Creating Real Value in a Virtual world with Alec Lazarescu - Step into the Metaverse podcast: EP27

Good day everyone and welcome to the Step into the Metaverse podcast. My name is Marc Van Reimenam and I'm also known as the Digital Speaker. I'm a future tech strategist and I think about how emerging technologies change organizations and society.

This podcast is part of my new.

Book called Step into the how the Immersive Internet Will Unlock a Trillion Dollar Social Economy. The book is available as an ebook, hard copy and audiobook. As part of this book, I did nearly 100 in depth interviews with the stakeholders involved in creating the open Metaverse, the investors, the developers, the artists, the collectors, etc. And I've turned a selection of these interviews into this podcast as I think that these conversations are too valuable to leave them on my computer. In this interview, I interviewed Alec Lazarescu. Alec is the Vice President of Software Engineering at Savas Learning Company. He also founded Verstek Metaverse, which is an educational organization committed to growing conversations and thought leadership on applying emerging technologies including AI, xr, VR and architecture, as well as blockchain to the evolving concept of the Metaverse. In addition, he runs the largest chatbot and AI community in New York City. During the interview, we discussed the role of blockchain in the Metaverse, the dangers of the Metaverse, and the role of digital fashion in the immersive Internet. Enjoy the conversation.

Maybe you can share a bit about your background and how you are involved in the Metaverse.

Sure. So actually I thought it was very appropriate that you mentioned the convergence of like blockchain and AI and all those things, because that's actually how I got involved. I was running a group for five years in the chatbots and AI space and I started seeing a lot of interest moving towards virtual worlds and really the sort of like, I guess the third wave of interest in blockchain was in NFTs and then using those NFTs and kind of these play to earn worlds and somewhat rebranding them as Metaverse, although I don't think that's usually been appropriate. But nonetheless, even within the hype, there's actually glimmers of some interesting things going on. So I really like the whole web3 idea. I like that. The thing I like most is like the decentralized creator economy aspects and how people can have transparency on what they're building, what cut the platform is taking, and ownership on the other side of those assets. So that's a big part for me.

Nice. I guess that that is an important part indeed. So what is the Metaverse according to you?

So to me, I Think of it like a persistent virtual world where the humans have an embodied avatar telepresence and they're able to immersively interact with content and each other in digital experiences and economies.

Nice. That's a, I think a very good description of what the metaverse is and so related to that. How important is identity? How important are avatars and reputation in the metaverse?

I think it's critical, but not in the real world identity sense. I think pseudonymous identities are important and actually can give us a lot of what people are looking for in terms of having like a repeated experiences with people, building trust, building reputation. And I like the aspects of self sovereign identity where someone can have the ability to project into one or more pseudonymous identities aspects of what they want to share. And that with some work on zero knowledge proofs, it's looking interesting where if I need to prove that I have something, I know something, some aspect about myself, I don't have to necessarily tell people who I am to do that. And an example would be it's not even just like nefarious things like, oh, you don't want to tell people you are. It might be things that are sensitive. Maybe you're attending like a therapy session in the metaverse and you don't necessarily want to just be your original self. You can do that. You can have like your identity for that therapy session that's still you and has a good reputation without telling everyone exactly like who you are and why you're there.

Yeah. So how would we organize interpretation then? Especially if you have like multiple avatars, multiple pseudonymity, pseudonymous, sorry, identities. How are we going to organize that reputation?

Yeah, I mean, I see it where you have, you are the owner of the private key, so to say that is able to connect to all of them and you can decide what should be exposed for each of them. So they will each build their own sort of individual reputation. But you should also be able to share some aspect of the totality of your metaverse experience, things you've done there as needed and you should have control on doing that.

Yeah. So. And of course you hear all these stories about brands entering the metaverse. Adidas, Nike, Gucci, Balenciago, all these great examples. What do you think that brands need to do to become successful in the metaverse?

