, 5G technology

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Fig. 7.2 Metaverse technology risks

will produce considerable changes in the gaming, movie, medical, and education industries and will play an important role in promoting social and economical construction. At the same time, we also need to address 5G security issues actively. 1. Security Challenges of 5G Networks 5G networks expand the application scope of network technology and enable better application in various scenarios, but they also impose higher security requirements on 5G networks. On the one hand, a large number of resources need to be connected to network devices, including telematics, IoT, and smart home devices, which may affect user security due to the large volume of network data and easy errors in information transmission; on the other hand, new services, architectures, and technologies based on 5G network technology also bring new security challenges to 5G networks, and NFV/SDN-based network virtualization, automation, and opensource make the network more flexible and agile, but also more vulnerable to attacks. 2. Security Challenges of Edge Computing Edge computing is also gaining attention as it rides on the coattails of 5G technology. As opposed to cloud computing, edge computing refers to providing computing services close to the data source. 5G networks can carry large amounts of data, but instantaneous, massive data transmission may “break” the 5G core network and risk data transmission failure. Edge technology reduces the pressure of data transmission in 5G networks through local computing, which positively affects the stability of 5G networks. Generally speaking, during edge computing, many important data are locally acquired, locally calculated, and locally stored, which can effectively improve the real-time performance of computing and also reduce the risk of information leakage during network transmission. However, in specific application scenarios, the security policy provided by the 5G network cannot cover the surrounding edge computing environment, resulting in the user ports near the edge computing cannot be effectively protected. This leads to the risk of network intrusion by unlawful elements (see Fig. 7.3). In the metaverse distributed world, to ensure user experience, edge computing may be one of the critical technologies, so the security of edge devices will also become one of the metaverse securities.

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Fig. 7.3 Security challenges of edge computing

7.1.2 Metaverse and AR/VR Security Issues AR/VR devices are the entrance to the future of the metaverse by combining with sensing technology, bringing the ultimate experience to the human senses. At the same time, the new technology also brings unknown security risks. Line-of-Sight Tracking To provide an immersive experience to users, developers are trying to collect more and more user-sensitive data (such as line-of-sight tracking) to improve the user experience, facilitate dynamic focus, or understand player emotions. In the metaverse, ads can easily be included in VR games, and by tracking user eye rolls and line-of-sight rest, advertisers can more accurately see how users perceive ads. In this way, market researchers can quickly and accurately see into the minds of their customers. While this approach may be exciting regarding technology and user experience, it can be intimidating if misused. Tampering with Reality “Seeing is believing” has always been an important guide for people’s behavior. But with virtual reality, metaverse users can change their appearance in the metaverse, remove facial blemishes, and show other users a thinner version of themselves.

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Movie providers are even loading apps onto smart glasses platforms that make users look like other people—like celebrities. While the metaverse is still in its infancy and VR/AR devices are not yet popular with consumers, that does not mean they will not interest the average consumer in the future. As VR/AR technology evolves, these may become more readily available and raise the above issue. Identity Falsification Motion tracking sensors in VR devices can record a person’s movement. VR headsets can record individual facial movements very well. The combination of machine learning and face recognition technology allows computers to more accurately manipulate people’s voices and appearance to create images or videos that look close to the real footage in order. This allows faked images or videos to look more real and fool everyone. In a virtual reality environment, people communicate with each other through virtual images. The tracking sensors in VR systems translate our real-life hand and head movements into virtual character movements. VR devices are collecting more and more user data to improve the user experience. But once these sensitive data fall into the wrong hands, the identity forgery will be more challenging to identify and respond to.

7.1.3 Metaverse and Cloud Computing Security Issues Without an advanced digital infrastructure, the metaverse would be a beautiful “building in the sky.” The “immersive,” “low latency,” and “anywhere” characteristics of the metaverse not only put higher demands on network transmission technology and VR/AR technology but it also relies on high-performance cloud computing and massive data storage. The metaverse itself requires computation and data storage. The metaverse itself involves computing, storage, and artificial intelligence technologies. These are all inseparable from cloud computing. In the metaverse scenario, cloud computing is based on the scale effect, high resource utilization, and the ability to provide a high level of data storage. Based on the scale effect and high resource utilization of cloud computing in the metaverse scenario, its fast distributed network connection, resource sharing, and data storage capacity, cloud computing can be used as a platform for developing the metaverse. Cloud computing is the future data universe. As the data storage and processing center of the future metaverse, a cloud security vulnerability is also an important factor for the metaverse. Cloud computing as the data storage and processing center of the future metaverse, a cloud security vulnerability, is also a major security challenge to be faced by the metaverse. Cloud service providers and cloud customers need to work together to solve them. To determine users’ top cloud security concerns, the Cloud Security Alliance (CSA) surveyed industry security experts to gather expertise on the most significant security issues in cloud computing. The CSA surveyed industry security experts to gather expert opinions on the most important security issues in cloud computing and

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Fig. 7.4 CSA cloud security threats

to discover in-depth the major cloud security issues and the security concerns that also. The survey was conducted by the Cloud Security Alliance (CSA) to gather professional opinions on the most significant security issues in cloud computing and to identify the main cloud security issues and the security issues that also need attention in the metaverse (see Fig. 7.4). A few of these issues are briefly described below. 1. Data Breach Data leakage has recently been a top-ranked cloud security threat, causing concern for the average user and enterprise customers, who may suffer severe damage to their company’s reputation and finances if business data are compromised. 2. Lack of Cloud Security Architecture and Strategy With the digital transformation trend of enterprises, more and more companies are choosing to migrate their IT systems and data to the cloud. For many companies, the migration’s efficiency and the migrated systems’ availability are more important than security. As a result, enterprises often do not consider cloud security at the very beginning, which leads to data migration to the cloud and easy targeting by hackers. 3. Poor Identity, Credential, Access, and Key Management Enterprises need to change their identity and access management practices in a cloud computing environment. They should adopt the principle of least privilege for account authorization based on business needs. The enterprise needs to change the rules related to identity and access management and adopt the principle of least privilege for account assignment based on business needs. The enterprise needs to change the practices related to identity and access management.

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4. Account Hijacking Attackers steal accounts by hacking into cloud services and other means. Once a legitimate account is stolen, the attacker may destroy important data of the enterprise, etc. Attackers may also maliciously obtain the user’s cloud account through highly emulated phishing sites, so users need to be extra careful when accessing cloud computing services through the Internet.

7.1.4 Metaverse and Blockchain Security Issues Blockchain is considered the “infrastructure” of the Internet of value. It has been developed for over a decade, giving birth to trillion market capitalization cryptodigital currencies like Bitcoin and Ether. The digital currency and economic system based on blockchain technology have entered the public eye. In 2021, NFT has made a big splash in digital artwork. Facebook released a Libra white paper in 2019 to join the blockchain field. In 2021, Zuckerberg announced that Facebook would change its name to Meta, fully embracing the metaverse and committing to building a worldclass metaverse enterprise. It is with the pre-blockchain layout that Facebook is so decisive into the embrace of the metaverse. Blockchain technology incorporates cryptography, economics, and sociology by encryption of information in each block to ensure that the information data stored in the block cannot be falsified or tampered with. In a decentralized and de-trusted way, the information stored in the block can be maintained by multiple parties. It is a decentralized and de-trusted way to achieve multi-party maintenance. The maturity of blockchain technology provides a valuable network for the metaverse. It bridges the gap between the real world and the virtual world. Following the footsteps of Facebook footprints, blockchain technology will likely become an important “infrastructure” for the metaverse. However, blockchain technology still faces multiple security risks, such as exchange security, wallet security, smart contract vulnerabilities, and arithmetic attacks (see Fig. 7.5). With the implementation of multiple applications of blockchain, the security problems caused by blockchain digital assets are generally on the rise and coin theft, fraud, illegal fundraising, money laundering, etc. The cases of coin theft, fraud, illegal fundraising, money laundering, etc., are frequent. Based on the application of blockchain technology, the DEFI and NFT security incidents also occur from time to time, and digital assets on the blockchain have become the target of hackers and cyber criminals. 1. Exchange Security Exchange security incidents have been climbing in recent years. 2019 has been a year of intense scrutiny because exchanges were breached, and hackers illegally accessed hundreds of millions of dollars in digital assets. The exchanges included global head exchange Binance and small local exchanges. The number of exchanges attacked in 2020 has increased further, and the amount of damage has expanded.

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Fig. 7.5 51% of the arithmetic attack risks

In 2020, more exchanges were attacked, the number of losses grew, and some exchanges could not support users’ withdrawals due to digital currency theft. In 2020, the number of exchanges attacked will increase. Further, the number of losses will increase, and some exchanges will even “run away” due to digital currency theft and the inability to support users’ withdrawals. 2. Wallet Security The security of blockchain systems relies heavily on cryptography. Although blockchain is touted to be almost “unbreakable,” we should note that no security problem can be solved by technology alone. Users’ digital assets (including digital currency, NFT, etc.) in blockchain systems are protected by private wallet keys. Only through the signature of the user’s local wallet private key can the circulation of digital assets be realized and authorized. In practical applications, most blockchain user-side wallets are much less secure, and there is a risk of hackers stealing the helper words and private key files. To promote the ease of use of the blockchain, some online wallets have the phenomenon of hosting users’ private keys, and the

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Fig. 7.6 Smart contract security incidents

risk is more centralized. If users store their keys on such insecure platforms, hackers can easily access them. Wallet security, or user private key security, is also one of the main issues for blockchain security. 3. Smart Contract Vulnerabilities While blockchains have traditionally been used for cryptocurrency transactions, smart contracts offer a broader scope of applications and are increasingly used in other areas. The problem is that the coding used in smart contract Dapps is often untested. Mainstream platforms such as Ether and EOS and public chains such as Wavefield have all lost money due to vulnerabilities in smart contracts (see Fig. 7.6). The most famous case was the DAO incident in 2016, which also caused smart contract vulnerability. Although the security incident was temporarily solved by forking, it caused severe damage to the Ethereum community. 4. Network Congestion Blockchain carries personal digital assets, and security is at the top of the list. According to the blockchain “Impossible Triangle” (see Fig. 7.7), the performance of blockchain is relatively low under the premise of ensuring security and scalability, which users have criticized. As the number of Dapps on top of blockchain proliferates and the complexity of Dapps increases, many blockchain transactions will cause network congestion and even blockchain service unavailability.

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Fig. 7.7 Blockchain “Impossible Triangle”

Metaverse Data Risk In addition to technical risk, there is also data risk in the metaverse. Before the vision of a complex, converged metaverse can become a reality, we must confront the thorny issue of data risk. For users, data risk can mean invasion of personal privacy, potential identity theft, and other types of fraud. Companies that fail to take data protection and privacy into account in the metaverse may face heavy fines and even be caught in the public eye for reasons such as data theft, which can lead to the loss of users. In the metaverse, data have various manifestations. User virtual identities, chat records, social records, and biometric traits are data; text, audio, and video are data; virtual real estate, ordinary roads, mountains, and rivers are also data. As a product of digital technology development, data naturally become the most important component of the metaverse. Studying different kinds of data in the metaverse positively affects risk awareness and data security protection of data in the metaverse.

7.1.5 Data in the Metaverse Before elaborating on the metaverse data (see Fig. 7.8), we first need to understand the data and their relationship to information. Data are a record that reflects the properties of objective things and a concrete expression of information. After data are processed, they become information, and information needs to be digitally transformed to be stored and transmitted. Information and data are inseparable. The Internet world is full of data, and it can be said that the development of the entire Internet is a process of data collection, transmission, storage, and processing that is constantly optimized. The metaverse is considered by many to be “Internet 4.0.” It gathers a large amount of data and extends the application of data to a whole new field, further expanding the four dimensions of scale, diversity, speed, and value of Big Data.

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Fig. 7.8 Data in the metaverse

1. Personal Data According to Personal Information Protection Law of the People’s Republic of China, personal information is all kinds of information related to identified or identifiable natural persons recorded electronically or in other ways, excluding information after the anonymization process, such as biological information such as fingerprints, iris, genes, etc., asset information such as personal assets and bank accounts, as well as information involving privacy such as action tracks, social records, personal emails, etc. In metaverse, users logging into the metaverse application first need to register and actively provide some personal information, such as name, cell phone number, email address, etc.; users purchasing virtual goods need to bind real-world bank accounts or third-party payment accounts; users opening virtual access control may use biometric data such as face and fingerprint. In addition, users in the metaverse dynamically generate new data by participating in various virtual activities, such as motion track records, chat records, shopping records, etc. Users may also bring existing data from the real world into the metaverse. Legitimate private assets owned by people in the real world, such as real estate, cars, and other physical assets, and virtual assets, such as articles, music, and videos, may be transformed into digital assets and mapped into the metaverse and

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traded as digital assets. Users in the metaverse can participate in creative activities through digital identity, creating digital assets, NFTs, literary works, etc. 2. Virtual Environments and Scenario-Based Data Like the real world, there are various virtualized infrastructures in the metaverse. If the real world is built on top of steel and concrete, then it can be said that the metaverse is built on top of data. The data in the metaverse are not only personal data but also data used to build virtual environments and virtual scenarios. In the urban traffic scenario, metaverse uses digital twin and machine learning technologies to generate highly realistic virtual–real traffic flow with a large amount of real traffic data and forecast, deduce, and verify urban traffic route planning. In the cultural tourism scenario, the virtual world scenery of the metaverse is consistent with the real-world scenery. It can show the 3D scenery scene in real-time, including the prediction and verification of the physical scenery. It can even simulate the damaged human landscape to give users a better cultural travel experience. There are many digital virtual environments and scenes in the metaverse. Real-world education scenes, customer service scenes, e-commerce scenes, pan-entertainment scenes, financial scenes, etc., may be reproduced in the metaverse and provide a different experience.

7.1.6 Metaverse Data Security As industries accelerate their digital transformation, the value of data is further highlighted. Data security incidents have been frequent in recent years, and according to the industry, the percentage of publicly reported data security incidents in the past three years is shown in Fig. 7.9.

