Centralized vs Decentralized Metaverse: Complete Guide

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by Ibukun Ogundare · 7 min read
Centralized vs Decentralized Metaverse: Complete Guide
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In the following guide, we will observe the emergence of virtual worlds and the participation of people in these realms, define the difference between centralized and decentralized metaverses, and see which is better for your purposes.

The desire to design a virtual environment where individuals could access freely and engage in any activities they choose without worrying about physical constraints resulted in the creation of the metaverse. The goal is to provide participants with a brand-new, truly interactive environment where they can build, make, learn, and discover. Metaverse can be built on one of two bases: one that is centralized and run by large corporations like Meta Platforms Inc (NASDAQ: META), or one that is decentralized and run by the future inhabitants of the metaverse. The natural progression of the internet is the metaverse. From the early times, when you could only read material already published, to the era of social media and the economy of creators, to the integration of the physical world into the virtual. The trajectory of the internet and information age is obvious; we will observe the emergence of virtual worlds and the participation of people in these realms.

Metaverse Defined

A metaverse is a huge, immersive, and all-pervasive digital representation of the analog (actual) universe. We can not mention the metaverse without referring to the use of virtual reality (VR) and augmented reality (AR) headsets and glasses. Despite the frequent confusion between the terms “metaverse” and “video game,” the former basically offers a sense of immersion, user agency, and real-time interactivity. The phrase “metaverse” was first used by Neal Stephenson in his 1992 book “Snow Crash”, but it has since gained popularity outside of literature. A metaverse is a virtual setting where people can socialize, work, play, and shop.

Since it is commonly seen as the next generation of the internet, some of the biggest businesses in the world are investing in it. Notably, most of them prefer a decentralized metaverse over a centralized one. Let us dive deeper into understanding both types.

The Centralized Metaverse

A centralized metaverse is a virtual environment where just one entity is in charge. This implies that a single person or entity may seize total authority over the metaverse and decide how it should be run.

Since the introduction of the internet, tech enthusiasts have cherished the idea of a centrally controlled virtual environment that exists in a setting parallel to the real world. It may be characterized as a visually varied simulated space where individuals can do real-life activities with a certain level of accuracy. Using avatars, metaverses, and immersive virtual experiences is paving the way for a new age in virtual interactions, allowing remote coworkers to collaborate virtually to create new goods and providing customers the ability to tailor their digital experiences. A centralized financial system (usually referred to as a bank) is one of the most straightforward comparisons for a centralized metaverse.

With internal servers and rules in place to control the virtual world, a centralized metaverse is one single entity that oversees the entire network. In centralized systems like Fortnite and Roblox, the virtual community lives within the constraints of a centrally controlled place, and the players are constrained within those parameters. Although the community can communicate with one another and exchange experiences, they are not free to own or control some aspects of the digital world.

The fact that there is some type of control in this virtual environment is a plus. If a user’s account is compromised or one of their transactions goes wrong, there are policies in place that can shield the person from further harm.

The con is that freedom is not as abundant as it might be in a decentralized metaverse. The security flaw that these centralized systems present as single-point-of-failure networks is a significant disadvantage.

Examples of Centralized Metaverses

A prime example of a centralized metaverse is Roblox – a gaming platform with over 50 million daily users. It enables anyone to create and monetize their own game worlds, which all exist in an interconnected metaverse and share features such as avatars and currency. Roblox is accessible on all popular operating systems, including Windows, Android, iOS, and Xbox. The gaming platform does not need gamers to purchase headsets and other pricey equipment because AR and VR are rarely used.

With a video game taking place all around it and a beautiful virtual hangout atmosphere, Fortnite is more approachable than anything that needs a VR headset. Millions of people hang out in the virtual world of Fortnite, which is more than simply a game. Being entirely free to play distinguishes Fortnite from other video games and makes it capable of uniting players unlike any other game before. Joining is free, and you can just hang out on a computer, an Android phone, or a game console.

Among other centralized metaverse instances, Horizon World is a large-scale multiplayer application that combines Roblox with the OASIS VR setting from Ready Player One. You can hang out in a virtual environment with up to 20 people at once using Horizon, which requires a Facebook account. Horizon Worlds is now more of a social platform than just a Minecraft-like environment for developing games.

The Decentralized Metaverse

A metaverse’s degree of decentralization may also evolve over time as the game and its community develop. Two elements are essential for decentralization: a dispersed network and a decentralized ownership structure. To be decentralized, a company, network, game, or other product cannot be owned by a single entity like in a centralized product, and a metaverse becomes more decentralized with more “owners” or stakeholders.

