What is the Metaverse?

A core challenge of identifying tangible problems and solutions for the metaverse and the technologies associated with it is the numerous concepts and definitions that define it. Having a clear definition of the metaverse that applies to a wide range of circumstances helps identify the technology that enables it and facilitates conversations on the opportunities and challenges.¹ While experts agree that the term “metaverse” originated in 1992 from the science fiction book Snow Crash, agreements on what constitutes the metaverse tend to end there.² Snow Crash describes the metaverse as “a wireless internet system with three-dimensional graphics and a virtual reality, which was populated by digital avatars of real people and accessible via terminals on a worldwide fiber-optics network using special goggles.”³ Despite how eerily accurate this definition captures current aspects of the metaverse, a wide range of definitions still exist. For instance, Matthew Ball, the author of The Metaverse: And How It Will Revolutionize Everything, provides a robust definition describing the metaverse as “a massively scaled and interoperable network of real-time rendered 3D virtual worlds that can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of data, such as identity, history, entitlements, objects, communications, and payments.”⁴ A report from the cybersecurity company Trend Micro defines it as “a cloud-distributed, multi-vendor, immersive-interactive operating environment that users can access through different categories of connected devices (both static and mobile).”⁵ And researchers from South Korea define it as “an immersive network of socially connected environments in a persistent multi-user platform.”⁶

One primary theory for the differing definitions is that it is in businesses’ interest to keep them vague and confusing. RAND scholars recently concluded that companies offer various definitions “often slanted to suit their own needs,”⁷ as companies cannot fail in creating business products if the shareholders do not know its purpose. Matthew Ball also explains that these numerous definitions are intentionally at odds with each other.⁸ While advantageous for businesses, vague definitions impede policymakers and subject matter experts from working on complex metaverse issues.⁹

Although companies have created their own definitions to suit their business needs, the U.S. government has not offered a definitive view on what they consider the metaverse. The Congressional Research Service (CRS) describes concepts and defines other key terms in their published reports on XR, but they do not provide a distinct definition.¹⁰ Similarly, the National Institute of Standards and Technology’s (NIST) Computer Security Resource Center’s Glossary does not contain a definition for “metaverse.” This is because NIST only defines terms that are included in their publications, meaning that NIST has not developed products mentioning the metaverse (though they have other lines of effort in this field that will be discussed later).¹¹

In lieu of a uniform definition, frustrated researchers have attempted to solve this dilemma. Georg Ritterbusch and Malte Teichmann wrote a paper for the Institute of Electrical and Electronics Engineers (IEEE) detailing their literature review to uniformly define the “metaverse.” Based on their analysis of 28 prominent definitions, they conclude “the metaverse, a crossword of ‘meta’ (meaning transcendency) and ‘universe,’ describes a (decentralized) three-dimensional online environment that is persistent and immersive, in which users represented by avatars can participate socially and economically with each other in a creative and collaborative manner in virtual spaces decoupled from the real physical world.”¹²

Yet, even this definition has limitations because it claims that the metaverse must be “decoupled from the real physical world,” which overly restricts the applications and types of technology that comprise the metaverse. Other definitions also exhibit this shortcoming except for the definition in Trend Micro’s report, which, as previously detailed, describes the metaverse as “immersive, digital environments” that can be accessed through “static or mobile devices.”¹³ In other words, the metaverse should be more expansive than only a virtual environment that can only be accessed through a virtual reality (VR) headset. The metaverse ecosystem should also include technologies that comport physical reality by overlaying digital images or digitally manipulating an environment.

The metaverse could therefore be thought of as a spectrum of how a user manipulates their environment: with full digital immersion at one end and a smartphone’s camera filter that places a virtual sofa in a physical living room on the other. To drive this home, a user does not need to be completely submerged in a virtual environment to access the metaverse. Operating off this reasoning, a revised definition of the metaverse could be the following: The metaverse is a blend of online environments that is persistent and immersive, in which users can participate socially and economically with each other and their surroundings in a creative and collaborative manner in virtual spaces or physical environments that are digitally manipulated by static or mobile devices. This then erodes the notion that someone can only access the multiverse through a VR headset, but also through a variety of XR devices and applications.