Fig. 7.9 Percentage of data security incidents in the last 3 years

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1. The Internet has Become the Most Affected Area in Terms of Data Security Incidents As seen in Fig. 7.9, the Internet industry has seen the most data security incidents in the past three years, accounting for 30% of the total. 2018 saw an uproar when Facebook released users’ personal information to Cambridge University for analysis without permission. In March 2020, users discovered that 538 million pieces of microblog user information were being sold on the dark web, 172 million of which involved sensitive personal information, including gender and geographic location. 2. The Financial Industry Security Incidents Are Frequent In the past three years, security incidents in the financial industry have been frequent, second only to the Internet industry in terms of number, accounting for 20%. Finance is an integral part of the modern economy, and financial regulators are gradually strengthening the security and compliance regulation of data applications in the financial industry. Insider violations mainly cause data security incidents in the financial industry, and malicious internal employees are the biggest security threat. In March 2017, a bank president provided illegally obtained property information of a district owner to others for soliciting business. In April 2020, there were media reports that an internal staff of a commercial bank leaked customer information in violation. 3. Data Security Incidents Involve a Wide Range of Industries In addition to the Internet and financial industries, e-commerce, government agencies, and service industries have all experienced data security issues to varying degrees. By analyzing ours, we can find that the industries with more data security incidents have the characteristics of large user traffic, high data value, and high network openness. We can see that the industries with more data security incidents are characterized by large user traffic, high data value, and a high degree of network openness. 4. The Metaverse Will Face Broader Data Security Issues The metaverse is based on the Internet and may cover all walks of life, far exceeding the current Internet 3.0 in terms of data volume and value. The domestic Internet giants Tencent, Byte Jump, Baidu, etc., have set foot in the metaverse. The Korean government has taken the lead in transplanting the city of Seoul into the metaverse and providing visualization services for the public through the virtual image of the metaverse. Facebook, Microsoft, and other foreign technology companies have also formulated strategic development plans for the metaverse. The future metaverse will be integrated with various industries, including the Internet, finance, government, and other industries. It will need to face a more complex virtual environment and more extensive data security issues.

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7.1.7 Status of Data Security Protection 1. The Basic Concept of Data Security Article 3 of the “Data Security Law of the People’s Republic of China” states that “data security means ensuring that data are in a state of effective protection and lawful use by taking the necessary measures, as well as having the ability to guarantee a continuous state of security.” From the definition of data security, it is clear that data security is a comprehensive concept that involves the entire life cycle of data, including the collection, transmission, storage, processing, exchange, and destruction stages. It is necessary to continuously guarantee the security state of data during this lifecycle to ensure data confidentiality, integrity, and availability. With the successful development of the digital economy and the wide application of new technologies, digital technologies have permeated the national political, economic, and military spheres. As fundamental laws and regulations, data security laws are the key to maintaining national security, safeguarding people’s legitimate rights and interests, and promoting the digital economy’s healthy development. Data are key to driving the development of the metaverse. Thus, data security issues have become a significant factor that hinders its development. Currently, laws and regulations have not yet been introduced, but the current laws and regulations provide important guidance for solving data security problems in the metaverse. 2. Data Security Protection Measures in China In recent years, as enterprises, individuals, and the state pay more and more attention to data security, China has formulated data security-related laws and regulations one after another (see Fig. 7.10), which have important guiding significance for metaverse data security. The Cybersecurity Law of the People’s Republic of China, which came into effect on June 1, 2017, emphasizes the protection of infrastructure and personal information, puts forward the principle of least sufficient management, adds provisions on data leakage notification and the right of individual deletion, and makes provisions on the domestic storage and outbound assessment of personal information.

Fig. 7.10 Domestic data security system construction

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Fig. 7.11 Foreign data security system construction

The Data Security Law of the People’s Republic of China, which came into effect on September 1, 2021, is the fundamental law for data security management, focusing on data security protection and supervision, and providing a legal basis for regulating the behavior of different subjects in cyberspace. The Personal Information Protection Law of the People’s Republic of China, which came into force on November 1, 2021, aims to regulate and promote the reasonable use of personal information. 3. Foreign Data Security Protection Measures Western countries and organizations, represented by the United States and the EU, have introduced their laws, regulations, and supporting measures with different focuses (see Fig. 7.11). The EU’s data security legislation is a global leader in terms of both legislative timing and legislative systematization. The General Data Protection Regulation (GDPR), which came into force on May 25, 2018, is the most representative data security legislation in the EU. The regulation strengthens the rights of data subjects and improves the relevant mechanisms. It constrains and regulates non-European tech giants and facilitates the data management of platform companies to play a regulatory role. GDPR strengthens the data subjects’ right to be forgotten, the right to data portability, the right to restrict specific processing, and the right to revoke consent for processing, effectively protecting the personal privacy of metaverse users. On October 4, 2018, the European Parliament voted to adopt the “Regulation on the Free Movement of Non-Personal Data,” which clearly defines the meaning of “non-personal data” and ensures the free movement of non-personal data across borders, effectively complementing existing personal data laws. The regulation will help regulate the use of non-personal data by metaverse companies to provide a better virtual experience. The United States implemented the “California Consumer Privacy Act of 2018” (CCPA) on January 1, 2020. The Act prefers a benefit-oriented data governance model and establishes uniform standards for protecting personal information. The Act draws on the “General Data Protection Regulation” model to fully release control of personal data to consumers while paying close attention to the interests

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of various industries. It clarifies the concepts of personal information, data subjects, and data controllers, emphasizes the individual’s right to control information, including the right to access, the right to know, and the right to delete, and sets heavy penalties for violations. 4. Data Security Is a Long Way to Go Although the data security laws and regulations are improving, the protection work is still insufficient. If data security is not effectively addressed, the path to the metaverse will be full of thorns. With the continuous updating of new technologies, architectures, and applications, new data security risks are emerging, and data leakage incidents are rising each year. In recent years, digital technology has penetrated all walks of life, such as online education, online medical care, Internet finance, etc. Once leaked, a large amount of sensitive data flowing on the network will cause a more significant infringement on personal privacy. The implementation plan of data security laws and regulations is yet to be figured out. Although countries have launched data security-related laws and regulations one after another, the specific implementation still faces tests, and data security regulation techniques still need to be figured out. Since the metaverse is highly open and interactive, the future metaverse may not be limited to one or some countries but is globalized. The globalization of metaverse data may cause the problem of conflicting data security regulations in various countries and regions.

7.2 Metaverse Data Security Governance In 2017, Gartner presented a basic definition of data security governance. It states that data security governance is far more than just a set of product-level solutions assembled with tools; it is a complete chain that runs from the top down through the entire organizational structure, from the decision-making level to the technical level, from the management system to the tools that support it. All levels within an organization need to reach a consensus on the goals and objectives of data security governance to ensure that reasonable and appropriate measures are taken to protect information resources most effectively. The metaverse is built on data. Data security governance on the enterprise side has a positive effect on metaverse implementation, and metaverse users should also take the initiative to participate in personal data security and privacy protection.

7.2.1 Data Security Governance Framework Data security governance is centered on people and data, focusing on the complete lifecycle security of data, involving data, business, security, technology, manage-

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ment, and other aspects. Since metaverse involves new application scenarios, it brings more challenges to data security governance. However, the goal of metaverse data security governance remains the same. Data security governance essentially safeguards the value of data assets, makes data more secure, and ensures data confidentiality, integrity, and availability. The successful development of the metaverse and the participation of many users lead to dramatic data volume growth, and enterprise data are exposed to complex exposure and proliferation misuse risks. Before building a metaverse platform or application, appropriate data security governance planning is required. The plan is carried out in terms of both relevant people management and technology. Metaverse data security governance should classify and grade data and adopt different security protection measures for other data to find a balance between data security protection and legitimate data utilization. The data foundation security not only puts forward requirements for data security in terms of data classification and grading but also in terms of compliance management, data identification and access, monitoring and auditing, and security incident response. Data security follows the “barrel principle,” so it is necessary to ensure the safety of the whole data lifecycle rather than a specific part of the security. The data security lifecycle includes six major aspects: acquisition security, transmission security, storage security, processing security, exchange security, and destruction security (see Fig. 7.12).

Fig. 7.12 Basic framework of data security governance

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1. Acquisition Security Metaverse dynamically connects the virtual and real worlds, and its data collection terminal contains not only VR/AR devices but also numerous IoT devices. The collection terminal has a large volume, many types, many data sources, and an extensive data collection range, which is vulnerable to hacker attacks in the collection process. At the same time, it is difficult to solve the problem of data source authenticity from technology alone so far. Therefore, while combining cryptographic technology to ensure the data’s integrity, it is also necessary to cooperate with monitoring, surveillance, and manual review mechanisms to reduce the probability of introducing dirty data, prevent hackers from tampering with the data, and avoid causing metaverse security problems. 2. Transmission Security Metaverse is an open network. Users will access the virtual world through virtual reality devices and communicate with other users, trade with virtual merchants, etc. All these will involve data transmission. At present, data transmission is relatively mature in terms of technology, and the SSL network security transmission protocol can ensure the confidentiality and integrity of the data during transmission. Data confidentiality, integrity, and availability during transmission can be guaranteed through SSL network security protocols. The data leakage prevention technology and Big Data analysis technology can further improve the possibility of detecting and preventing data leakage and effectively realize the security of data transmission. 3. Storage Security A large amount of sensitive user data flow in the metaverse, and if hackers steal these data, it is likely to cause severe damage to the legal rights of users. In recent years, data security storage has become more and more mature, which is manifested as follows: on the one hand, sensitive data are encrypted through cryptographic technology to prevent hackers from directly stealing; on the other hand, the rise of distributed storage and the improvement of backup and recovery mechanisms can be effectively applied to the metaverse to ensure the availability and disaster recovery of data. 4. Processing Security Data flowing up can reflect its value. The metaverse virtual world effectively integrates various industries. The multidimensional and large-volume data can effectively train machine learning models, promoting the optimization of the virtual metaverse scenario. With the development of federated learning, secure multi-party computing, and fully homomorphic encryption technologies, privacy computing becomes possible. 5. Exchange Security Frequent data exchange brings about interlaced and complex data flow paths. Data no longer flow in one direction and are no longer restricted to flow within a single system. Data can be copied and shared without cost; it will be more challenging to track as data are shared more frequently.

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6. Destruction Security Data destruction refers to the complete deletion of stored data through various technical means to ensure that the data are not recovered to protect critical data. Metaverse enterprises should do an excellent job managing affiliated enterprises while complying with the effective use of data and sharing data. Under the authorization of the data owner, take the right way to destroy the data.

7.2.2 Metaverse Personal Privacy Protection In addition to enterprise data security governance, individuals should always be aware of protecting their privacy when interacting with the metaverse. Do Not Disclose Unnecessary Sensitive Information Do not share anything you do not need; for example, do not share your payment information unless you are buying something, etc. Review the Meta Universe Platform Privacy Policy Do your best to understand how the company behind the platform you created your account stores your data and what it does with it; this material can be lengthy, but it is critical to protect your privacy. For example, is your data shared with third parties? What kind of data is shared and collected? What actionable data do you have on your data? Ensure Safe Use of the Internet One way to protect your identity and data privacy on the Internet is to use a VPN service. In addition, if you are joining VR and AR online communities, pay attention to the websites you visit to ensure that every link you click is secure. Every link you hit is secure and not infected with malware. To be sure, the metaverse gives us a broad scope of imagination and will be used in economic and social development in the future. It will also play an important role in economic and social development in the future. However, we should be cautious about the potential hazards it may bring and always be aware of the possible risks, such as data security issues and personal privacy leakage.

Bibliography 1. Dengguo F, Min Z, Yan Z (2011) Cloud computing security research. J Softw 22(1):71–83

Chapter 8

Metaverse and Law

The metaverse is a mapping of the real world and can cover an extensive range of industries. Building a metaverse does not simply rely on one technology. Still, it requires the synergy of multiple technologies and the integration of new technologies into various industries, which will inevitably have many problems. Metaverse is considered to be the next major technological revolution. To build a new virtual space different from the real world, some forward-looking research is essential, and how to build a new order is the first important issue to be considered. Problems such as identity fraud, intellectual property rights, regulatory review, and data security will arise in the metaverse’s development and gradual maturity process. Therefore, it is contingent, necessary, and urgent to prevent and solve the legal issues arising from the metaverse. To this end, legislation, law enforcement, and justice in digital technology, data, algorithms, transactions, taxation, and property rights should be followed up promptly. This chapter will discuss the various legal risk issues faced in the metaverse and the shape of the metaverse legal system.

8.1 The Order of the Metaverse The original meaning of “order” refers to an organized and uncluttered situation, which is the opposite of “disorder.” The dictionary defines “the arrangement or disposition of people or things about each other according to a particular sequence, pattern, or method.” From the jurisprudence’s point of view, the American jurist Bodenheimer believes that order means a certain degree of consistency, continuity, and certainty in both natural and social processes. Generally, the order can be divided into the natural and social orders. The natural order is governed by the laws of nature, such as sunrise and sunset, etc. Social order is constructed and maintained by social rules, which refers to the

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relatively stable relationship pattern, structure, and state formed by people in longterm social interaction. From the current market promotion opinion, the metaverse is objective, open-source, dynamic evolution, user demand-oriented, and essentially an artificial virtual world, which will involve multiple social relationships, multisubject participation, an extended operation chain, and diversified risk thresholds. Because it is a pluralistic social relationship, it needs a large area of rules coverage and even the construction of the superstructure of law.