I think it's important that they understand the existing norms of whatever world they're going into. They work with creators that are already have a fan base there, have built some sort of notoriety. And I think unless they're already a Luxury brands. It would kind of be a mistake for them to jump in and decide that I'm going to make these very expensive NFTs out of nowhere just because I've seen other people do it. I think the model that's worked well in the real world, whether it's kind of a Toyota coming to the US and then leading on quality and then coming out with Lexus or even like smartphones, Samsung and others, starting from commodity phones to then flagship phones, I think that's the right way to do it. You don't, you don't just jump in and say, hey, I have a rare item. Why doesn't everyone give me all the money? You have to build your reputation and learn the local culture.

I think that's an important one. I guess the culture in the metaverse will be different from the culture in the real world.

Yeah, I mean, in a way I think there'll be certain aspects of it that are. You can find them both, but the Internet tends to amplify things and you kind of get with a group of like minded people and for good or bad, things can get a little funny for sure.

So, and then if we have the. So, yeah, sort of have two versions almost, you could say, of the metaverse. You have an enterprise version and you have a consumer version. The consumer, you know, with the consumer brands, the games, the social platforms, et cetera. And then you have the enterprise version with the meetings, the events, the digital twins. How big do you think that the enterprise metaverse will be? What kind of role will it play?

I think it's sort of like starting at opposite ends and they'll probably meet in the middle. They're not going to be forever divergent. Right now the enterprise metaverse is not starting with like game engines and all the other things that the consumer ones are. But I do think it's very powerful in terms of building essentially a training simulation playground for AI generative adversarial networks kind of running loose on the metaverse, so to say. And also for companies to interact with vendors. You could almost think of it like a sandbox for integration, where you could have a digital twin of your supply chain, your factory, what have you, and have someone else plug in and try it out, do a virtual pilot, almost compared to the expense of doing something like that in the completely real world.

I guess you can almost get like, as you say, a simulation of an entire supply chain. You can have, of course, a digital twin or a machine or maybe even of a factory, but then you can also get a I guess a digital twin of a supply chain. And then you can run simulations on that, on what the impact of the weather will be or, I don't know, those kind of things. Yeah, that's quite interesting. I didn't think about that. So there you go, something new. And then I think the final pillar will be the governments. You know what do you think that how the governments can use this? Will we get like public virtual squares or you know, how this is going to work?

I think that a lot of things have happened fairly recently. Governments wanting to be known for being friendly to crypto governments making Estonia having E Citizenship friendly to business. You could even think, I've seen virtual Helsinki for tourism and all that. So you can think of companies bringing some of their culture to a virtual partner metaverse and even Estonia one day, if you get your E Citizenship, you run a business there that could also come with the right to lease a storefront in some popular spot in their virtual world. And now you almost have like a, a piece of commerce value that you can add to someone that this is a cultural area of Estonia's metaverse and now you can have some sort of store there to show something off.

Yeah, so that, that almost relates them to the digital real estate which is happening at the moment and they're being sold for millions of. What is your idea around that digital real estate and your artificial scarcity that's being created.

Yeah, I really have mixed thoughts on the digital real estate because there's only one real world yet every week I hear of some company popping up trying to sell you there. It's literally the Brooklyn Bridge idea happening now and multiple people are selling it to you. That being said, I mean, you want to have a place where people are going and if for whatever reason, if ties to the real world or some other significance, people in the metaverse are going somewhere that has value. The only question is what are you going to build on that experience? Right now people are buying on the promise of that there will be an experience and people will come there. But you're essentially placing a hold on a plot of land, hoping for that. So I think we'll see how that plays out. And what, which of the platforms, if any, right now or some new one, will do that?

Well, yeah, that's a good point. And then I guess relates to that you see a lot of companies and also artists, Snoop Dogg getting, buying land and creating stuff. How important do you think that user generated content and creativity is for the Metaverse?

I actually think that's hugely important. Certainly big budget companies can make a WoW experience, AAA type game titles, but the creativity can come from anywhere. And even in just continuing with gaming, there have been new game genres that have come out of the user generated community. The mobile game genre, the capture the flag, the battle royale, all those started from mods from existing games, not from a company deciding, hey, I want to create this new type of game. So that's huge. The rise of TikTok, YouTube before TikTok. But I think even TikTok is probably, probably the best example because they do a really good job of pushing fresh new people and not kind of having all the network effects really consolidate too early. So user generated content, hugely important.