That naturally leads to the need to define XR and identify technologies within the XR family. XR could be defined as the extension of the reality perceived by users, referring to any technology that can alter reality by adding digital elements to the user’s environment.¹⁴ This includes a range of technologies that enable VR, augmented reality (AR), and mixed reality (MR). VR provides the user with a wholly virtual and immersive visualization,¹⁵ while AR is “technology that overlays digital information to the real world through a screen or surface onto which the digital information is projected or shown.”¹⁶ In other words, AR provides an “enhanced version, not a replacement, of a user’s perception of physical reality.”¹⁷ MR is a mix of VR and AR and offers a “highly interactive AR application, where virtual objects realistically blend into and interact with, real objects and/or with the user and allows the user to interact with both digital and physical elements.”¹⁸

With the metaverse defined and the technology to access it identified, the third leg of this three-legged stool is the technology ecosystem that allows for the metaverse to operate. First, there is the primary technology that the user directly interacts with. This includes headsets, mobile devices, sensors, virtual applications, computers, and other tools that allow the user to directly access the metaverse.¹⁹ The secondary technology includes those that enable the users’ devices to function properly. This includes cloud computing that hosts data produced during a user’s session, the semiconductors within headsets, and the third-party code that a metaverse or XR app relies upon. The third tier consists of technologies that enable the internet, such as 5G cell towers and fiber optic cables. While this is not an exhaustive list, this framing shows how the attack surface that a malicious actor could exploit will expand with the use of XR technology and how they could exploit existing infrastructure to impact XR technology.

Similar to the challenge of defining the metaverse, economists also struggle to understand the metaverse and XR technologies' impact on the economy. For instance, PwC suggests that the global XR market will be $476 billion in 2025, up from $46.4 billion in 2019.²⁰ A coalition of XR companies in the European Union (EU) believes that the EU can see an impact ranging from $838 billion to $1.5 trillion by 2030.²¹ McKinsey is more optimistic and believes that the “economic value of the metaverse” could have a $5 trillion impact by 2030.²² Of course, knowing what is defined as the “metaverse” and what is considered a “metaverse technology” impacts these economic estimates. There is also varying economic growth across different sectors. For example, in another McKinsey report, e-commerce may see an impact of $2 trillion to $2.6 trillion from XR technology, $180 billion to $270 billion in the academic virtual learning market, a $144 billion to $206 billion impact on the advertising market, and a $108 billion to $125 billion impact on the gaming market.²³

While these numbers may seem bloated, business investments and market trends favor these estimates, despite the recent quarterly market downturns in XR technology. The number of mergers and acquisitions throughout the years has increased from 109 in 2018 to 166 in 2020.²⁴ Andreessen Horowitz operates the cleverly named “Games Fund One,” a $600 million fund investing in “game studios, metaverse infrastructure, and games themselves.”²⁵ Overseas, total equity fundraising in U.K. companies was roughly $3 billion between 2018 and 2022.²⁶ These investments have the potential to translate to job creation, with the EU expected to create anywhere between 440,000 to 860,000 jobs by 2025.²⁷ One prediction estimates that over 23 million jobs could be created globally.²⁸

Regardless of the true economic impact, these companies and investors clearly believe that if they build it, (or more aptly, invest in it), users will come. A survey in 2022 found that 62 percent of respondents engaged with branded virtual experiences, 36 percent were excited about brands in the metaverse, and 30 percent were excited about luxury brands providing products in the metaverse.²⁹ In 2026, a quarter of the world population could spend “at least one hour a day in the metaverse for work, shopping, education, social and/or entertainment.”³⁰ Indeed, a recent Pew survey of developers, business leaders, researchers, and activists found that 54 percent believe that by 2040 the “metaverse will be a much more refined and truly fully immersive, well-functioning aspect of daily life for a half billion or more people globally.”³¹