8.1.1 Legal Supervision of the Metaverse in Various Countries European Union On Sept. 14, 2022, Thierry Breton, the European Union’s Commissioner for the Internal Market, published “People, technologies & infrastructure—Europe’s plan to thrive in the metaverse.” In part, Breton signaled confidence in existing law on metaverse issues, noting that “With the Digital Services Act (DSA) and Digital Markets Act (DMA), Europe has now strong and future-proof regulatory tools for the digital space.” But the commissioner also clearly indicated that the work of regulating the metaverse is just starting, announcing the launch of the Virtual and Augmented Reality Industrial Coalition, “bringing together stakeholders from key metaverse technologies” to develop a roadmap for further development. Breton stressed safety and competition concerns, promising that “we will not witness a new Wild West or new private monopolies.” South Korea South Korea’s National Data Policy Committee announced on Sept. 23, 2022, that it would develop regulatory amendments specific to the metaverse. The Committee is chaired by South Korean Prime Minister Han Duck-soo and co-administered by the Ministers of Science and ICT and the Minister of Interior and Safety. The announcement focused on the metaverse as an issue that could “lead the success of national competitiveness.” The Committee found specifically that the South Korean framework that exists for videogaming was insufficient to deal with metaverse issues. Earlier in the week, Vice Chairman of the Korea Communications Commission, Ahn Hyoung-hwan, met with a metaverse platform provider to discuss growing concerns over South Korean minors being subjected to sexual harassment on metaverse platforms. Japan Earlier this year, Japan announced creation of a Web 3.0 Policy Office under the Ministry of Economy, Trade and Industry (METI) to formulate metaverse-related policies. The Ministry noted that “as metaverses become new personal interfaces especially among younger generations such as Generation Z, digital spaces and assets could become much more important” and that Web 3.0 entrepreneurs may be departing the country for less-regulated options.

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USA In the United States, the most direct regulatory statement on the metaverse has come in the context of the Federal Trade Commission’s lawsuit to block Meta’s acquisition of a popular metaverse application. Per the FTC, “The virtual reality industry offers a uniquely immersive digital experience and is characterized by a high degree of growth and innovation,” but that Meta’s drive to “conquer virtual reality” posed a threat to competition. “Meta, the global technology behemoth that owns Facebook, Instagram, Messenger, and WhatsApp, is the largest provider of virtual reality devices, and also a leading provider of apps in the U.S.” The FTC claims that by purchasing the fitness app, Meta discouraged anyone else from creating such an app, dampening future innovation and competitive rivalry. Whether by enforcing and expanding existing laws or developing new regulations, or through the soft regulation of policies and guidelines, the developing metaverse will continue to occupy a central place in government discussions around the world. Holland & Knight’s Metaverse Strategy Team includes experienced attorneys who are recognized thought leaders in the field. The Metaverse Strategy Team represents dozens of clients, including Fortune 500 companies to technology startups, as these businesses navigate the metaverse landscape. China Like many jurisdictions globally, China recognizes the importance of developing its digital economy amid rapid developments around the world. Although it does not reference the metaverse directly, China’s Plan for Development of the Digital Economy includes terms and covers concepts that would be applicable to the metaverse, such as blockchain and virtual reality. However, there are significant concerns regarding money laundering and the potential impact of the metaverse on China’s financial markets, its currency stability, and foreign exchange, among other areas. For these reasons, China has a particularly robust stance on cryptocurrencies, which have been effectively banned in China since September 2021. China’s Banking Association, Securities Association, and Internet Financial Association issued a set of guidelines for the non-fungible token (NFT) industry, which include stating that underlying assets of NFTs should not include bonds, insurance, securities, precious metals, or other financial assets, and obligations for platforms to verify identities on NFT issuance, sale, and purchase, among others. Despite restrictions, certain NFT markets remain strong, such as the digital art collectibles market, which operates on permissioned blockchains, with transactions conducted in Chinese Yuan and not any cryptocurrencies. With many new digital collectible platforms launching every month since early 2021, the buoyant trend seems to set to continue well into 2022.

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8.1.2 The Rules of Access to the Metaverse Virtual Identities in the Metaverse Correspond to Real Individuals The metaverse is a concept of reality that corresponds to the virtual world. In other words, a virtual world reflects the real world but is independent. First, we must create our own virtual identity in the metaverse and keep accumulating contacts, socializing, growing, and accumulating wealth in this blockchain world. Just like the scene in the movie “Ready Player One,” one day in the future, we can change our identities anytime and anywhere, travel freely between the real world and the digital world, study, work, make friends, shop, and travel in the “metaverse.” So how to enter the metaverse platform? This is our first question to enter the metaverse. In real life, everyone has an ID card to prove their identity, so we can summarize the conditions and restrictions required to enter the metaverse according to this. For example, in real life, every time you register an app, you need to verify and bind your cell phone number. Such a principle can also be applied to the rules of access to the metaverse, virtual identities in the metaverse can correspond to individuals, and the behavior of individuals in the metaverse must follow the different rules of the metaverse (see Fig. 8.1). When performing various activities in the metaverse, the risks or costs of the activities may fall on the actual individuals. Metaverse Rulemaking Based on Group Consensus The development of metaverse rules requires the participation of every subject in the metaverse. In the history of social development, legislators, in the traditional sense, are often sovereign states. However, in the Internet era, some technology giants also influence rulemaking. In the metaverse, states and technological giants may influence the development of metaverse rules, but there may be no single subject with absolute authority over the development of metaverse rules. This way, the metaverse rules have more possibilities and require more individual participation. In the metaverse, every individual can be the creator of the meta-rules, which also means that the metaverse rules are likely to be the consensus of every individual in the metaverse. The identity interaction between people in the metaverse is the central attraction, and identity interaction lies first and foremost in identifying identity. Thus, anyone

Fig. 8.1 Enter the metaverse: the mapping of real individuals to virtual individuals

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who can provide a metaverse identity and set rules for metaverse access can give a metaverse. Imagine that when identity is open, every natural person can coexist with the same identity. We can think of this as a metaverse when Spider-Man and Iron Man coexist in the same scenario. Therefore, for the metaverse, one is to obtain an identity through creative material, and the other is to get material through constructing an identity. The two paths are complementary to each other.

8.1.3 Law-Making in the Metaverse The Necessity of Making Order in the Metaverse The inability of the metaverse to create a harmonious and clear world will not lead to the disappearance of rules and laws and may even require laws to maintain some order. With the advent of the Internet, we see that the human legal system is still struggling to adapt to the Internet age regarding legal theory and judicial practice. However, with the advent of AlphaGO, smart technology has impacted law. Nowadays, with the development of virtual reality and metaverse practices, who will make its rules? How should the law prepare for the arrival of the metaverse? According to Chen Xu, the founder of MetaZ, “the metaverse is a digital world in which people can participate and live with a digital identity. As the field of human public communication increasingly crosses national borders, the globalization of law may become a fundamental trend in legal development. The globalization of law across national borders refers to aggregating various legal elements such as legal principles, legal concepts, legal values, legal systems, law enforcement standards, and regulations in the metaverse platform to form prototypes or models.” Metaverse Decentralized Group Consensus The formation of metaverse rules relies heavily on group consensus (see Fig. 8.2) but also requires full consideration of real-world regulations. The metaverse is a Fig. 8.2 Metaverse decentralized group consensus

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Fig. 8.3 The legal bottom line in the metaverse

distributed digital world, namely, a decentralized world. In the decentralized model, group consensus governs the whole world, so group consensus is the metaverse rule. The group consensus itself exists in a distributed manner, and no subject can control the group consensus. It can be built for any reason or decentralized at once. The basis for maintaining the existence of the group consensus model is credit. The metaverse rules are distributed like “soft law” in international and administrative law. Ultimately, no restrictions apply to the metaverse forever; they change as the group consensus changes. Ethical Guidelines and Legal Bottom Line Due to the uniqueness and highly interactive nature of digital assets and identities, we must establish standard legal rules in the metaverse. As participants from all over the world conduct business and transactions in the metaverse, violations of others’ rights and interests are quietly occurring. Establishing the same legal system can effectively sanction or even deter such behavior. Determining a set of restraint mechanisms to ensure the safe and stable operation of the metaverse and clarify the moral and legal standards is an inevitable requirement for the benign interaction and positive feedback between the metaverse and the real world. Imagine if a person who has committed a crime in real life enters the metaverse. Will they change? The answer is no. To ensure the stable operation of the metaverse, the law, as the last line of defense, must punish the moral code when it does not work (see Fig. 8.3). The globalization of law as an objective historical process makes it challenging to separate international and domestic legal norms, and the boundaries between laws are becoming blurred. Moreover, the same rules and order should be observed under such a unified and large platform as the metaverse.

8.2 Legal Relations in the Metaverse Legal relationship refers to the social relationship with the form of legal rights and obligations formed in the process of adjusting people’s behavior to legal norms. In terms of its subjective formal features, it belongs to the category of superstructure.

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Fig. 8.4 Legal relationships in the metaverse

In terms of its social content, it includes social relations in various fields such as politics, economy, and culture. It comprises three elements: subject, content, and object (see Fig. 8.4). Man is the subject of the metaverse, his activities are still regulated by law, and he bears the corresponding responsibilities and risks based on his actions. When a person exists as a subject in the metaverse, the object, matter, or subject matter to which their rights and obligations are directed can be called the legal object in the metaverse.

8.2.1 “Legal Subjects” in the Metaverse The Emergence of Metaverse Broadened the Scope of Legal Subjects The metaverse can be regarded as a mini-society in virtual space. However, the legal subject is social, and the sociality of the subject of legal relations means that who can be the object of legal relations as stipulated by law is not arbitrary but determined by specific material living conditions. The expansion of human existence space from real life to the metaverse provides a new field for developing human subjectivity. Technology can separate the subject in the metaverse from the body in real space. This correspondence between the virtual nature of the metaverse and the real body undoubtedly broadens the reach of human subjectivity. Legal Subjects in the Metaverse After the emergence of the metaverse, the existence of human subjects has a duality—“real self” and “network self”—thus raising the field of subject–object

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Fig. 8.5 Legal subjects in the metaverse

integration to a new level. The subject of the metaverse is the embodiment of the real subject on the network platform. Qualified real subjects form the basis of capable metaverse subjects, but they are manifested as undifferentiated electronic data and are difficult to recognize. On the face of it, the civil and commercial acts of metaverse subjects on the Internet may be performed on behalf of the subject rather than by the subject itself. The virtual subject may own certain “assets,” such as virtual goods like land assets on the metaverse. These factors may justify the claim that the subject of the metaverse should be called a legal subject (see Fig. 8.5). People in the metaverse are independent of the real world to a certain extent and are not a complete reproduction of the real world. In essence, the metaverse is a virtual world independent of the real world. In the metaverse, each person’s identity attributes differ from the real identity attributes of the real world. Through this virtual mapping, people can live a life in the metaverse that is very different from real life and realizes identity heterogeneity. All real people in the metaverse have their own identities in real life, which correspond to the mapping of many dimensions of the metaverse. In the metaverse, people’s social life is not related to the social life conducted by the real identity they have in the real society. Simply put, people in the metaverse sometimes exist in the metaverse, and sometimes they disappear from the metaverse and return to real life.

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Fig. 8.6 Legal objects in the metaverse

8.2.2 “Legal Objects” in the Metaverse The object of legal relations, also called the object of rights, is the object to which the rights and obligations of the subject of legal concerns are directed. The objects of legal rights include things (money, securities), other property (property rights), work and services, information, and results of intellectual activity (exclusive rights—intellectual property, non-material interests). In real life, the purposes of legal relations are diverse, as people have various material and spiritual needs. In the metaverse, the rights objects are mainly expressed as virtual property, including land assets, game weaponry, intellectual achievements, virtual money, virtual goods, etc. (see Fig. 8.6). Property in the Metaverse Is Objective and Valuable The virtual nature of the metaverse, accessible storage, and ample storage space make traditional legal relationship objects computerized and virtualized. With the continuous development of cyberspace, people’s lives are becoming more convenient, and the use of cash in real life is gradually decreasing. With the development of mobile payment companies, some people (especially young people) may not have used cash for a long time. Not only is the use of cash in market transactions declining, but even in an increasing number of labor relationships, the form of labor compensation has changed with the development of cyberspace. Today, most employers no longer pay cash but transfer wages to a bank card. People rely on bank cards for deposits and withdrawals and use mobile payments directly for everyday expenses and business transactions. The object of labor legal relations has changed from tangible—cash—to an invisible string of numbers in a bank account. The metaverse development has facilitated social development and given rise to new types of virtual property on the Internet (e.g., Bitcoin) and virtual property in the form of certain symbols in online accounts. However, it is undeniable that virtual property is fundamental in the metaverse and can play an objective role. Virtual property is an object of rights and obligations in legal relations in cyberspace and an object that is objectively real and has value. Value has two professional concepts: philosophical value and economic value. Value in the philosophical category refers to the benefits the object can bring to the subject t. Value in economics also has the meaning that the object satisfies the subject. In