As said earlier, in a centralized metaverse, a single entity oversees the whole network, with database servers and policies to control the virtual world. The community can communicate among themselves and exchange experiences, but they cannot independently manage or control certain aspects of the digital world. Meanwhile, the creators are in charge of the platform rather than one central authority in a decentralized metaverse.

Decentralization makes it possible for participation without permission, which is a notable distinction compared to the centralized metaverse. The users’ power over the project’s administration increases with the decentralization of the metaverse. They can expand the universe as much as they like and give each other immersive experiences and scenes.

The key disadvantage is that protecting users’ privacy is completely their responsibility. Individuals must be cautious about the data they share about themselves because there is no central agency to monitor what occurs in these virtual environments.

Examples of Decentralized Metaverses

A prominent example is Sandbox (SAND), which provides tools for designing 3D models, characters, and vehicles. These creations are then produced as Non-fungible Tokens (NFTs) and may be imported into other Sandbox environments. The platform’s integrated marketplace also allows for the trading and sale of these NFTs.

Decentraland, which is another example, got some of the world’s biggest superstars and brands, including Morgan Stanley, Coca-Cola, Adidas, Samsung, and Snoop Dogg, to call Decentraland home. It has its own cryptocurrency called MANA.

Choosing the Metaverse

A brand’s decision over which metaverse to use depends on the kind of experience it wants to provide. Each metaverse allows for the creation of various experiences for its consumers. Companies should take advantage of this by positioning themselves in metaverses that provide this option.

There are a few tips on how to choose either a centralized or decentralized metaverse:

  • Place yourself where you can find a sizable portion of your target in the metaverse.
  • Put yourself in a metaverse where a prospective target is present. It’s advantageous to place a wager on a metaverse where there are the most GenZ users for a business looking to revitalize its audience, for instance.
  • Improve the narrative. A brand is defined by its narrative, identity, and values. These few elements will form the basis of the proposed brand experience.
  • Establish your strategic aims.
  • Concentrate on the experience and the value it will provide to users.

Bottom Line

Although still in its infancy, metaverse development is increasing. It is necessary to exercise caution when deciding what information to give because privacy in the metaverse is crucial for maintaining the integrity and safety of each user individually. Data gathering and identity tracking are more prevalent than ever in the world we live in today.

People must safeguard their privacy and have complete control over the information they choose to disclose and not disclose about themselves because the metaverse is entirely virtual.



What is a metaverse?

Metaverse is an ever-expanding virtual environment where users can customize their reality using information and experiences from the real world and connect with one another.

What are the types of metaverse?

Traditional centralized metaverses, also known as web2 metaverses, operate on a centralized system in which a central authority regulates user data access. Centralized blockchain metaverses are classified as a web2 metaverse type that incorporates blockchain into its workings.

There are also decentralized blockchain metaverses, which are sometimes referred to as web3 metaverses. People have full power and discretion in these decentralized blockchain metaverses rather than a centralized authority.

What is centralized metaverse?

Centralized platforms are created to guide users around the metaverse and curate the experience. The engine, development tools, asset libraries, and services needed to build virtual experiences are provided by these platforms to third parties (users or companies). Still, the platform itself sets the policies, manages governance, and owns the user relationship. This implies that a larger portion of economic activity goes to the platform. 

What is decentralized metaverse?

The goal of decentralized platforms is to provide third parties with the engine, development tools, asset libraries, and services they need to build virtual worlds in the metaverse. The virtual platform charges a tiny fee for users’ direct interaction with third-party sites. These platforms commonly use blockchain technology and rely on DAOs for governance. 

What is the key difference between a centralized and decentralized metaverse?

The community can engage and share experiences in centralized locations, but they cannot independently manage or possess certain elements of the digital world. However, in a decentralized environment, the platform’s system is managed by the community rather than a single central authority. As a result, people have far more individual control over their personal assets. 

How to understand which metaverse is better?

The metaverse’s functionality is determined by both the gestor entity’s goal and the activities available to internal users. When user agreements lead to transactions in a virtual environment and a related exchange of goods and cryptocurrency, a decentralized system is preferred. This is necessary to provide consumers with clear and transparent purchasing options. This is done by gathering and protecting information about users’ identities, buying histories, and other personal information. Therefore, if the virtual world is the site of activities that do not necessitate the sale of goods or contents, a decentralized system is unnecessary. In such a situation, a centralized system in which the brand controls all factors is preferable.

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