Understanding the number of users that could use XR applications also demonstrates just how widespread using the metaverse could become, and, by extent, the data its users will produce. Today, Americans from 16 to 64 years old spend an average of seven hours a day online.³² If that trend holds, or more likely expands, they will eventually spend their time online in various metaverses. The data generated per day, per week, per month, and per year then starts to become an unimaginable, but very real, number that companies and governments must contend with. One estimate projects that the metaverse will increase the data usage of each internet user by 20 times.³³

Due to these economic estimates, the current high internet usage rate, and new data generated, C-Suite executives are optimistic about incorporating XR technology into their businesses. In a recent survey, a near-unanimous 95 percent of senior executives “expect the metaverse to have a positive impact on their industry within five to ten years.”³⁴ As a result, these executives believe this technology will have a positive impact on their economic bottom line. Sixty-five percent expect metaverse technology to influence more than 5 percent of their total revenue in five years, while 24 percent take a more optimistic view and think it will drive more than 15 percent of their revenue.³⁵

These surveys have translated into real-world market movements, with big-name companies taking steps to get into the metaverse market. While Microsoft’s $69 billion acquisition of Activision would help cement its place in XR and video games, they also created “Mesh” to enable teams to better connect with each other in virtual environments.³⁶ Google released “ARCore Geospatial API,” which provides “immersive” experiences within Google Maps in over 100 countries.³⁷ The rock band, Gorillaz, famously used this platform to perform an AR concert in 2022.³⁸ The Chief Technology Officer of Roblox remarked in 2023 how they are making investments to ensure that Roblox manifests a “build once, run anywhere” system so that a Roblox experience “can run on a high-end PC, … run on a three-generation-old phone, [and] run on a VR headset or a console.”³⁹ A quick search for the term “metaverse” in the SEC’s Electronic Data Gathering, Analysis, and Retrieval system reveals over 5,000 documents between July 2018 to July 2023.

Despite its promise, the market is constantly fluctuating. The company most directly associated with the metaverse, Meta, has seemed to completely pivot to artificial intelligence.⁴⁰ Disney shut down its entire metaverse division.⁴¹ While these may indicate that XR technology is a fad that will never gain traction outside of the gaming industry, the following case scenarios illustrate that as XR technology becomes cheaper and more easily accessible their applications could become limitless.

XR technology has the potential to be, if not already, integrated into a wide range of business and critical infrastructure sectors. The video game industry is probably most closely associated with the metaverse and how someone is likely to come into contact with XR technology. For example, accessing Pokémon GO, a form of AR, only requires a smartphone, connection to the internet, and access to an application store. At its peak in 2016, Pokémon GO was estimated to have 232 million active users.⁴² Unsurprisingly, in Europe, VR/AR videogames were the largest source of earnings for all XR technologies in 2022, representing about €11 billion.⁴³

Beyond video games, the adoption of “digital twins” can expand the use of metaverses. Digital twins are “digital copies of actual surroundings and digital avatars representing real users that are created for virtual world experiences.”⁴⁴ An individual’s digital twin could, theoretically, do everything virtually that the user could do in the real world. Within retail, customers could use their digital twin to try on clothes or, in a Sims-like fashion, see how a piece of furniture or art may look in their house. For critical infrastructure, a digital twin could be used to train workers in operational technology environments by using digital schematics without the stress of making a costly mistake.