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addition, it includes the total amount of the product or service. Technically, it has a use value and an exchange value. The analysis shows that the virtual property in the metaverse is acquired by the network participants who invest a lot of time and effort and thus can obtain great satisfaction. This is precisely what is meant by use value in the economic context. In the metaverse, the virtual property can be used to trade and buy desired items, which is precisely what exchange value is in economics. Virtual Property Is Protected by Law On September 4, 2017, the People’s Bank of China and seven other departments jointly issued the Announcement on Preventing the Risks of Token Issuance and Financing, in which Bitcoin (BTC), Ether (ETH), and other virtual currencies are defined as virtual commodities, so virtual currencies should belong to the category of virtual property in a broad sense in terms of legal nature. Article 127 of the Civil Code also explicitly states: “Where the law provides for the protection of data and virtual network property, it shall comply with its provisions.” The United States is a classic case law country. According to the court’s decision, as long as the basic facts of the case are the same or similar, the claim must be handled by the rules set by case law. The abstraction of the concept of “virtual property” in the United States has gone through a process of not recognizing it, recognizing its property rights, and then expanding the scope of protection through judicial precedents. The discussion of virtual property rights in U.S. case law mainly focuses on emails, Internet domain names, and virtual objects in games. These cases first appeared in civil litigation, such as Intel Corp. v. Hamidi, Bigfoot Partners Ltd. v. Wallace, etc. In these cases, email, as a virtual product of the Internet, was considered by the courts to be private property protected by property law, and infringement of virtual property was protected primarily through the tort law system. For example, in the Intel case, the court ruled that the company privately owned Intel’s email system and employee mailboxes and that the defendant’s actions constituted an infringement of another’s property. The plaintiff Intel could file a lawsuit against Hamidi under tort law to enjoin its infringement. In addition, for computer programs with property attributes, the United States includes them in the scope of protection under copyright law. For example, the No Electronic Theft Act, enacted by the federal government in 1997, provides that any act of using electronic means to infringe copyright for financial gain constitutes a copyright infringement crime (see Fig. 8.7). The Ownership Properties and Setting Authority of Virtual Objects Are Important Issues in the Metaverse Almost all objects in the metaverse are newly created, while they are all virtual. Unlike property rights in traditional societies, metaverse objects do not claim ownership through possession, even at the initial stage. Regardless of whether the virtual metaverse has the properties of a thing, the metaverse existed at the time of its creation. The subject of the metaverse is simply a data owner, and likely the virtual elements derived from the data are not indeed theirs. Much like equipment in some games, the transfer of equipment from one

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Fig. 8.7 Laws and cases related to the protection of virtual property

player does not transfer data or code to another player but adds the symbol of the attribute corresponding to that code or data. Also, some elements of the metaverse may be the product of pure algorithmic repetition, i.e., they can be copied at a low cost. The proprietary nature of this part of the universe may be debatable. The main question now is how an object should be treated when it is considered valuable in the metaverse but should not be considered valuable in real-world valuation. Thus, virtual objects in the metaverse face two problems: the scope of virtual properties and what criteria should be used to assess whether a virtual object has virtual properties. The other is the relationship between the ownership and the possessor of a virtual object, namely, how to determine the ownership in the metaverse. For the above two problems, we can learn from the logic of NFT. NFT, introduced in Chap. 6, is a block of data stored on the blockchain. NFT is recorded in the blockchain and cannot be copied, replaced, or split. It is the only credential used to verify the authenticity and ownership of a particular digital asset. Therefore, we can use NFT to prove the identity of the owner of a digital asset. It is believed that in the future, NFT based on blockchain technology will significantly impact the development and improvement of the virtual property system in the metaverse.

8.2.3 “Legal Rights” and “Legal Obligations” in the Metaverse Legal Rights and Legal Obligations Are Unified and Inseparable Hundreds of years ago, Marx revealed the essential relationship between rights and obligations: rights and obligations are complementary concepts. Therefore, this chapter will not discuss “legal rights” and “legal obligations” separately. Rights and obligations are interdependent concepts, and it is impossible for a right to exist separately from an obligation or for an obligation to exist without a right in return. Participants in metaverse activities seem to believe that exercising an individual right in cyberspace does not require the fulfillment of the obligation corresponding to it. Blindly exercising the rights provided by law and not fulfilling the obligations provided by law are a kind of obligation abuse in cyberspace. The opposite of obligation abuse is the legality of the obligation, and the consequence of obligation

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abuse is that the right will also be in an inappropriate state. At the same time, this will cause the loss of the right. For the subject, the range of rights that can be exercised is getting smaller and smaller. The Freedom of People in Metaverse Space has Reached an Unprecedented Level The metaverse space is more prone to the dilemma of inappropriate obligations than the real society because, in the virtual space, people can engage in various activities and act in multiple ways. With the help of virtual technology, the people behind the devices manipulating the network will release different hidden and repressed desires in their hearts in cyberspace. The Activity in the Metaverse Is Also the Intentional and Conscious Human Activity Behind It In short, the metaverse is not a place where you can let go of your freedom but has rights and obligations. Unlike the real world, the social form of the metaverse breaks the limits of time and space in the real world. However, not all activities in the metaverse occur spontaneously; they are also the intentional and conscious activities of the humans behind them. Based on this property, the rules of governance in real society also apply to the metaverse, which also requires a certain degree of “legal rights” and “legal obligations.”

8.3 Law-Making, Implementation, and Enforcement in the Metaverse In the metaverse, human consciousness is greatly expanded. At the same time, new social relationships and emotional ties are formed among virtual people in the metaverse. The life and emotional experiences they gain in the virtual space can be brought to the real world. The high frequency of real-time interaction between the real and the virtual may lead to a breakthrough and reconfiguration of the traditional social science system. It will also promote the emergence of a paradigm for the study of the natural science system of the metaverse, which will lead to an in-depth exploration of the operation rules of the virtual world of the metaverse. During the metaverse development, traditional legal concepts may be changed or overturned. First, laws are social rules with universal norms. The consensus of social groups determines the metaverse’s social rules, which may lead to the encroachment and value misalignment of different national cultures. As the metaverse continues developing and more people enter it, how should their values and rules of civilization be designed? Who will maintain these orders and regulations? When there is chaos in society, laws should and must be made. The law will study equality, justice, righteousness, etc. It is not simple. The French writer Anatole Francais said, “Under its lofty equality, the law forbids at

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the same time the rich and the poor to sleep under bridges, beg in the streets and steal bread.”

8.3.1 Law-Making: “Legislation” Recognizing the Virtual Nature of the Metaverse Is a Prerequisite for Legislation Metaverse space exhibits many attributes, such as virtuality, integrity, physicality, and artificial creativity, but in the final analysis, the most fundamental attribute is virtuality. The metaverse is neither an autonomous nor a transcendent metaphysical space but a third space outside the framework of the state and society. Three Layers: Physical Layer, Logical Layer, and Virtual Layer The metaverse consists of three layers from a technical point of view (see Fig. 8.8). The lower layer is the physical layer consisting of the network infrastructure, the middle layer is the logical layer (also known as the code and algorithm layer), and the upper layer is the virtual layer (also known as the content layer). In the virtual layer, which is open to the world, different users send and receive data instantaneously between numerous devices, creating a metaverse space that spans people and countries, real and virtual. The spanning nature of the metaverse space determines that the security of the metaverse space requires the protection of national sovereignty laws. Still, it does not fall entirely under the sovereignty of a single nation. The cyber infrastructure of the physical layer is tangible and coordinated in the real world, so it falls under the category of traditional security. Unlike the physical layer, the logical layer of the metaverse is invisible and opaque. Fig. 8.8 The three-layer structure of the metaverse

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Its key network resources are mainly defined by the global Internet technology community, which does not fall under the sovereign jurisdiction of any country. Three Security Requirements The three-layer structure of the metaverse corresponds to three security requirements: first, the security of the critical infrastructure in the physical layer, and second, the security of the network operation and logical algorithm layer. And third, the security of the virtual layer of information and data. These three security requirements cover personal, national, real, and virtual spaces and constitute the need for global security. In conclusion, the metaverse is a new kind of space, and a clear understanding of the nature of the metaverse is a prerequisite for legislation. The correct way of observation should be to observe the physical space of the metaverse from the perspective of physicality, the virtual space of the metaverse from the standpoint of virtuality, and the metaverse space from the perspective of leapfrogging. If the three are confused, cognitive differences will arise. According to this approach, cyberspace security includes not only the physical security of the network but also the security of virtual space, such as data and algorithms. Meanwhile, promoting the building of a community of destiny in cyberspace, and realizing interconnection, cooperation, and sharing between one’s people and those of other countries, is the significance of leaping into cyberspace.

8.3.2 Metaverse Implementation and Enforcement: “Law Enforcement and Justice” “Law Enforcement and Justice” Under Decentralization As the name implies, law enforcement is the control of the law, its dissemination, and implementation. Enforcement refers to the activity of enforcing the law. Since the metaverse is decentralized, the core concern is who enforces the law and the acceptability of the results after the law is enforced. Group consensus is a key factor in maintaining the existence of the metaverse. Therefore, dispute resolution within the metaverse must also conform to group consensus. At the same time, due to the complexity of the metaverse itself, the same type of dispute may not have the same resolution outcome. In other words, the outcome of dispute resolution itself is no longer central; the acceptability of dispute resolution may be more critical. “Public Opinion” and “Local Rights” An important feature of modernity is humans’ crossing of traditional borders to achieve greater integration. The emergence of the metaverse has allowed many individuals within nations to break away from physical boundaries to form global cyberspace dominated by multiple forces that can aggregate and express a public opinion in a short period and generate a public opinion. Public opinion is often

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emotional and easily exploited by others. From the “Twitter revolution” triggered by the 2009 Iranian presidential election to the WikiLeaks disclosures of U.S. war documents in Afghanistan and Iraq since 2011 and the tumultuous Arab Spring and Occupy, the combination of public opinion and hegemony, cyber giants, and the capital power behind them has formed a new form of cyberspace power and become a massive source of cyberspace security threats.

8.4 Legal Risks of the Metaverse The metaverse can face addiction, discrimination, harassment, and violence problems, which inevitably spill over into the real world. Western scholars are now more concerned about privacy, personal data security, widespread falsification of real activities, mental health, and addiction, focusing on children’s physical and psychological health. The metaverse may also bring new social issues. For example, the metaverse’s immersive experience can negatively impact young people’s development. It can quickly become an addictive “digital poison,” immersing some people in a metaverse that creates an ideal living environment for long periods. Over time, knowledge and behavior can become disconnected from people in the real world. Humans will never be able to live in a virtual world where basic material needs cannot be made and met. When you are addicted to virtual digital space, you will eventually wake up with a hungry stomach, not to mention that we enter the metaverse as virtual digital people. A virtual digital human is an incarnation of an actual human in the metaverse. When creating a digital person, a complete copy must be made from actual human data. The protection of personal data and privacy is a complex problem to solve. The resentment and hatred caused by the sharp contrast between the virtual digital world and the real world, as well as the impact on marriage, love, procreation, interpersonal relationships, mental health, production, and consumption, will become increasingly prominent as the metaverse develops.

8.4.1 Protection of Privacy and Personal Information Rights In the Internet era, as people’s reliance on the digital environment deepens, the amount of data is growing exponentially yearly. These data-carrying personal privacy information may be sold or used for other commercial purposes without the owner’s consent. After collecting and analyzing these privacy data, businesses can easily paint a personal portrait and track the life trajectory of individuals so that they can target their products and advertising. In addition, these data can be obtained by unscrupulous individuals for illegal activities. In a metaverse where people will conduct their daily activities in a more complex digital world, the volume of data will grow exponentially, and private data will become more challenging to protect.

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Therefore, in addition to the technical aspects, we also need to improve further the laws and regulations related to the protection of personal privacy data. Chinese and International Privacy Settings The English jurist James Stephen was one of the first to focus on the issue of privacy in Western academia. In his book “Liberty-Equality-Parity,” he conducted an in-depth study on the meaning of freedom and considered it necessary to protect citizens’ privacy. It was not until 1890 that the concept of “private life” was formally introduced in Western theory. Around this time, Harvard Law School professors Louis D. Brandeis and Samuel D. Warren published their famous article “The Right to Privacy” in the Harvard Law Review. In this famous article, the two scholars creatively define the right to privacy. They described “privacy” as the right of a natural person to be left alone. In China, The Civil Code adopted in May 2020 stipulates that “privacy is the private space, private activities, and private information of a natural person’s private life and peace and unwillingness to be known to others.” Based on the above theory and viewpoint, the right to privacy is the right of a natural person to be free from interference by others and to protect personal information, private space, and private activities. Personal Data and Privacy Protection The metaverse’s thorniest legal issue is protecting users’ data and privacy. In a metaverse, the virtual world that a user sees will be shared among everyone. This means that data can be easily shared, virtual worlds can interact with any loggedin user, and users have immediate access to information about other users. Thus, the metaverse means more sensors in everyone’s office and home. These sensors will monitor us as we interact and move around the world. In other words, these augmented reality devices are also monitoring devices. In addition, the metaverse can identify other people because each user is unique (similar to an IP address). This means that virtual reality headsets or glasses can be tracked and located according to people’s wishes, which puts the privacy of individuals at significant risk. Hackers can use the extensive technology integration of the metaverse to attack targets (because the more technology and systems are integrated, the more security vulnerabilities there are) for activities such as stealing personal data, tracking, data mining, and unauthorized access to restricted areas. There is a risk that private user information will be illegally collected in online activities. However, this type of activity is usually easier to identify. A simple and effective way to avoid these problems is to minimize interactions with these privacy-related activities. Users interested in privacy can also use software that blocks cookie trackers. However, if individual autonomy requirements are oppressed, people will not be able to secure their confidentiality unless most users prevent allowing access to their data. But even those who value privacy are at risk due to the collection of Big Data. Based on the analysis of the network context, a natural person is an independent individual. Of course, natural persons do not include legal persons. However, the difference between natural and legal persons cannot be ignored. If the exact requirements are used to regulate natural and legal persons, the legislation’s goal will not achieve the desired effect, and the system design will face some difficulties.

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Therefore, in essence, the protection of personal information is the protection of individuals.

