The story of how the metaverse came into existence, from the early internet and VR systems, to the rise of online games, social media, cryptocurrencies, NFTs and remote work.
Updated Mar 3, 2023
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Metaverse
Technology
Gaming
About 4.6 billion people have access to the internet, and almost all of them are on social media. There are over 2 billion gamers worldwide, and more than 1 in 10 Americans have invested in cryptocurrency. All of these disparate use cases, technologies and interests are converging to build the metaverse—a set of interconnected 3D virtual worlds where our avatars will work, play, socialize and trade.
But where did this buzzword come from all of the sudden? People often credit Neal Stephenson for coming up with the metaverse, which is understandable. After all, his 1992 science fiction novel Snow Crash popularized the term and contextualized the metaverse as a successor to the internet—which was still in its infancy back then.
The first graphical web browser had barely been out for two months before the novel was released, just to give you an idea of how early this was.
Since then, you’ve seen metaverses in The Matrix, Tron, Ready Player One, and a number of other films and TV shows. But the idea of 3D online virtual spaces predates Snow Crash by at least 20 years, if not more. No single person created the metaverse, but a handful of people and companies pioneered all the necessary ingredients.
So, what developments actually led us to the metaverse, and how far away are we from fully inhabiting these virtual worlds? Let’s wind the tape back over a hundred years, hit play, and see.
The metaverse as we know it today is intimately tied to technologies like the internet, virtual and augmented reality (VR/AR), cryptocurrencies and NFTs. But virtual realities, in their purest form, existed way before computers were around.
Humans have always sought to recreate reality in other mediums, dating all the way back to cave paintings of stick figures hunting wild animals. In the thousands of years that followed, we kept tinkering with the way we drew three-dimensional objects on flat surfaces—culminating in the 15th century Renaissance, where artworks became photorealistic.
The invention of photographs, audio recordings, animation and video would occur over 400 years later. But to truly immerse ourselves inside of other realities, these mediums would all have to be combined into a single interactive device.
In the 1930s, around the time when sound and color made their way into movies, IBM and other companies created the first digital computers. But these were glorified calculators by modern standards. As such, these computers would only be used by scientists and engineers for the next 40-odd years.
In the early 60s, a cinematographer called Morton Heilig built the Sensorama, one of the first examples of a VR system. The giant device stimulated the viewer’s sense of vision (color display), sound (stereo sound), balance (moving chair), smell (odor emitters), and touch (fan). One of the five films it could display included a motorcycle ride through the streets of Brooklyn, New York. But alas, this system wasn’t interactive.
Around the same time, The United States Department of Defense (DoD) was developing a way to access computers remotely. This became ARPANET, the first wide-area computer network connecting universities like UCLA and the Stanford Research Institute.
In the late 60s, computer scientist Ivan Sutherland and his students created the first head-mounted display (HMD) for immersive simulations, humorously called The Sword of Damocles. This device was so heavy that it literally had to be suspended from the ceiling.
Up to this point, computers were these large and expensive machines that only governments, big corporations and universities owned. Additionally, users had to encode computer tasks on punch cards and wait hours or even days for it to process. But a slew of semiconductor advances led to the Intel 4004 in 1971, which in turn kicked off the personal computer revolution.
Now pinball machines and other arcade games had been around since the 1930s, but Pong is what put arcade video games on the map in 1972. And with the adoption of microprocessors, developers were soon able to create more complex games like Space Invaders and Pac-Man.
The first commercial video conferencing system, AT&T’s Picturephone, was released in 1970. While it was a commercial failure, it pioneered a technology that would become indispensable in the late 90s.
Foreign computer networks, like the French CYCLADES and British NLP network, emerged around this time. This led researchers to begin developing the TCP/IP protocol, which would enable all these separate networks to combine into a single network of networks.
Even though the internet was still mostly used by academics, that didn’t stop them from having some fun with it. In 1973, a couple of computer scientists at NASA created Maze War. This was the first online 3D multi-user first person shooter game, and was soon played by multiple universities over ARPANET. Aside from this, Multi-User Dungeons (MUDs), which are text-based role playing games with online chat, started becoming very popular.