In fact, metaverse applications could be used in all 16 U.S. critical infrastructure sectors.⁴⁵ These 16 sectors consist of “assets, systems, and networks, whether physical or virtual, [that] are considered so vital to the United States that their incapacitation or destruction would have a debilitating effect on security, national economic security, national public health or safety, or any combination thereof.”⁴⁶ Therefore the security and resilience of these sectors are of the utmost importance to the U.S. government and the owners and operators of these systems and assets. Although the following use cases illustrate the benefits XR can bring to these sectors, they also exemplify the need to ensure that these systems are secure from cybersecurity threats:

• Water and Wastewater: Since 2017, a water utility in Australia has used VR to allow users to walk through a virtual model of their treatment plant to help identify more design problems than traditional walk-throughs.⁴⁷
• Dams: The U.S. Army Corps of Engineers is identifying AR/VR solutions to help with flood risk management infrastructure.⁴⁸
• Transportation Systems: XR can be used for passenger airplane flight deck training to simulate emergency landing situations.⁴⁹
• Financial Services: Citigroup launched a “virtual trading desk” with Microsoft HoleLens to allow a user to view a digital workstation showing stock performances and other market information.⁵⁰
• Food and Agriculture: A startup called Plant Vision allows farmers to use headsets to get information about their crop’s temperature, health, and other vital information by leveraging various infrared cameras and sensors.⁵¹
• Health Care and Public Health: Medical professionals can train in realistic scenarios, improve telehealth appointments, enhance medical imaging, and allow professional surgeons around the world to assist with any given surgery. For example, the European Tampere University leads a research consortium to identify how to present medical imaging data in combination with 3D methods.⁵²
• Nuclear Reactors, Materials, and Waste: Headsets or AR-visors could superimpose information about the radiation source strength in a power plant, helping prevent unintended exposure to employees.⁵³
• Communications: With limited inspectors available after a major storm, telecommunication providers can dispatch personnel with XR headsets to inspect damaged cell towers and connect with inspectors who can then walk the dispatch personnel on how to repair the damages based on a tower’s digital twin.⁵⁴
• Emergency Services: Trainees from emergency services, fire, and police departments could be placed in virtual environments to simulate terrorist attacks, an incident at a large public gathering, and other natural disasters to help train emergency response plans.⁵⁵
• Government Facilities: U.S. cities could create digital twins of municipal services to allow citizens to access and process government requests in a replica of a city in a metaverse environment, similar to the efforts underway in Seoul (further detailed later in this report).
• Commercial Facilities: As previously described, stores can revolutionize online shopping by allowing customers to interact with their products through various XR applications.
• Critical Manufacturing: XR could improve the accuracy and efficiency of drilling by connecting off-site specialists with those operating the drilling platforms and tools.⁵⁶
• Chemical: Similar to the medical field, scientists can simulate environments where chemicals could be safely stored in various conditions to find better efficiencies.
• Energy: AR headsets could be clipped onto hard hats that technicians wear during pipeline inspections to project instructions for the technician, which could reduce errors.⁵⁷
• Information Technology: The XR companies that create metaverse ecosystems and related devices and cloud companies hosting user data would fall within this sector. While IT companies could use XR applications similarly to other sectors, their greatest impact would be in supporting XR technologies.

The most consequential use of XR technology is how the 16th sector, the Defense Industrial Base Sector, will deploy it to support military organizations to train soldiers and carry out military operations. In the United States, XR technology has been used in the military for decades. The U.S. Air Force began using flight simulators as early as the 1950s to replicate cockpit experiences for pilots.⁵⁸ In the 1980s there was SIMNET, which was a “wide-area network with various vehicle simulators built to provide a real-time, distributed combat simulation.”⁵⁹

Since then, the importance of XR technology across all military branches has only grown, and senior leaders within the Department of Defense (DoD) have increasingly spoken to its importance. Dr. Alethea Duhon, the Technical Director at the Air Force Agency for Modeling Simulation, remarked that “VR and augmented reality technologies are of huge importance in the way we innovate moving on because that’s what this generation is used to. Technology is catching up. We cannot slow down.”⁶⁰ Lisa Costa, Space Force’s Chief Technology and Innovation Officer, noted that they should “take advantage of the investments that industry is going to be making in the metaverse. Those technologies could be used for training as well as for operations. And incorporated into a digital engineering ecosystem, operator feedback could be used to automatically improve the product in its next iteration.”⁶¹ The Under Secretary of Defense for Research and Engineering Heidi Shyu said that the DoD intends to leverage “AR/VR and live training…[that is being matured] by the gaming industry” to develop DoD XR programs.⁶² Those remarks came on the heels of her office identifying “human-machine interfaces for XR as one of 14 critical technology areas for the Department of Defense.”⁶³