8.4.2 Ownership Rights Coinlist founder Naval Ravikant said, “The idea that the only people who can own items in the metaverse can be giant corporations is strange; it’s saying that only Zuckerberg is allowed to own the metaverse. Only he can own the whole metaverse, so why can’t each of us have our room, our property in the metaverse? So the deniers of NFT, and crypto, are saying, ‘We’re not going to have a collectively owned future but a corporate-owned future.’ I used to think that what we were going to do was replace Uber, Facebook, and Twitter with Web 3.0-enabled proto-languages and the resulting networks, but now I don’t necessarily think that; I think we’re just going to create entirely new things that we can’t even predict or identify. But we’re going to turn our attention to those things eventually. So Twitter and Facebook will still be great and will continue to exist. But we’ll focus on these new applications uniquely enabled by proto-languages like NFT and token.” Metaverse Needs a Sense of Realism, and the Key to Authenticity Is the Ownership of Virtual Objects Because the “metaverse” is a “virtual world,” the most important thing here is not “virtual” but “world.” We have seen a lot of “virtual” things. What is exciting is the “world,” and the most important thing about the “world” is the “real.” What is real? Is it realistic instant high frame rate visuals from VR and communication technologies, realistic simulated worlds, and realistic NPCs using artificial intelligence and image processing, or do all the characters have real-world players behind them? No, none of this is real enough. If you think about your dreams, the answer is straightforward: those things you are sure to belong to you and will not be lost are real. They are different from the stuff in the dream and will not disappear because they suddenly woke up. In short, the core of what is real is the ownership of virtual items. We are sure it belongs to us when we are confident that the cool gear, the rare cards, the houses we build, the clothes we buy, the adventure stories, and the interactions and friends lists belong to us. I believe the world and its content are real when game companies go bankrupt and stop serving it, and it does not disappear overnight because the game company changes. At least for a generation used to a world controlled by Internet giants, it is hard to mentally believe that an item is a string of numbers stored on some server in some organization. Attribution of Digital Objects If you own an item in the database of the game company, the game company guarantees that you own it. You need to remember your credentials from the game company’s server, i.e., username and password, and then open the application to log in. The company will tell you, “you have this item in your account,” after

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verification. But psychologically and logically, you may find that you do not actually “own” the item because the game company controls the authentication and all the data. If you forget your username and password, then you will lose them. In addition, the game company’s administrators can log into your account and change your account information with administrator privileges. From this point of view, at best, you share these items with the game company, or at least the game company will tell you that “all the data belongs to the company.” So, is there a law that protects your ownership of your posts? Unfortunately, although there are laws, they are not enforceable. Blockchain Is the Technology That Allows You to “Own” Something in the Virtual World Technology When you own a bitcoin or have an NFT on the blockchain, you will have the private key for that blockchain. However, if you are using a wallet application and are logged in with your account and password, that wallet application will display the bitcoin or NFT information in your account. The wallet app is a service provider and is only responsible for getting information about the channel data from specific consensus nodes. It is like how you always remember your bank card password, but a hacker can still steal the amount of money you have saved in your account. Simply put, a blockchain is a chain of blocks of information. Blockchain technology allows the secure sharing of digital assets through a peer-to-peer network where files are stored in nodes on the network. As a P2P technology, it eliminates third-party involvement, and data are secure, distributed across multiple nodes, and immutable. According to Washington Times contributor Dan Boylan, blockchain security is that any slight change to the data is immediately sent to all users, and a secure and reliable record is generated. Because each user has a copy of this record, the entire database is secure, even if an individual user is hacked.

8.4.3 Intellectual Property Rights The Setting of Intellectual Property Rights in the Metaverse Is Very Complex Whenever a new online community or virtual world is created, the question arises: Who owns the copyright of the works created in this environment? If a trademark is protected in the real world, but someone uses it in the virtual world, can a claim be made for it? Things get even more complicated when users in the virtual world generate entirely new material based on various production materials in the real world. While the legal rule that real-world users must obtain permission from others for their intellectual property is clear, the arrival of the metaverse is bound to trigger a flood of intellectual property litigation. This poses a challenge to businesses or creators in today’s world that they need reasonable strategies or methods to protect their intellectual property in the real and virtual world. These content or product providers should work with metaverse monitors to regularly check for infringement of trademarks or registered trademarks,

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for example. In addition, providers face questions about how users of the metaverse can use the content or property they have created. When we create in a metaverse society, valuable content is produced, which involves the question of who owns the intellectual property. Copyright issues are already very complex in the real world, and the stakes only get more complicated in the complex virtual world. Also, can content generated in the metaverse be recognized in the real world? What steps must be taken to ensure that content generated in the metaverse is identified in the real world? All of these involve complex attribute authentication, integrity checking, etc. When participants create content in the metaverse and communicate and share it, they all participate in the ownership and protection of rights to the valuable content mentioned above. The law has a clear and firm position in protecting intellectual output. However, how to protect the intellectual output created by participants in the metaverse through certain technologies in the virtual world is a problem faced by governments, companies, creators, and the world at large. Intellectual Property in the Metaverse Exists Mainly in the Form of Information Data Intellectual property formed in the metaverse exists primarily in the form of information data, an information resource that, in most cases, is tangible and can be presented to the public through the screen, and an intangible portion. Therefore, the forms of intellectual property in the online environment—both tangible and intangible—are entitled to legal protection, reflecting respect for the labor and wisdom of creators. In addition, network intellectual property has another characteristic. It mainly refers to the protection of intellectual property rights owned by the right holder, which is different from other forms of property rights. This is what we usually call “exclusivity.” For example, if two people are on the same online game software, they can resell, destroy, and donate it without interfering. Still, the game’s patent belongs to the inventor, and the patentee has the right to prohibit the third party from reinventing or transferring his invention to a third party to a certain extent. Otherwise, it constitutes an infringement. Intellectual property on the Internet covers many fields, including technology, art, and literature. It touches almost every aspect of production and life. Imagine how you feel when the work you created in the metaverse appears in real life the next day. If there is no suitable intellectual property protection mechanism in the metaverse, will people continue to “create” in the metaverse?

8.4.4 Identity Theft and Fraud Identification We will interact with the metaverse in more ways than we can imagine, involving not only phones and computers but also new interfaces that we cannot imagine. Smart glasses, for example, will present us with augmented reality designed to inform and

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entertain. Other technologies will accompany us everywhere, giving us the ability to do things that seem science fiction today. In the metaverse, we will soon be able to do almost the same things as in reality, both online and offline. Games are the first foray into this new world, and other forms of entertainment will follow. As the metaverse grows, all walks of life and even medicine will be involved. You will be able to interact and communicate with medical personnel in the metaverse, asking them questions and registering for medical appointments. On the one hand, this is something we can only dream about, and everything sounds incredible. On the other hand, it also poses some problems of supervision and management, mainly those related to identity information. In a virtual world where everyone hides behind a digital mask, how do you know if the person in front of you is the one you have designated? When you pay for a virtual venue or concert ticket, how do you know the recipient is the real recipient? With so much identity data collected in the metaverse, how can we tell which is correct and which is wrong? Identity Theft: The Biggest Enemy of the Metaverse One of the most active areas of innovation on the Internet has been finding ways to establish the identity of network participants and eliminate fraud. In the early days of the World Wide Web, the network was relatively small, and people were willing to share their real names and addresses via email when conducting transactions, but this only lasted a short time. By 1995, sites such as eBay were not only meeting people’s needs by displaying items for sale but also taking the risk that paid items would not reach their final destination. Of course, risk should not stay on the platform for long, and insurance companies that provide coverage for individual purchase orders were born. Fintech is ultimately the guardian of online fraud risk. Today, payment processors such as Stripe, PayPal, and Dwolla are responsible for verifying the identity of payers and recipients online. Banks and credit card companies are also involved, all of which work together to collect user identification documents, verify them, and then validate payment information through, for example, two-factor authentication. For example, telemedicine will likely become the primary way to interact with healthcare providers. We will enter digital classrooms where we must prove that we passed the test without asking someone else to take it for us to receive college credit. Technology allows people to mask their appearance and voice with surreal skin and computer-generated voices. People generally want to know that the person they are interacting with is the person they are talking to. The main difference between fraud prevention practices on today’s Internet and those that exist in the metaverse of the future is the enormous amount of data to be analyzed. There is no denying that the volume of documents to be analyzed today is significantly greater than that could have been imagined ten or fifteen years ago. For this reason, every time you open a bank account or apply for a loan online, the passport or driver’s license photo you are asked to send will be scanned by artificial intelligence. Regulatory platforms sometimes ask you to take a selfie to compare your documents, and AI is also used here. Some companies have even discovered

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how to verify identity by analyzing video clips. Interestingly, this technology can even be used for job interviews. In the metaverse, all of these technologies are used to verify identity. Changing the Status Requires Technological Improvements In the metaverse, technology must improve rapidly. We need to strengthen algorithms through machine learning and develop algorithms to apply audio, text, and behavioral analytics to everything we write, say, and do in real-time. How long it will take to achieve what Zuckerberg and others have described as A true “metaverse” is still up for debate. Ultimately, many technical and ethical issues need to be resolved before we can truly enter the future digital world.

Bibliography 1. Aimin Q, Gaofeng Z (2016) On the establishment and improvement of national data sovereignty system. Suzhou J Su Zhou Univer (Philosophy and Social Science Edition) 1:83– 88 2. Junhui H (2021) Meta-universe without law and ethics is “overhead fiction”. http://www.ittimes.com.cn/a/xinwen/tuijian/2021/1009/34859.html. Cited Oct 2021 3. Kongxiang W (2015) International law in the field of internet governance. Law Press, Beijing 4. Panming W (2006) A few legal analysis on the first case of bloggers suing bloggers for infringement of reputation rights. http://www.chinacourt.org/public. Cited Oct 2021 5. Smith A (2005) The wealth of nations. University of Chicago Bookstore, Chicago 6. Xiaoying C (2014) China’s Rule of Law in Cyberspace to Accelerate Forward. https://www. chinanews.com.cn/fz/2014/10-28/6724761.shtml. Cited Oct 2021 7. Yuanju L (2021) Two methodologies leading to the metaverse: technology and identity. http:// www.eeo.com.cn/2021/0911/504160.shtml. Cited Oct 2021

Chapter 9

Metaverse and Investing

9.1 Introduction Capital is the principal property used for investment to obtain profit. It is the general term for all kinds of social and economic resources that people create material and spiritual wealth. Capital can be divided into institutional and social relations of production capital, and its promotion or appreciation is achieved through changes in social and political thought. On 2021 September 8, the whole metaverse exploded, and several stocks such as ZhongQingBao (300052. SZ) and TOMCAT (300459. Sz) rose by the daily limit. In the medium to long term, the metaverse has attracted a lot of investment, which is expected to bring virtual world innovation and promote the prosperity of various industries.

9.2 Metaverse Value in the Eyes of Real Capital Capital is a floating value. The movement of capital is shown in three stages: purchase, production, and sale, followed by three functional forms: monetary capital, productive capital, and commodity capital. Capital can only produce and realize Surplus value if it is smoothly transformed from one functional state to another and goes through the three stages of purchase, production, and sale. Once capital ceases to function, the goal of realizing value is lost, and the life of capital ceases. Investment refers to the purchase and holding of investment products so that the use of capital is expected to obtain capital appreciation. Investments can yield higher financial returns or provide the income needed to help achieve financial goals. In many cases, value-added and income from investments are necessary to achieve financial goals. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Cheng, Metaverse: Concept, Content and Context, https://doi.org/10.1007/978-3-031-24359-2_9

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Fig. 9.1 Investment product segment

As shown in Fig. 9.1, investment products include equities, bonds, mutual funds, and guaranteed investment certificates (GIC). Stock is the unit of ownership of a company, ownership of a company’s stock gives the owner the right to an equal distribution of income in the form of dividends (if any), and ownership of stock means partial ownership of a company. Bonds are debt instruments (tradable financial assets) that promise to pay a specified amount of interest and return the principal at a specified maturity date. A mutual fund is an investment product that brings together funds from multiple individual investors and uses them to purchase securities such as bonds, stocks, or other investable assets selected and managed by a fund manager. A guaranteed investment certificate is a safe investment because it provides a guarantee of return on your investment and ensures that the principal of your investment is safe. Investing is a great way to get a return, but it is also risky. Therefore, one must follow the scientific method and the step before investing. As shown in Fig. 9.2, the investment process is divided into eight steps: First Review Look for the best investments, define investment objectives and risk tolerance, identify time frames and liquidity constraints, negotiate, and invest. Consultation Among Venture Capitalists Discuss the initial proposal, decide whether to follow up with an interview or a rejection, and strictly manage risk to minimize risk and maximize return in the portfolio. Interview If the entrepreneur’s project interested the venture capitalist, the investor will look into the entrepreneur’s and the team’s background. This is the most crucial meeting in the whole investment process, comprehensive qualitative and quantitative, to plan long-term investment direction. If the interview is successful, it will further understand the market and enterprise situation.

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Fig. 9.2 The diagram of investment process

Accountability Review After a successful initial interview, the venture capitalist conducts multiple reviews of the company’s market potential, technology, team size, and management team. This involves contacting potential users, consulting with technical experts, and holding multiple rounds of meetings with the management team. Terms of Reference After the liability review, the venture capitalist is optimistic about the project’s prospects, and the valuation and investment form will be negotiated. The entrepreneur will be given a list of terms and conditions, listing the stake the VC wants, the entrepreneur’s input, and how the management team will change. Signing Contracts Venture capitalists analyze the value of investments over 3–5 years to estimate the risk to the company’s revenue. The final factors affecting the transaction include four parts: risk, the market size of venture capital, capital market timing, and exit strategy. Regulation After an Investment Goes Into Effect Because venture capitalists have multiple roles, they often act as a consultant, following the progress of the business and regularly reviewing the financial analysis submitted by the accounting networks and associations, making suggestions to improve the progress of the enterprise to make more profits. Other Investment Matters Venture capital firms have liquidation priorities to reduce risk, bringing more management and consulting resources to venture firms. The investment demand for capital and the demand for virtual social communication and creation increase simultaneously, accelerating the step of human information digitization. The market demand for the metaverse also expands further.

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9.2.1 Market Demand Market demand refers to the number of products or services a customer can purchase in a particular area, at a certain time, in a specific marketing environment, and a detailed marketing plan. It is evident that market demand is the sum of consumer demand and is also an important subject of demand-side management or reform of theory and practice. Since market demand comes from individual demand, market demand depends on the factors determining individual buyers’ demand. Recently, the metaverse has become a hot topic in the capital and technology circles. ByteDance spent nine billion yuan to acquire VR hardware startup Pico, once again setting off a metaverse concept boom. Facebook officially changed its name to Meta, and its stock code has also been changed to MVRS (short for metaverse), showing its determination to enter the metaverse. In the future, Facebook will invest more than $10 billion in the Reality Lab to drive VR and AR. Technology companies such as Microsoft and Nvidia are following suit. The creation of the metaverse is also developing a new economic model. Several underlying infrastructures have taken shape, such as blockchains, cloud computing, and big data, which provide the infrastructure for the formation and construction of the metaverse. The metaverse will also attract more innovative companies to invest in its development. In 2016, more than 1900 VR-related companies were set up, with a 65% increase in registrations, a record high, according to Sky Eye data. By 2021, 3022 VR-related companies have been set up.