The late 70s also saw a lot of developments in the spatial aspect of VR, including the Aspen Movie Map and the Large Expanse, Extra Perspective (LEEP) system. The LEEP, in particular, influenced the way optics are designed in modern VR headsets.
A small anecdote: IBM allowed a few employees to start working from home in 1979. In the years that followed, they even expanded to 2,000 people. This little experiment set a precedent that most of us would only come to appreciate down the line.
Around this time, personal computers from the likes of Apple and IBM were introduced to much commercial success. Microsoft wasn’t doing too bad on the software side either.
The ARPANET adopted TCP/IP protocols on January 1, 1983, which is now considered the official birthday of the internet.
That same year, American cryptographer David Chaum came up with the idea for an anonymous cryptographic electronic money called ecash. But a decade would go by before he actually implemented it.
In 1985, The National Science Foundation Network (NSFNET) was created to connect a group of supercomputing centers for governments and universities to use. This network would go on to become a major internet backbone.
The first online virtual worlds, like Habitat and Cityspace, also started appearing. VR wasn’t quite ready for the spotlight yet, but Mattel’s Power Glove for the Nintendo Entertainment System was one of first VR devices that consumers could buy at that point.
The early 1990s gave birth to the modern internet. ARPANET was decommissioned, NSFNET removed their public restrictions and Internet service providers (ISPs) like Sprint and AT&T started managing commercial traffic.
Not to mention, computer scientist Tim-Berners Lee created the World Wide Web, which gave us the ability to interlink documents on the internet through hypertext. Soon after this, many web browsers were developed, the most famous of which was Mosaic. As mentioned above, this is the period when Snow Crash came out and the metaverse started making its way into the public lexicon.
The early 90s was also VR’s first attempt to go mainstream, with devices like the Nintendo Virtual Boy and various Virtuality machines installed in arcades. Needless to say, commercial VR failed due to high costs, poor tech and health concerns.
But VR’s failure didn’t dampen the growth of 3D gaming one bit. The technical and commercial success of titles like Meridian 59 and EverQuest set the standard for massively multiplayer online role playing games (MMORPGs) today.
In the gaming arena, Whyville is also worth mentioning. It’s a (still active) virtual world for children that was one of the first to integrate virtual currencies and economies into an online game, one of the key features of today’s metaverses.
Remember David Chaum’s ecash idea from the 80s? Well, in 1995 he implemented it as Digicash, a payment system that was untraceable by banks and governments. Around this time, one of the crypto pioneers still around today, Adam Back, created a precursor to proof-of-work—one of the key components of Bitcoin. Other cryptographers like Wei Dai, Nick Szabo and Hal Finney developed on these ideas and wrote papers that described how cryptocurrencies could work.
With the internet now available to the public, combined with affordable personal computers and user-friendly web browsers, adoption grew exponentially. Soon enough, email, video chats, blogs and forums, encyclopedias, and e-commerce stores began cropping up.
Hype around the internet hit such a fever pitch that investors kept pumping money into overvalued dot-com companies with no business case (e.g. Pet.com) until the entire tech market crashed. This became known as the dot-com crash, where even quality stocks like Amazon.com and Qualcomm lost up to 90% of their value.
At the dawn of the 2000s, the internet had clearly reshaped every aspect of life and business. Commercial VR was dead but MMORPGs were booming. Funny enough though, only 5% of the world had internet access at this point. Not to mention, the Web 1.0 experience was static, where users mostly consumed content but didn’t create any of it. But a number of developments went on to break all of these limitations.
Efficiency increases in video compression made video conferencing much more practical in the 2000s, and free services like Skype made it accessible to average consumers. In 2003, we saw the release of Second Life, which many consider to be the first true metaverse. Unlike the virtual worlds released up to this point, Second Life did not label itself a video game. It was designed to be an open, 3D virtual world where people can create avatars, socialize, travel, build and trade virtual goods and services.