These are not merely words, as the DoD has increasingly leaned into XR to fulfill its training needs. For example, the DoD’s Army’s Synthetic Training Environment (STE) is an XR training environment that allows soldiers “to train where they will fight, with the partners they will fight with, and in complex operational environments to include dense urban, woodland, jungle, desert, and sub-terrain, before the first fight begins.”⁶⁴ In practice, the STE will enable “mission rehearsal capability, [as it] interfaces with operational networks, training interfaces with battlefield platforms, interfaces to live training instrumentation, and native interoperability with the Common Operating Environment.”⁶⁵ One example of how this will look is the STE Information System (STE-IS) and the Reconfigurable Virtual Collective Trainer (RVCT). The former uses a 3D mapping dataset that “integrates actual terrain imagery from around the world” to enable training scenarios in those locations.⁶⁶ The RVCT is an interactive set of equipment (e.g., head displays and representational controllers) that will allow soldiers to train in Abrams, Bradleys, and Strykers in an STE-IS environment.⁶⁷

The STE is just one of many examples of XR military training across different military branches. In addition to the STE, the Army developed the Virtual Squad Training system in Hawaii to simulate tactical training for squads such as performing combat patrols, entering and clearing buildings, and reacting to IEDs.⁶⁸ In 2014, the Office of Naval Research partnered with the University of South California to develop “Project BlueShark” to provide a virtual environment for sailors to train on vessels and virtually collaborate.⁶⁹ The Navy launched the “Naval Aviation Training Next-Project Avenger” to “reduce the length of time it takes to train students by combining traditional classroom instruction and flying time in the T-6B Texan II with virtual and mixed-reality trainers, artificial intelligence, tablets, and aviation apps.”⁷⁰ The Air Force is also interested in creating an XR environment for maintenance training and creating virtual training hangars.⁷¹

XR technology can also enable large-scale military exercises with global partners that otherwise would be costly. CRS found that performing XR-enabled military exercises could save costs and protect military personnel from otherwise dangerous activities while maintaining the ability for multi-state units to exercise together.⁷²

In addition to training and exercises, the military increasingly uses XR technology on the battlefield. Air Force pilot helmets for years had aspects of XR that enabled pilots to better navigate and manipulate their environments. The helmet for the F-35, for example, includes an AR display that shows telemetry data and target information over video footage from around the aircraft.⁷³ In 2018, the Army gave $22 billion to Microsoft to develop the Integrated Visual Augmentation System (IVAS), which is a headset to “improve soldier sensing, decision-making, target acquisition, and target engagement,” and will eventually be incorporated into both ground and air vehicle platforms.⁷⁴ Additionally, the Army has developed Tactical Augmented Reality goggles that combine traditional GPS devices and night-vision goggles so that soldiers do not have to look down at their GPS device.⁷⁵

This is not to say that these programs do not have their challenges. Those who use XR technologies in daily operations may grow too reliant on their systems, leaving them at a disadvantage if a disruption were to occur. Similarly, the user may be paralyzed into inaction due to information overload.⁷⁶ Securing the data produced in the training environments will also increasingly be a challenge. A recent CRS report has begun raising alarms, highlighting “concerns about the potential cybersecurity vulnerabilities of XR systems, particularly those that rely upon high-value-target databases for weapons maintenance, image classification, or other functions.”⁷⁷ In terms of the impact on the military, CRS assesses that: “If such systems are infiltrated, they could provide an adversary with critical information about U.S. weapons systems, as well as information about how the U.S. military trains, and thus how it intends to fight in the event of a conflict. XR systems used for warfighting could additionally enable an adversary to distort the common operational picture used to coordinate military actions or cause the system to misidentify people and platforms—potentially resulting in fratricide or unintended civilian casualties.”⁷⁸