By now most of us have heard of virtual currencies. Now a group of software developers is creating an entire community in a virtual reality world where people are already buying and trading ‘land’. (And all while you’re still trying to decide whether to build your first hotel on Connecticut Avenue or Boardwalk.) Investor’s Digest of Canada columnist Jordan Lazaruk spoke with the developers of ‘Decentraland’.
Steven Spielberg’s Ready Player One opened over the Easter weekend, earning US$53 million during the four-day holiday. The film was Mr. Spielberg’s take on a future that science fiction author Ernest Cline had laid out in his 2011 novel of the same name, one in which most people spend a significant portion of their lives in a digital virtual reality world—The Oasis.
Clearly, the concept has not only captured the famed director’s imagination. A few companies have emerged that are attempting to construct the foundation for this type of world but one stands ahead of the pack: Decentraland.
Founded in Argentina by software developer Esteban Ordano, Decentraland is currently being constructed by a distributed (i.e., working in a variety of geographic locations) global team of software engineers and designers.
Decentraland ran an ICO (initial coin offering) of its token, MANA, in August 2017 with a fund-raising target of US$24 million—a goal they reached in 35 seconds.
In December, they auctioned off the first group of ‘land’ parcels to the public over a week; users spent roughly US$23.5 million to buy up the 10-metre-by-10-metre plots. At the time, there were about 90,000 parcels in total, of which roughly 40,000 were located in community districts. Some parcels, reserved for roads and community parks, were not available for sale.
Has the virtual reality revolution finally arrived?
Now, they are laying out the first stage of their digital world, Genesis City.
I had a chance to speak with Trevor Waldorf, world product manager at Decentraland, about its history, current status, and the next stages of development.
J.L.: How did the Decentraland project get started?
T.W.: It started in May of 2015. There was this idea called ‘proof-of-existence’, which was Esteban Ordano’s, that you could upload artists’ work to the blockchain and say, “I’ve made this,” like a new copyright. Then they built the unity proof-of-concept . . . where people can claim land and build a virtual experience.
There was an ICO in the middle. After that, we had an auction for all the land. We distributed 90,000 parcels to the community.
Then in February 2018 we launched the third-party marketplace, which became the largest marketplace on Ethereum. People are trading and buying land like crazy right now, and there’s roughly US$16 million in land that’s been traded so far.
In April we launched the beta of our SDK (software development kit). Currently we have a huge host of ecosystem projects, community projects, and research initiatives.
Decentraland pioneers building virtual community
J.L.: What is Decentraland and why build it?
T.W.: We believe that Decentraland is the first of many virtual worlds. We think that the future of virtual spaces is open worlds that can be manipulated and inhabited in flexible ways.
We would posit that Decentraland is a proof-of concept, or a prototype, for these configurations, a really good way to figure out what are some of the pitfalls and what configurations work well.
We also are building this for sovereignty, this idea of how you can own, with an amount of totality and certainty, the assets that you would associate with your identity.
In the current structure, our identity and our assets are largely backed and owned by other people and licensed to us. They are on a database somewhere; in the case of the US citizen, they have a social security number stored in the government’s database.
Exposing only the information you choose
J.L.: How do you envision Decentraland extending or protecting our sovereignty?
T.W.: It’s important that when I have information about myself that I consider private, I can (still) expose it to people; this is important for authorization.
When I rent an apartment, I have a credit history, a history of all the payments I have made. I want to expose this to you but only you, and I only want to do it for a certain amount of time so you can verify my credit.
In the current configuration, we don’t have control over that. Whether via the mail or over a web form, we send this information off and then they have it.
We’re giving away our information and not all people are care-taking it in ways that are responsible. So, this sovereign configuration we’re building is such that you expose only the information you want to expose and you can control the extent of that exposure, the duration of that exposure, and who can view that exposure.
J.L.: You’ve described Decentraland as an “open decentralized world on the blockchain”. What is the importance of being “open” and “decentralized”?
T.W.: Open means open-sourced and censorship-resistant. These two properties are really critical for the success of the world.
Everything you do is open-sourced, and the idea is eventually—within the next five years—the community will control, contribute and will have written us the code that the world runs on. Above all, it’s censorship-resistant, which is a huge part of being open and allowing ‘dangerous’ ideas to thrive.
The example we use is, if the original Bitcoin white paper had been published inside of a large banking organization, we would not have Bitcoin. Instead, it was published in an open environment, which led to this whole crazy experiment with cryptocurrencies, and whether or not you think that’s a good thing it’s certainly been interesting. Censorship is a strong value in the virtual world.
No central authority will make any decisions
It’s decentralized because no central burdens long-term means that the points of failure are significantly reduced.
We see Equifax data breaches and Facebook’s lackadaisical control of data as being key examples of why these central burdens in information wells are really a problem for virtual environments and spaces.
Another huge part of decentralization is no ‘acts of God’. Traditionally, in multi-player games ‘acts of God’ are a really big deal—in the case of World of Warcraft, Ultima Online, or Second Life, administrators have a defined right to do what they will.
We believe that this compromises the integrity of the world in such a way that we couldn’t generate significant value without a consistency in the rules there. So we get rid of the ‘acts of God’ by having no central authority make any decisions—that’s all handled by the MANA token and our governance structure (token holders vote on any changes to the system).
J.L.: Do you plan to do most of the significant development in-house or do you plan to establish partnerships?
T.W.: One of the huge problems of Decentraland is that we’ve just taken a massive bite of decentralization. We’re also making this whole virtual world. We’re also making content, also an identity system, also payments, also governance of autonomous organizations and societies—so at a certain point it’s a balance of: “Is this so core that only we can build it?” or, “Is there another team out there we can get involved with?”
We’re beginning to say, “There are other teams that can build these things, let’s work with them and let’s be friends,” instead of trying to be the smartest kids in the room. We’re not—Esteban might be but the rest of us aren’t—and that’s fine. That’s one thing that’s great about the blockchain infrastructure: it incentivizes these kinds of projects.
Decentraland’s corresponding token, MANA, has been a victim of the recent bearish nature of the cryptocurrency market. It has plunged from a January high of more than US$0.27 to just over US$0.10 and will likely continue to decline, along with the entire market in the upcoming months.
However, once the cryptocurrency market finds its inevitable floor, I would strongly advise investing in Decentraland; its development is far enough along that there is no doubt it will one day function as a ‘real world’, albeit virtual, equivalent to the imaginary Oasis of Ready Player One.
Jordan Lazaruk is a cryptocurrency consultant, co-founder of the food and lifestyle company Grindz, and a board member and proud supporter of Toronto-based non-profit group Project Phoenix.
This is an edited version of an article that was originally published for subscribers in the July 6, 2018, issue of Investor’s Digest of Canada. You can profit from the award-winning advice subscribers receive regularly in Investor’s Digest of Canada.
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