Yeah. And then what role do NFTs will play and how important will they be for the creators?

I think they have a ton of value for creators because they set very clear ground rules. You have transparency and who's taking a cut, who, who owns it. And it gives a sense of easy ways to prove that you own something. Or this is a limited supply. Where previously you had to be some famous artist for anyone to even give you an interest in a limited run of prints. Whereas now, like that's just table stakes. Like every NFT creator can decide on doing disamounts and they can end up being popular. So you need digital scarcity just because otherwise the best person can create one thing and then it just gets copied infinitely. And creators need to be paid. It's kind of speaking from a place of privilege to say like all art and information should be free. That's great when you don't need the money.

I guess if you need to buy yourself food as an artist you really want to get paid. So related to that, to art, to identity, how important do you think digital fashion will be for the metaverse?

I think it's very important because like we were long past proximity being like the sole control of who you see, where you spend your time. Even pre pandemic, like people moving online and it started with just like status messages and like profile pictures, but like people are really customizing their spaces. Like the Animal Crossing game has been like massive and people just love making simple things or the special like seasonal items that they have there and it's just expressing themselves and that's, that's a very human nature thing. And if you're not spending your time in person with new people, you can do it online. If that's where you spend the most time, it makes sense to kind of care about how you appear there.

Yeah, that makes sense. I Guess we'll probably see some kind of explosion in identities, you know, in people walking around as crocodiles or whatever you can come up with. That's going to be exciting to see.

Yeah, I mean, it's much less limited. Like, I mean, when I was younger people had like black lipstick or piercings and like now that's like, oh, boring. I could just be like this laser eyed monkey instead.

Yeah, true. So how do you think we are able to create a rich and vibrant metaverse economy?

So I do think kind of related to user generated content, making sure that there's subsystems in place that make it reasonable for individuals to participate, or even like small artists collectives and not just the bar. So high that only like well connected or rich companies can do it. And I do think that we need some more tiering. It's almost, I think of it like high fashion and fast fashion and like the entity stuff is all high fashion. And I'm not sure it's. Well, I know most of it's not going to stay high fashion, but everyone pretends it's going to be and, and that's just exhausting. Like, it's almost like being a Gilded Age socialite or like an aristocrat in like 15th century France, where your entire job is impressing people with like what you have or how you dress and no one has time for that anymore. I think at some point, like, you're just gonna want some decent quality things in your metaverse world. Like we need the IKEA of the metaverse too, where you have item one of 20 million, not one of the a thousand. And it's a nice desk lamp for your metaverse. Not everything needs to be some curated experience. It's just too much price sensitivity. You end up like checking your phone to see how much is your metaverse home worth. I think that's going to pass because it's exhausting.

That's funny how you say that. I agree. In the end, I think not everyone can also afford a $4,000 virtual Gucci bag. You know, just, just like in the real world, people can't afford that either. So why would you all of a sudden be able to afford it in the virtual world?

Yeah.

So what are then, according to you, the sort of ethical challenges that we will face with the metaverse?

I think sort of tying onto that. I hope we don't sort of create drab slums in the metaverse as a default experience just because we want to enforce this artificial scarcity and motivate people to like pay for Something nicer. Like, I hope we can have like just a pleasant baseline experience. It doesn't have to be like full of like super gilded rarity, but just give people a little respect in the metaverse and not have this weird like classist thing carry over there to an extreme.

Yeah, that makes sense. And so from a dangerous perspective, what kind of dangers do you see? How dark can the metaverse become, so to say?

I think we don't fully know like what it will do to people's minds if you have all these kind of created experiences in AR or VR. And I mean, the opposite of augmented reality is diminished reality, where if someone's malicious, they could literally like change what you see, impersonate people, hide things. They could, if you're following like your metaverse map somewhere, it could like turn you somewhere else and get robbed. Like it's, it could be disconcerting to be able to distinguish reality or especially if there's like hackers and just the whole like wallet system and ownership where currently there's no recourse on the blockchain and everyone talks about how, oh, oh, it's, well, now it's your responsibility. Like, that's great until like something happens to like your grandparents or who knows.