9.2.2 Industry Section The emergence of the “Metaverse” provides an ecological picture of the future society, which is regarded as a new frontier of digital economic innovation and industrial chain expansion. It has aroused wide attention in the fields of culture, science, technology, capital, and enterprises. The metaverse is undoubtedly one of the strongest winds. Foreign head companies in the metaverse market and China’s Internet giants are also one after another. ByteDance, Tencent, and Ali have invested in different industry sectors of the metaverse, while Baidu is pushing its metaverse product “Greek soil” on various platforms. Although the universe is still in its infancy, it may become a carnival of capital as capital rushes in. Capital forces poured into the metaverse industry, and diversified markets brought about a diversity of investments. The whole yuan-universe industry plate comprises four significant parts: artificial intelligence and cloud computing, content and scene, hardware, and the underlying architecture. The four major parts are closely integrated and permeate each other, bringing rich possibilities for investment.

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The metaverse may become the next Internet revolution. After a period of adjustment, a share in the metaverse began to strengthen, the plate index hit a new high, and the market continued to rise. From the current point of view, share-related investment opportunities include games, AR/VR, cloud computing, and other areas involving more concept stocks. However, the metaverse concept is hot, but the industry is still in its infancy. The most important thing is how to put these concepts on the ground and create real value is the crucial point.

9.3 Secondary Market The secondary market is the capital market for buying and selling stocks of listed companies. By contrast, new share issuance is a primary market for new securities. The secondary market is the trading market for any old financial commodity and provides liquidity for the initial investors in the financial commodity. The financial commodities can be stocks, bonds, mortgages, life insurance, etc. The secondary market for various assets may vary, ranging from loans to stocks, with characteristics ranging from fragmented to concentrated and from illiquid to very liquid. The leading stock exchanges are the most obvious example of a liquid secondary market—in this case, financial commodities are shares of publicly traded companies. A secondary market exists as soon as new security is issued. Once a new issue is listed on a stock exchange, where market makers start bidding and offering new securities, investors can trade more efficiently. The stock market of each country is generally a secondary market. Compared with the U.S. and other Western countries, the secondary market for financial products such as mortgages and life insurance is mainly the Chinese mainland. More and more local governments, not just companies, are looking at the new track to get a head start on development. The secondary market has been rising and falling in waves until recently. However, the metaverse market has been widely criticized because it was initially supposed to be nurtured by venture capital, then completed the ABC round of financing when the project matured, and then to the open market for funding and trading. This is not quite in line with the experience of the Chinese investment community over the past years—the secondary market started to stir up the metaverse before the primary market. In other words, venture capitalists directly use the public trading of stocks to “Invest” in the universe-related business plans of the enterprise and become investors in the open market. Secondary market transactions do not directly fund the enterprise’s metaverse.

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9.3.1 U.S. Capital Markets The U.S. tech giants have been the most aggressive in investing in the metaverse, thanks to years of accumulation and distribution in the metaverse. Their infrastructure and functional platforms have been well established, playing a leading role in the global metaverse industry. Its representation of the enterprise is as follows. 1. Roblox Roblox consists of a Roblox client application and a Roblox Studio authoring platform. The client is the gateway to the virtual world, where users can explore, socialize, and consume, which is the company’s primary revenue source. The creators relied on many platforms to share and ushered in the spring. On the client side, players shop and trade via the Roblox Platform’s currency, Robux. Virtual currency and membership subscriptions generate a lot of revenue for Roblox. In addition, each player could also be a creator. Through their wisdom, they could design unique props, characters, and skins, share the joy of creation with other players, sell the props, and get a hefty platform share. Roblox released a series of figures showing that the developer 2021 accounted for 26% of Roblox’s total revenue in the third quarter, as shown in Fig. 9.3, which illustrates the importance of developer ecology to the metaverse. In addition to paying for equipment, Roblox will split Premium members’ game time as part of its developer budget. In 2020, developers received more than $300 million, with nearly 1300 earning more than $10,000 and 305 earning more than $100,000, according to public figures. Roblox has attracted more than eight million developers due to its user-friendly developer split policy. With the continuous expansion of the company’s scale and rapid growth in business volume, a healthy operation and sustainable development of the metaverse building are rising.

Fig. 9.3 Roblox developer share trends

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Fig. 9.4 Roblox revenue trends

As Fig. 9.4 shows, after the 2020 first quarter, Roblox’s revenue has grown by more than 20% year-over-year for several consecutive quarters. As we all know, marketing has always been a significant source of spending for Internet companies and game companies. Compared with the 30% marketing cost of China b-site, Roblox spends only 3% on marketing. This shows that they rely not on marketing but on their product strength to move the market. These financial data suggest that Roblox’s business model has a flywheel effect, enabling it to grow organically. Globalization is the only way for the company to develop rapidly. Netflix, the video-streaming giant, has implemented a policy of localizing its content and platform, investing more than 770 billion won over the past five years in programs such as TV dramas and movies in South Korea. The kingdom cost two billion won per episode. At the time, it was the highest-paid Netflix series overseas, garnering colossal attention and rave reviews from users worldwide. Netflix has shown tremendous ambition and strength to break into South Korea and even capture the high ground of the global original content market. In the Japanese market, Netflix combined local ACG culture to invest in or acquire a large number of popular animations. Drawing on Netflix’s experience in localization, Roblox has partnered with Tencent to launch Roblox’s Chinese language version of Roblox. Figure 9.5 shows the length of time Roblox users spent online. Figure 9.5(1) shows that North n and Canadian 2021 had the most significant percentage of time spent online, at 29.71%. The percentage of time spent online fell to 25% in the European 2021 from 27.37% in 2019. Figure 9.5(2) shows the growth rate of time spent online by region. In the third quarter (Q3), the Roblox platform total 2021 increased by 40.37% year-overyear and 15.69% year-over-year in the Asia Pacific and other regions. Growth was 8.65% in Europe and 3.88% in North and Canada.

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Fig. 9.5 Roblox total platform hours by region and quarter

Players’ top-up Robux coins are Roblox’s primary source of cash flow. Cash flow is the “Blood” of a company, and if a company lacks sufficient cash flow, it may encounter obstacles in expanding new business. As Fig. 9.6 shows, Roblox’s cash flow is highly ample. 2. Facebook(Meta) Mark Zuckerberg had his eye on VR for a long time, buying Oculus VR, the unicorn of the day, and envisioning Facebook as the center of the metaverse, connecting everything. This was followed by the launch of Facebook Horizon, a VR social platform where users can create games and environments and socialize with friends using avatars. Not to be outdone in games, it has acquired Unit 2games, a game studio that can compete with Roblox in terms of game creation and distribution platforms such as Crayta and Roblox. At its core, Facebook is one of the world’s largest social platforms, and its philosophy of UGC .+ social constitutes an early concept of the metaverse. On September 27th, 2021, Facebook 2021 plans to open channels with governments, industry partners, and academics over the next two years to discuss possible problems in building a metaverse. It also announced a $50 million XR project and research fund to explore and study the ecological rules of the metaverse. On October

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Fig. 9.6 Roblox cash flow by quarter

28 of that year, Facebook officially announced that it had changed its name to Meta, and Mark Zuckerberg, explaining why the company had changed its name, used a video to visualize the future of the metaverse: it could create a virtual “Home,” invite familiar people to socialize, put on a device and enter a virtual workspace to work with colleagues, or even create a virtual world. With VR, AR, AI, and blockchain technologies at the bottom, Facebook presents an ecological vision of the metaverse. Facebook’s investment cloud is shown in Fig. 9.7. 3. Microsoft On November 2, Microsoft announced at Ignite that it would release avatars and immersive meetings in its conference and video calling software, Microsoft Teams. To enhance the virtual environment and user experience, Teams users are expected to become 3D cartoon characters in webinars in the first half of 2022. In addition, Microsoft has released Mesh, Azure OpenAI, Loop, and more. These business scenarios enrich the elements of the Microsoft metaverse. Not only in the office space but also in the metaverse, Microsoft CEO Nadra says the Xbox gaming platform is a fertile ground for the metaverse, with endless potential to be tapped. Computer games such as “Halo,” “Horizon,” “My World,” and other first-party masterpieces utilized this to satisfy the players’ expectations. In the field of gaming for many years of deep cultivation, giving Microsoft layout of the yuan-universe complete confidence, Xbox gaming platform access to the yuanuniverse is imperative. 4. Epic Games Epic Games, an American video game and software development company, helps many developers with its virtual engine, War Machine, Infinity Blade, and Night in

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Fig. 9.7 The word cloud of meta investment

the Citadel based on the engine. But the company’s ambitions do not stop there. In April, it announced a $1 billion 2021 focused on the metaverse. But Epic chief executive Tim Sweeney also stresses that the metaverse is not the work of a single industry giant but the collective creation of millions of people and is not something a company can control.

9.3.2 China Capital Market Under the influence of global pandemic, the virtual reality industry has entered a new outbreak period, according to the “White Paper on the development of virtual reality industry (2021)” jointly issued by the China Institute of Electronics and Information Technology and the Virtual Reality Industry Alliance, 2021, and from January to September, the total investment and financing amount of virtual reality industry has reached 20.709 billion yuan. China’s big factory is not inferior to the United States in the commercial sense of smell. Some representative enterprises’ situation is as follows. 1. ByteDance ByteDance followed the lead of other 2021 and in April made a strategic investment in code universe, a Chinese game developer called Roblox, the developer, which has a youth creation and social UGC platform called “Re World,” followed up with

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Fig. 9.8 ByteDance metaverse investment chart

the $9bn acquisition of VR Maker Pico in August, with ambitions for the Yuan, as shown in Fig. 9.8. Pico VR ranked first in China in 2020, with a 57.8% share in the fourth quarter. In September 2021, ByteDance in Southeast Asia launched Pixsoul, a multiverse social product in high demand for hardware and software. Like Facebook’s acquisition of Oculus, ByteDance wants to leverage its social, content, and globalization expertise and build your own “Metaverse” by integrating your office, social software, and games into the next generation of devices that disrupt mobile phones. 2. Tencent “The metaverse is an exciting topic, and I believe Tencent has a lot of technology and capability to explore and develop the metaverse, for example, in areas related to games, social media, and artificial intelligence,” said Ma Huateng, Tencent’s chief executive, in his first public response to investor concerns about the metaverse. Tencent is one of the country’s biggest Internet companies to benefit from the metaverse concept. Thanks to its natural monopoly of social networking, which spans the entire Chinese Internet ecosystem, the current layout of Tencent is right at the very heart of the elemental universe. As of December 2020, WeChat had 1.225 billion monthly activities, making it the largest social network in China, with 595 million monthly activities on QQ, second only to WeChat. Tencent also has an advantage in every segment of content, in both gaming and entertainment, which is a China leader. Not only that, but Tencent is also trying to deploy VR AR. They have invested in AR glasses company INNOVEGA, VR performance service Wave, VR games company Warcraft era, digital animation production company soul net, and VR film company Original Force, respectively. It also includes Chinese virtual social software Soul, which will be the “Social Universe,” and U.S. gaming giant Epic, which has made strong responses on hardware, platform, and content.

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Fig. 9.9 Roblox and Tencent co-funded the joint venture company “Roblox”

The Chinese giant is naturally attracted to Roblox because of its reputation. As Fig. 9.9 shows, Roblox has formed a joint venture with Tencent called Robles, in which Roblox owns 51% of the shares and Tencent 49%. Roblox, a Chinese version of Roblox, is planned. Roblox provides the underlying technology development and platform content for Roblox, while Tencent is in charge of distribution and marketing for the Chinese region, as has been the case with Tencent investments. The joint venture aims to foster an ecosystem of game development, teach Chinese youngsters skills such as coding basics and game design, hold college game creative competitions, and support outstanding developers and works. After two years of cultivating and developing the developer ecosystem, the Chinese version of Robles was awarded the edition number. Under the attention of netizens in China, the game entered the top of the Free List of iOS games on its first release day. Tencent’s localization strategy has done an excellent job. Not only is it a localization strategy, but Tencent’s entire industrial structure has inherent advantages, from low-level technologies (including, but not limited to, game development engines, cloud services, and Big Data centers) to mid-level products with a wide range of ecosystem interconnections and mature social networks, then to the upper organizational structure management, the strategic adjustment of the PCG department. At the same time, Tencent’s outbound investments are spread across all aspects of the Internet ecosystem, including e-commerce, live streaming, strangers’ social interactions, and local life. Figure 9.10(2) shows the investment lexicon for Tencent. In addition, the core of the early universe was a troika of social, content, and entertainment. Tencent benefits from its games business, which is based on

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Fig. 9.10 The word cloud of Tencent’s investment

the monoculture of the metaverse, with advertising and other content businesses interspersed among them, generating significant revenues. Tencent’s cloud services, financial payments, and the like will also grow based on the metaverse’s requirements for the underlying technology. In finance, to counter another payment giant Alipay, WeChat, with its traffic base and ecological construction, the number of daily payments has led Alipay, and Tencent’s financial business line is still improving. In addition, wealth management, micro-loans, and other high-profit business will gradually build a credit system to contribute more income. The civilization of the digital economy is a central part of the “Metaverse,” and Tencent’s fintech business has the imagination to build a virtual currency system.