Second Life even has its own virtual currency called the Linden Dollar, which is exchangeable with real money. The platform’s user base quickly grew into the millions and even birthed the first metaverse millionaire, Anshe Chung, who made her fortune by selling and renting virtual real estate. Take a moment to appreciate that people were already making money in virtual economies almost two decades ago, while big gaming studios are still playing catch-up today.
Around 2004, Web 2.0 was popularized as a general trend toward more interactive websites that centered around user-generated content. This included social networking services like Reddit, Twitter and Facebook, wikis like Wikipedia and video sharing sites like YouTube and Dailymotion. Web 2.0 also gave rise to the monetization of user data, which would go on to become one of the key arguments for a decentralized metaverse.
The iPhone came a few years after, and the mobile revolution was officially kicked into high gear. All of the sudden, people were taking their phones everywhere: Googling on the go, mobile shopping, and capturing every part of their lives with photos and videos. Soon enough, we saw the rise of mobile-first companies like Uber and Instagram.
By this point, World of Warcraft (WoW) had become the most popular MMORPG of all time, merging 4 decades worth of innovations in graphics, gameplay and storytelling. Fun fact: Ethereum founder Vitalik Buterin first became interested in decentralization after a WoW patch changed his avatar for the worse.
In 2009, Pseudonymous developer Satoshi Nakamoto released Bitcoin, the first decentralized digital currency. He disappeared one year later and transferred his creation over to the bitcoin community.
Then Ethereum came along and introduced smart contract functionality to the crypto space. This made it possible for developers to create decentralized applications (DApps) and tokens on top of Ethereum. This led to a Cambrian explosion of decentralized exchanges, lending protocols, NFTs (non-fungible tokens) and other digital assets all utilizing the Ethereum blockchain.
NFTs, in particular, gave people the ability to create and trade digital items (e.g. artworks, avatars, virtual land) that were verifiably unique. Cryptocurrencies and NFTs would go on to create billion-dollar exchanges and marketplaces like Coinbase and OpenSea, paving the way for top metaverse cryptocurrencies to help build the necessary financial infrastructure.
NFTs
After a decade of relative silence, VR finally started gaining steam in 2010. Palmer Luckey is widely credited with reviving VR through his Oculus Rift headset. His Kickstarter campaign raised ten times its $250,000 goal, and the tech was so impressive that Facebook acquired Oculus VR for $3 billion in 2014. Competing VR headsets like HTC Vive, Valve Index and Playstation VR soon followed.
That brings us to the present day, where the internet, VR, gaming, social media and crypto came together to form our vision of the metaverse. Metaverses like Minecraft, Fortnite, Roblox are now more popular than ever, with hundreds of millions of monthly active users. And their decentralized counterparts, like Decentraland and The Sandbox, are catching up quickly.
People and companies alike are looking at the metaverse as an investment opportunity. Tech giants like Amazon, Apple, Facebook, Google, Microsoft and others are all developing their own VR and AR products. Last year, Facebook announced that it was rebranding itself to Meta Platforms and committing $10 billion to developing the metaverse. Microsoft and Nvidia have also showcased their own metaverse work solutions.
The COVID-19 pandemic in 2020 resulted in the widespread adoption of video conferencing and remote work. This normalization of remote work has set the stage for future careers in the metaverse, like virtual architects, metaverse advertisers, play-to-earn gamers and virtual event planners.
The metaverse of today isn’t quite ready for wide-scale adoption though, due to a variety of factors like:
Still, the popularity of metaverses and VR technologies has been on a steady increase. A few examples include the Oculus Quest 2 outselling the Xbox in 2021 and virtual concerts by artists like Travis Scott and Ariana Grande attracting tens of millions of viewers.
Not to mention, the metaverse is gaining more institutional adoption by the day, with organizations like Nike, Gucci, McDonalds, JPMorgan and even the Seoul government creating NFTs and virtual real estate. So the only question that remains is, will you take the red pill and dive head-first into that rabbit hole?