What, which will happen.

Yeah, absolutely.

Yeah. Because I guess people lose their passport or their phone all the time. So people are definitely going to lose their private key to their wallet.

Yeah, I mean, and what if you lose the NFT that proves a deed to your house? Is someone going to show up at the door and kick you out? Like, what does that even mean?

Yeah, I guess we will have a few of these examples happen in the real world and then draft some legislation around it, I guess, to see how to deal with it.

I guess it's also, if anyone can create anything, you could get a bunch of offensive people making the hate metaverse or who knows what. And how do we deal with things like that? Yeah, that's going to be interesting in decentralized world and how that would work.

So just from a more technical perspective, a question. What role do you see that the blockchain will play in the metaverse? Will it be a role for just to prove your ownership, or will it be that we will have virtual world running on the blockchain with all the computer distributed? Because at the moment that's not possible.

Right? Yeah, I've actually just recently had a discussion about that. I do think if we want to be fully decentralized, the code has to be running on the blockchain as well. And not just kind of the trivial smart contract code we have today, but sort of the physics engine, the other rules as well. Because then it's truly something that's not under central control. Because right now like if you're in the game world, like it's their game client or it's their like back end servers and you could have an NFT of the best sword in the game and they could still decide that sword is not usable anymore. And you prove the owner on the blockchain, but if you can't use it, what does it matter?

So, but when do you think that we will reach that stage that we can do all that on the blockchain? Because at the moment that's not really possible.

Right. It's hard to say, especially now with everything accelerating. It could be 15 years, it could be 30 years, it could be five years. It's really challenging and it depends on the fidelity level. Certainly you could come up with like a Minecraft level version of this and it will be done sooner than the 8K photorealistic version of it too. I saw an interesting project where Don Hoff, who was the creator of Loot and what's it called, vine, he created essentially an NFT that was like an old video game cartridge where essentially on chain is all the code and then the client is like an interpreter for that code.

Okay.

So it's kind of, it's getting a little closer to the actual business logic and service, so to say being on the blockchain as well.

Yeah. So how do you think the future of the metaverse will look like?

I think the interoperability for like the wearable and avatars, like that'll be figured out. It's not there today, but I think there's joint incentives and interest to make that happen. The other items, I think tbd, if those will be interoperable, where those will be, I think maybe a system of like filter subscriptions would be one way people can handle like a decentralized environment where they can't have top down censorship. So I almost think of it like your, your ad block list in the browser. You subscribe to like a bunch of people's filter lists of sites that they have found ads on. You could similarly subscribe. Okay, I don't want not safe for work type images because this is my kids account or I don't want hate speech or whatever else you think of. So it almost be like your personal firewall of stuff which has its pros and cons because now you're trusting someone else to make that decision. So not. Nothing is foolproof, but it's all a start.

Yeah, I guess we have to start somewhere and then figure it out along the way.

It may seem obvious in hindsight, but I think just preparing people for the Metaverse winter, it's like we had the AI Winter and Crypto Winter. The things that are out now are not going to reach the level of the high expectations that have been set just off the bat. I think we're just going to have some time of disillusionment, and I think that's actually helpful because it kind of gets some of the hype out of the way. It lets companies work quietly outside of distraction and come up with things. And it's so early. Like, we're in the Friendster era of the Metaverse. We're not even at the MySpace yet, and we've got a few tiers to go on before we get somewhere.

I think so, too. All right, well, thank you so much, Alex. I really appreciated your time and input.

All right, thank you. You, too. Bye.

Thank you. Bye. Bye.

And that wraps up the conversation with Alec Lazaresco. If there's one thing that stands out for me from the conversation, it is that diminished realities, actually a thing, and that it can have a big impact on our society. The dangers of the Metaverse are real, which is why in my new book, Step into the Metaverse, I cover them at length and offer three possible solutions to mitigate these dangers. If you enjoyed this conversation, don't forget to hit the like and subscribe button on your favorite podcast platform, so you will be notified when any of the other interviews will become available. Thank you and see you in the metaverse.