9.3.3 Japan Capital Market The Japanese capital market is different from the Chinese and big American factories in the investment aspect of the metaverse. The Chinese and American capital markets focus on the extensive and comprehensive. In contrast, the Japanese

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capital market has more local and personalized characteristics, relying on the developed game industry and the secondary market, maintaining a solid user stickiness. The international market has injected new power into the universe. Some of the cases on behalf of the enterprise are as follows: 1. Gree Gree, the Japanese social networking giant, said it would build its metastatic business around a subsidiary, REALITY, and expected 2024 to invest ten billion yen to develop more than 100 million users worldwide. Gree’s vision of the metaverse dates to the introduction of virtual space services in its product in 2007, when the “Virtual World .+ social network” trend was already in place. This is a conceptual shift for GREE, which was founded in 2004. The company believes that virtual worlds are not just 3D, but their social dimension is crucial. In Gree’s vision, REALITY will become a metaverse with high degrees of freedom. Users can create their own virtual spaces and items, earn money by playing games in the metaverse, and sell original virtual goods. “Personal rooms,” “Pets,” and “Avatars” are all ways to give users a sense of life and integrate the GREE platform into their daily lives. The Gree platform can be used to build an entire virtual world by integrating existing functionality into a “Personal room.” A strong metaverse should provide users with mechanisms that help build relationships and stay in the virtual world for long periods. 2. Sony In terms of gaming, Sony’s PlayStation ecosystem is a firm grip on the console game ecosystem. Compared to its rivals such as Microsoft and Nintendo, Sony has been more active in the metaverse VR game. PSVR, combined with its game ecology, is difficult for other manufacturers to match. Not only that, but Sony’s Dreams Universe lets users create 3D games, make videos, and share them with the UGC community. According to IDC, Facebook has 38.7% of the VR market, followed by Sony, which has 21.9% of the market. 3. Hassilas Hassilas, the Japanese VR developer, has officially announced Mechaverse, its newest metasomatic platform. The platform does not require users to register and can be accessed directly through the browser. Business users can also quickly hold product launches on the platform and provide viewers with a 3D model experience and video introductions. The metaverse platform offers a variety of services, including but not limited to virtual concerts, virtual stadiums, and support for up to 1000 people simultaneously online.

9.3.4 Korean Capital Market An official from the Ministry of Science and Technology said that the South Korean government wants to play a leading role in the metaverse industry. According

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to the 2022 fiscal budget announced by the Korean government, out of a total budget of 604.4 trillion won, the government plans to allocate 9.3 trillion won to accelerate digital transformation and foster new industries such as the metaverse. Some representative companies are listed below. 1. Samsung Samsung launched the Samsung Global Metaverse Fund. The fund has been well received since its launch. In addition, in the VR space, Samsung is developing VR glasses for people with visual impairments, where people with corneal opacity can see a more unmistakable silhouette. Under the support of the supporting software, there are refractive disorders and high myopia correction effects. This immediately became a hot area for investment. A unique technology project in the 2020 Consumer Electronics Show is “Artificial human” Neon, designed by Samsung Technology and Advanced Research Laboratory Star Labs, which can respond to conversations as quickly as a real person, it can answer questions almost in realtime, and it can smile or raise its eyebrows. Each smile is different because it builds machine learning models, after capturing and learning data such as a person’s original voice and expression, and it forms long-term memory like a human brain. Although these products have not yet been mass-produced, once the technology is mature, this will become a capital input explosion. 2. SK Telecom JUMP AR is an AR-based App from SK Telecom. Users can design their own AR images and place them in real-world situations to take photos and videos. The company has also teamed up with several celebrities to create AR images of them, using Volumetric Video Capture Technology that allows users and idols to take photos anytime, anywhere, bringing the celebrities closer to their users. 3. Zepeto Zepeto is a popular social mobile game that allows players to quickly customize their 3D avatars and dress up according to their preferences. You can also take interactive photos with your friends, create emojis, make virtual avatars dance, make short TikTok videos, or post photos on Instagram. Not only is SoftBank a significant investor in Zepeto’s 230 billion won financing, but other South Korean entertainment giants, including HYBE, JYP, and YG, are also participating in the investment. This marks the entertainment industry’s massive foray into the metaverse. Zepeto has also partnered with Gucci, Nike, Supreme, and others to launch a series of joint virtual products. Zepeto currently has 200 million users, 90% of whom are from overseas, and 80% of whom are in their teens. More than 40 million people attended a virtual signing of the South Korean idol “Black pink.”

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9.4 Primary Market The primary market is a financial market that deals with new security issues. A company, government, or public sector raises funds by issuing new shares and bonds. The primary market is part of the capital market, where the issuer issues and sells securities directly to investors. This process is usually done by the syndicate of the securities firm (the syndicate) or by the securities underwriter (the person who guarantees the purchase of all the shares or bonds issued). The process of selling new securities is called underwriting, also known as initial public offerings, and the underwriters take a commission. Once the initial transaction is completed, the subsequent transaction will be completed in the secondary market. Usually, this market does not have a fixed time and place of issue, belongs to the invisible market, and points the way to change with the purpose of the problem. So, what is the dividing line between the primary and secondary markets? It is whether the shares of the enterprise are securitized. Before the enterprise stock securitization, the stock transaction was the primary market. After the enterprise’s stock securitization becomes the stock, the ownership standardization certificate is the secondary market after carrying on the circulation in the open market. The “Metaverse” label already exists as a concept stock, similar to “Virtual currency,” “Blockchain,” and “Artificial intelligence,” as if rubbing against these concepts would make them famous. Not only Internet companies but those that have not yet done so are registering yuan-universe trademarks. Investment in the metaverse primary market is booming, with virtual office platform Gather announcing a $50 million Series B funding round, led by Sequoia Capital and Index Ventures, Dylan Field (Figma), Jeff Weiner (LinkedIn), Protocol Labs CEO Juan Benet, Lachy Groom, Elad Gil, YC Continuity, Neo, Haystack, and more.

9.5 Investment Risk Investment risk refers to the chance the investor may bear for the loss or bankruptcy caused by the future operation and financial activities to realize his investment goal. The investment risk is the important content of the forecast analysis of the investment subject’s decision whether to invest or not. The main factors that lead to investment risk are the change in government policy, the mistake in management measures, the sharp rise in the price of the essential materials that form the product cost or the sharp fall in the product price, the sharp rise in the borrowing interest rate, etc. The investment risks of the metaverse are divided into seven parts: monopoly tension, industrial rat race, computing pressure, addiction risk, ethical constraints, privacy risk, and intellectual property rights.

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1. Monopoly Tension In the real and virtual worlds, the metaverse needs a complete monetary system, economic order, social rules, governance system, cultural system, and even legal constraints. The borders involved require the participation and supervision of centralized organizations. To a certain extent, the propaganda of the metaverse in the social aspect makes complete decentralization a false statement. The fundamental problem of ecological closure is difficult to break under the fierce competition of each giant, and it is tough to achieve complete decentralization. Epic Games founder Tim Sweeney argues that the metaverse is not something a company can build; it is a form of mass-participation media. And society will not allow the metaverse to be monopolized by one company any more than any one company can dominate the Internet. 2. Industry Rat Race The metaverse is the product of unconscious competition in games and social interactions. In addition to the competition for talent and user resources and the increasing regulatory pressure, the game and social product model has gradually entered a bottleneck, and the related Internet Giants have joined the stock exchange phase, zero turnover. In the context of inward competition, there is an urgent need for a new concept to re-ignite capital and user imagination. Although the Pareto efficiency of capital allocation has been achieved in stages under the new concept, the conceptual breakthrough has not substantially changed the status quo of the industrial rat race. 3. Calculating Pressure The metaverse is a collection of massively multiplayer online games, open quests, editable worlds, XR portals, Ai Content Generation, economic systems, social systems, avatar systems, decentralized spelling systems, and real-world scenarios. Current technological progress is slower than expected, and the capabilities required for an actual metasomatic world envisioned by humanity are far from being met. Its operation requires a high degree of robustness, continuity, and low cost for algorithms and computing power. The Ultimate Universe still needs excellent technological progress and industrial innovation, which may be another 20–30 years before that happens. More work and life will be digital, and online time will increase dramatically. In a three-dimensional digital world, high-intelligence AI will bring the human digital economy to a high level of prosperity. The ultimate metaverse will be the combination of science and technology and humanities, is the experience of science and technology for people and efficiency, is the reshaping of technology to the economy and society, and in the future time the improvement of algorithms, and computing power is imperative. 4. Addicted to Risk Liu Cixin sees the universe as a seductive, highly hallucinogenic “Opium of the people” and worries that humans are stuck in virtual worlds. Due to the interaction of virtual images, immersive experience, and its “Compensation effect” on reality, the metaverse is naturally addictive. To a certain extent, the anti-doping policy for

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minors reduces the yuan-universe user diversity development. While our vision is for people to switch freely between the virtual and the real, there is a particular risk of addiction. Shortly, the government’s dominance of industries such as games will also be established. And the regulation of virtual content is bound to be more stringent, involving gray areas of market content that need to be hit. On the other hand, if the virtual world values, interactive logic, industry rules, and the real world to distinguish, or even alienation and opposition, people who are immersed in the virtual world will have negative feelings toward the real world, such as dissatisfaction, hatred, and so on. Not only does this kind of over-immersion in the virtual world not bring happiness, but it can also cause psychological problems such as social phobia, social distance, or relationship problems such as marriage, birth, and inter-generational relationships. 5. Ethical Constraints In our ideal concept, the metaverse is a highly free, open, and inclusive “Utopian” world. But as a surrealism collection of social relations, complex rules such as ethics, power structure, distribution logic, and forms of organization must be clearly defined and regulated. A high degree of freedom does not mean unlimited behavior, and a high degree of openness does not mean the infinite generalization of borders. How to reach a consensus on the ethical framework of the metaverse under the decentralization framework is yet to be explored from many angles. The new generation of ethics of artificial intelligence and the EU’s pre-regulatory strategy for AI and data are governance solutions designed to avoid AI and data risks. It is closely related to various countries’ and regions’ existing cultures, ethics, and norms. 6. Privacy Risks As a virtual space transcends reality, the metaverse needs information about users’ identities, physiological responses, behavioral paths, social relationships, interpersonal interactions, property resources, and scenarios. Even mood states and brainwave patterns are fine-tuned and synchronized in real-time. It places higher demands on individual data’s size, type, granularity, and timeliness. As the bottom resource supporting the continuous operation of the metaverse, personal private data need to be updated and expanded. How do you collect, store, and manage these data? How do you properly authorize and comply with the application? How to avoid theft or abuse? How do we achieve certainty and accountability? How to guard against new data-based forms of crime in the metaverse? The metaverse links real life with virtual and augmented worlds. Everyone will share the enhanced world that users see. Data can be easily shared, augmented objects can interact with any connected user, and users can immediately get information about other users. These problems have yet to be solved. 7. Intellectual Property There are three main types of civil IPR infringement cases: copyright, trademark, and unfair competition. Copyright infringement cases account for about 85% of all game-related intellectual property cases. The problem of intellectual property is

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persistent in the digital space. Although blockchain technology provides technical possibilities for authentication, confirmation of rights, and accountability, many UGC and IP applications cross the boundary between virtual and real in the metaverse space, aggravating the complexity and confusion of intellectual property management. The metaverse is a collaborative shared space, and almost everyone is the creator of this world, which has also spawned many collective works. This collaboration has a certain degree of randomness and instability for such collaborative positions and groups. Copyright owners need to have specific rules. Elements such as virtual people, objects, and scenes in the metaverse are likely to come from or be adapted from their real-world counterparts. Such adaptations across the boundaries of virtual reality are likely to lead to intellectual property disputes, including portrait rights, music, pictures, copyright disputes, etc.

Bibliography 1. Chen J (2021) Primary market. In: The dictionary of substances and their effects. Royal Society of Chemistry. Available via DIALOG. https://www.investopedia.com/terms/p/primarymarket. asp. Cited Dec 2021 2. Guiping T (2007) Logistics economics. Machinery Industry Press, Beijing 3. Shengming H (1990) Dictionary of finance and economics. China Finance and Economy Press, Beijing

Chapter 10

The Future of the Metaverse

10.1 Introduction In the previous chapters, we discussed the technical foundations needed to build a metaverse and the safety and legal implications of a metaverse. Based on advanced technology, the metaverse will be an all-encompassing digital playground. With technological innovation, all walks of life will usher in new development opportunities. The blueprint for a new era of digital information revolution sketched out in the metaverse has attracted a lot of attention from industries, especially the Internet. As the future of Internet technology, people have a lot of expectations for the metaverse. Based on the support of solid technology clusters, immortality technology may no longer be an imaginary concept. And in a technologically savvy future scenario, building a metaverse will also face many problems.

10.2 Metaverse Opportunities Although the metaverse is supposed to be the next revolution on the Internet, its construction is not limited to the Internet but covers a wide range of industries. This has attracted the attention of investment, Internet, game, hardware, technology, and other traditional enterprises. Figure 10.1 is a market map of the metaverse. The top half of the circle is the development of hardware and network infrastructure technology companies, including cloud servers, digital twins, artificial intelligence (AI), advertising technology, communications technology, and public chain technology industries; the lower half of the circle is made up of companies developing software and application technology, including industries such as interactive interfaces, Play-to-Earn, social platforms, virtual identity creation, and digital finance. The whole metaverse ecological industry covers all aspects of advanced technology and application. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Cheng, Metaverse: Concept, Content and Context, https://doi.org/10.1007/978-3-031-24359-2_10

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Fig. 10.1 Market map of the metaverse diagram

The metaverse is not built by a single technology but relies on a collection of all cutting-edge technologies. Future scenarios in the metaverse will also be achieved through a combination of technologies. At present, technology research and development carried out by global science and technology giants aim to change how humans interact with computers and virtual space. Making interaction more natural is an important technical problem to be solved, which is the core of achieving high fidelity and high immersion in the metaverse. Developing cuttingedge technologies is crucial to constructing the metaverse, and how advanced technologies are integrated into all walks of life is equally critical. From the application level, the field with the metaverse concept is mainly concentrated in the game industry, and the ultimate form of the metaverse cannot just be games. However, the key to realizing the top form of the metaverse is that industries other than technology land in a virtual world. And in the face of this future world in the imagination of humanity, all industries also ushered in unprecedented opportunities. The industry involved in hardware, backend infrastructure, low-level architecture, artificial intelligence, content, and scene five areas has increased the strength of technology investment.

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10.2.1 Hardware Development for Wearable Devices and Chips Facebook, which is currently focused on VR, acquired Oculus in 2014 and was the 2021 player in the first-quarter Global VR device share ranking by Counterpoint (75%), dabun VR and Sony VR came in second and third, with 6% and 5%, respectively. Apple has also recently invested heavily in AR technology and is committed to developing its AR platform. Its ARKit, launched in 2017, has been iterated into the fifth generation. Microsoft introduced the first Kinect in 2010 as a motion-sensing peripheral for games, incorporating advanced technologies such as real-time motion capture, image recognition, voice recognition, raw sensing data streaming, and skeleton tracking. Then, in 2015, Microsoft introduced HoloLens, a head-up display device that is no longer just for games but also for projecting news streams and assisting designers in 3D modeling. In addition, HoloLens uses environmental recognition technology to help visually impaired people navigate easily and choose the right direction to move. Developed by Huawei, the Hesse XR chip platform can support 8K decoding capability, enhancing the clarity and immersion effect of the vision device. Also, Hayes partnered with Rokid to launch Rokid Vision for AR glasses based on the XR chip platform. The cooperation between Hesse and ROKID builds a complete industry ecology in the field of XR, from chip to system to experience. Qualcomm dedicated VR/AR device chips XR1 and XR2 can be used in OCU LUSQUEST3 glasses, Hololens2, Neal, and many other VR/AR devices. Qualcomm also launched the Snapdragon Spaces XR developer platform, which supports over 50 commercial devices and can help the development of AR device software and hardware.

10.2.2 Backend Infrastructure Sector Focused on Increasing Transmission Speed Huawei is involved in crucial 5G technologies such as massive antennas, softwaredefined network (SDN), network functions virtualization (NFV), network slicing, edge computing, and full-spectrum access and is at the forefront of the industry. Huawei topped the 2020 European Telecommunications Standardization Association’s list of core patents required for Global 5G standards with 1,970 patents. Huawei has the world’s first core chip for 5G base stations, Huawei’s plough, and the Baron 5000, a 5G terminal chip. Amazon started running Amazon Web Services (AWS) in 2006 and has released cloud-related systems such as Amazon Nitro and Amazon Outposts for over a decade. A new ARM architecture chip, Amazon Graviton3, will be released in 2021. AWS covers a suite of services, including cloud computing, cloud monitoring,

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private cloud, resilient data block storage, content payments, artificial intelligence, and applications in 245 countries and territories worldwide. The global market share of cloud computing services has reached 46.8%.

10.2.3 The Underlying Architecture of the Core Technology Ecosystem Facebook has acquired technology companies such as computer vision startup Scape Technology, brain computing startup CTRL-Lab, and VR/AR zoom technology company Lemnis. In the future, it will invest heavily in computer vision, facial vision, eye tracking, artificial intelligence, and VR/AR zoom technology. Microsoft has a very well-developed enterprise metaverse technology stack. The azure platform covers IoT, digital twinning, space computing, holographic lenses, artificial intelligence and automation systems, and many other technology areas. Microsoft also plans to integrate its hybrid reality conferencing platform, Microsoft Mesh, into its chat and online conferencing software, Microsoft Teams. Nvidia’s Nvidia Omniverse is a platform for 3D design collaboration and simulation, and it can connect with other digital platforms to give virtual worlds the physical attributes of the real world. The platform’s technology is highly compatible with the concept of metaverse mapping to the real world, and it is the core technology needed to construct the virtual scene. Huawei’s River Map Cyberverse, a mapping software based on spatial computing technology, will enhance the ability of mobile devices to recognize space, allowing them to extract spatial information more efficiently and accurately. This is the critical technology to realizing the seamless connection between the universe and the real world.

10.2.4 Artificial Intelligence to Enhance the Virtual Environment Experience Facebook’s Artificial Intelligence Division has launched a project called Ego4D to improve the immersive experience of virtual spaces. The project’s developers use first-person images to train the AI model. Unlike previous approaches that used video and photographs to train the AI model, the training method of the first perspective can make it have a more genuine human perspective. Nvidia dominates the field of AI chips. Since 2019, the World’s top four cloud computing service providers, Amazon, Google, Alibaba, and Microsoft, have been 97.4% of AI projects using NVIDIA’s GPU.

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Baidu has adopted a “Cloud .+ AI” strategy, accumulating algorithms and computing power through its propeller depth learning platform and Baidu’s Kunlun chip. As of August 2021, the number of developers has reached 3.6 million. DeepMind, which Google owns, developed AlphaGo in 2016, and in 2017, at the Google I/O conference, Google announced that the company’s strategy would change from Mobile First to AI-First. In addition, Google has a deep learning algorithm framework TensorFlow, artificial intelligence chip TPU, and rich core Android technology.

10.2.5 Content and Scenes Related to Everyday Experiences Facebook is focused on building a hardware and software ecosystem with Oculus VR headsets as its entry point, investing in a string of well-known VR game developers and content companies in the film and television industry, such as VR content production platform Blend Media, VR game Beat Saber Developers Beat Games, Cloud Game Company Play Giga, and VR game Population: one developer BigBox. Apple’s Apple TV .+ plans to introduce AR features, and the App Store has also launched AR apps and games. Microsoft’s Xbox game platform has metaverse concepts such as Minecraft and flight simulators.

10.3 The Metaverse and the Technology of Immortality The human struggle against aging and death never ceases. Immortality has always been a human desire. Many scientists say extending human life is a more straightforward goal to achieve in the short immortality, but further research is needed. The development of science and technology makes people see another possibility of “Immortality.” Some scientists, futurists, and philosophers have come up with the idea of immortality: perhaps we will identify the genes that control aging and modify them so that our bodies do not age. Maybe we will create new technologies to create artificial organs to replace broken ones at any time; perhaps human immortality can be achieved through digital immortality. Digital immortality is the hypothetical concept of storing (or transferring) a person’s personality in a computer, robot, or cyberspace by uploading ideas. From the archive, an avatar is created that can mimic beliefs, values, and personality traits and interact with others in the form of an AI chatbot. This avatar can continue self-learning and self-improvement. Many have pinned their hopes on the belief that immortality can be achieved by creating multiple non-biological “Copies of the brain.”

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Fig. 10.2 Brain–computer interfaces

10.3.1 Entrance to the Eternal Life of the Universe: Brain–Computer Interface A brain–computer interface (BCI) is a direct communication path between the brain and peripheral equipment (usually a computer or robotic limb), as shown in Fig. 10.2. BCI technology is often used to study, map, assist, enhance, or repair human conscious or sensory functions. After years of animal testing, the first neuroprotein devices implanted in humans appeared in the mid-1990s. Recently, scientists have applied machine learning (ml) to the brain–computer interface (BCI) field, which extracts data from brain waves for human–computer interaction. The study was successful in terms of mental states (relaxed, neutral, focused), emotional states (negative, neutral, positive), and thalamic-cortical dysrhythmias. There are two ways to implement BCI. One is non-invasive, which uses the wearable device to connect outside the brain, and the other is invasive, which implants the device into the brain. Because of the plasticity of the cerebral cortex, when the brain adapts to the BCI, it can process signals from the implant. We rely mainly on electroencephalography (EEG) to detect brain activity. However, the development of brain–computer interface technology is slowly changing this traditional model. Technology already uses multiple sensors and complex algorithms to extract relevant data, analyze brain signals, and recognize brain patterns. Currently, most mainstream commercial BCI uses non-invasive devices, such as wearable headsets and earplugs. Brain–computer interfaces (BCI) based on existing technology are designed to allow humans to control prosthetic limbs through consciousness. In short, the BCI is the bridge between the brain and the computer. BCI technology is still developing and derived from the brain–computer interface cell culture. Such research is known as neurochip, an integrated circuit chip technology designed to interact with nerve cells. In 2010, Naweed Syed’s lab produced the World’s first neural chip, which grew brain cells on microchips that could capture subtle changes in brain activity more accurately. In the future, BCI-based brain activity data may be used to build virtual human avatars. Combining artificial intelligence and virtual reality, achieving “Immortality” in the metaverse will be possible.

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10.3.2 Advance in the Eternal Life of the Metaverse: Consciousness Upload Mind uploading, also known as whole brain emulation (WBE), is a theoretical concept. It can create a “Brain copy” by scanning the brain’s structure and combining it with brain activity data, then transfer it, or store it digitally in a computer that processes that data. You can react the same way as the original brain and experience the actual brain’s consciousness. The concept of consciousness uploading sounds like science fiction, but scientific research in the field is ongoing. The research in the field of consciousness uploading mainly focuses on brain mapping, virtual reality, brain–computer interface, and information extraction of dynamic functional brain and supercomputer. In 2013, Obama published the Brain Activity Map Project, which aims to map every neuron in the human brain to understand the human brain better. The Blue Brain Project, which began in 2005, has modeled the neural networks of rats’ brains and mapped a 3D map of every cell in their brains. However, technical limitations and ethical issues do not yet know when an “Artificial brain” can be created. Research in the field of consciousness uploading has led us to the possibility of immortality, perhaps a future in which human consciousness can be carried on a machine without having a biological body. In this way, in the virtual space, consciousness will exist forever and thus achieve some sense of immortality. However, brain simulation involves many cultural, legal, and ethical issues, so even if future technology matures, whether it will be universally applicable is debatable.

10.4 The Limits and Problems of the Metaverse The metaverse will revolutionize the way people use the Internet to communicate and interact. However, there are some problems associated with the construction of the metaverse. As described in the previous section, this covers the data security and investment security issues inherent in the Internet domain. In addition, it may create new problems beyond the scope of existing cognition.

10.4.1 Technology Coverage One of the limitations of the metaverse is that it relies on various advanced technologies. While there are currently several areas where technical standards and protocols have been applied at the commercial level, there are many technologies that are still in the process of being developed. There is no uniform standard or agreement—in addition, developing new technologies and purchasing technologies require significant investments, which cannot guarantee technology coverage and

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penetration. If advanced technology can only be applied in a few developed areas, then the ultimate form of the metaverse cannot be achieved.

10.4.2 Interpersonal Relationship and Social Experience One of the attractions of the metaverse is that it can reshape human relationships and enhance social experiences. One can further break down physical boundaries and interact online with other humans and even virtual digital beings in a virtual world. But it is unclear whether such a scenario would lead to unhealthy social relationships. Moreover, there are many hidden dangers in the security of virtual life.

10.4.3 Data Security Issues Privacy issues have plagued the Internet age, with applications reading and collecting user data. Despite the efforts of technicians in data security, problems such as the illegal sale of data continue to emerge. The data in the metaverse will be many times larger than it is today. In the virtual world, people will rely more on data, and whether they can guarantee data security and solve a series of problems caused by data leakage is still unknown.

10.5 Cultural, Legal, and Ethical Issues Although the metaverse is a virtual space that mirrors the real world, the emerging things, such as Digital Life accompanying it, will create new norms and cultures. It is also unknown whether the new culture will erode the existing human culture or give rise to legal and moral issues beyond the current human cognition. The public’s interest in the concept is more concerned with its superior performance in the financial world than with the future scenarios depicted by the metaverse. The new technologies involved in the metaverse concept (such as cryptocurrency and NFT, etc.) require a very high degree of expertise. The general public in the professional field does not understand the case if the venture into the universe-related areas will face more significant risks. After understanding the core technology clusters for building the metaverse, whether we need a shared virtual environment is a fundamental question worth considering beyond the heat.

Bibliography

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Bibliography 1. Connected Data Datayes (2021) Make a bold dream: smart investment under the concept of metaverse The idea of an intelligent investment platform. https://www.sohu.com/a/504712499_ 120099902. Cited Dec 2021

Index

Symbols 5G, 69

A AI chip, 37 Algorithms, 71 Artificial intelligence (AI), 36 Augmented reality(AR), 50

B Big data, 32 Block, 85 Blockchain, 86 Brain-computer interface (BCI), 212

C Cloud computing, 71 Colored coin, 125 Counterparty, 125 Creator economy, 17 CryptoKitties, 126

D Data security, 158 Data storage, 33 Data visualization, 61 Decentralization, 17 Digital assets, 129 Digital light processing (DLP), 59 Digital twins, 72

E Edge computing, 35 Exchange security, 151 Extended reality(XR), 53

H Hash functions, 84 Hash tree, 85 Helicopter drop, 100 Hijacking, 151 Holographic live, 80 Holographic projection sandtable, 75 Holographic transparent screen, 77

I Image display, 57 Image rendering, 71 Immersive interaction technology, 71 Immersive interactive experience room, 76 Internet of things (IoT), 10 Investing, 188

L Liquid crystal display (LCD), 58 Liquid crystal on silicon (LCoS), 59

M Market map, 207 Metaverse, 1 Miner, 87 Mixed reality(MR), 52

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Cheng, Metaverse: Concept, Content and Context, https://doi.org/10.1007/978-3-031-24359-2

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218 Mobile internet, 9 Monopoly tension, 203 N Node, 87 Non-fungible token (NFT), 124 O Optics, 54 Organic light-emitting diode (OLED), 58 P Portal search, 8 Primary market, 202 S Scientific visualization, 60

Index Secondary market, 191 Smart contract, 87 Social networking, 8 Spatial computing, 17

V Virtual real estate, 134 Virtual reality (VR), 49 Visual analytics, 62

W Walled garden, 28 Wallet security, 152 Web 1.0, 27 Web 2.0, 28 Web 3.0, 28 Whole brain emulation (WBE), 213