An era of decentralised control: risks and opportunities enabled by the metaverse
Since the very beginning of social media, the question of identity has brought forth a tug of war between what’s personal and what’s shared.
There are undeniable benefits to sharing more online: from a UX perspective, users gain a more personalised, engaging experience, and from a social perspective, public users are more likely to build community with a network of followers. However, users have recently grown acutely aware of predatory data mining and profiteering – not to mention the constant threat of cyberattack and fraud. In tandem, a communal language has taken form to help all internet participants, from IT to marketers to end-consumers, communicate the journey and collection of data: from “cookies” to “close friends only.”
We’re now at the beginning of the metaverse – the natural progression beyond social media. However, the privacy paradigm has changed, and users are ready to be back in the driver’s seat when it comes to the control of their data and their identity. Will this mindset shift hurt or help the formulation of the metaverse? Let’s take a closer look.
Cybersecurity, Identity Theft, and a Lack of Trust
Cyberattacks, phishing, bot fraud, and identity theft are all on the rise. With digital processes sprawling across new parts of our work, financial, and social lives, there are exponentially more lucrative opportunities and vulnerabilities to be exploited by hackers – we’re talking trillions of dollars annually. Due to the rise of at-home and hybrid work schedules, for example, many home workers have lost the shield of enterprise cybersecurity protocols and protections. And though consumer cybersecurity technology is growing more sophisticated and attracting enormous investment, we’re seeing cybercriminals evolve in lock step.
The scale of the issue is difficult to capture; we’re seeing entire countries held to ransom. Take Australia, for instance: two data breaches in 2022 resulted in 56% of the population’s data being compromised. And because businesses rely more heavily on customer data to operate and compete – and consumers, in turn, choose to share more about themselves to unlock greater functionality and personalisation – these cyberattacks come at a deeper cost to the individual. From those two attacks alone, we now have 14 million people who will treat every brand interaction with wariness moving forward.
This all comes back to the importance of trust in consumer behaviour and purchasing decisions. As consumers become acutely aware of the flow and vulnerability of their data, security has become a major element of brand reputation and a driver of customer loyalty. And vice versa: consumers are more likely than ever to approach a brand with scepticism and cautiousness. This is true across generations: 96% of baby boomer users, 94% of Gen X users, 92% of millennial users, and 93% of Gen Z users don’t trust social media platforms to protect their data.
Web 3.0: A Shift in Control
Consumers are seeking control of their online identity, not only from a creative expression standpoint but also from a security standpoint. With the vision for Web 3.0, the online experience will be defined by a decentralised approach, leveraging blockchain technology to replace the centralised database the web currently depends on. What this means for users is a more seamless and secure experience, where they can be the custodians of their own data and decide when, where, and for how long to share it. This also creates a more unified and intuitive experience.
Today, consumers can take advantage of single/federated sign-on. For example, using their Google account to log into a retailer’s online store without entering credentials and filling out repetitive forms. The drawback of this model is that the data remains centralised and not fully in the hands of the user – giving both parties (Google and the retailer) access to all the consumer’s preferences and data. With Web 3.0 and the metaverse’s decentralised infrastructure, users will have the convenience of a federated identity but with the control that today’s models lack. In fact, the security of this decentralised transaction model is the reason hundreds of banks and financial institutions have adopted technology like blockchain and distributed ledger transactions (DLTs) to some degree.
This attitude shift is essential in understanding the appetite for the metaverse, which hinges on decentralised identity control and management by the individual. With interest in creative and potentially anonymous digital personas rising, metaverse participation makes sense to many security-minded consumers.
However, this model is not perfect. While there is a strong belief that decentralised DLTs are the most secure option, we are seeing a healthy amount of cautiousness as cryptocurrency theft and fraud continue to rise. We are also seeing debate over the management of these identity keys, as consumers may not realise how much responsibility and risk they are taking on as custodians of their digital wallets. Once a key is lost or stolen (most frequently in a malware attack), those assets become forever inaccessible. Rather than have users hand their keys to a third party for safekeeping, which would take us full circle back to centralisation, we are likely to see digital, encrypted vaults integrated in mobile operating systems to bring users that simplicity and peace of mind.
This brings us to our key question. Can the decentralised foundations of the metaverse truly be secure, or will cybercriminals continue to loot and wreak havoc on digital infrastructures?
The Metaverse: A New Era of Customer-Controlled Connectivity Enables Fresh Ecosystems and Monetisation Opportunities
When we understand the consumer mindset going into the metaverse era, we can better comprehend the wealth of opportunities that the metaverse will offer. Monetisation is the name of the game. McKinsey findings show that 79% of consumer users on the metaverse have made a purchase, and the metaverse has the potential to be worth $5 trillion by 2030.
Central to the metaverse’s enablement are telcos, which are integrating into this decentralised architecture to offer unprecedented connectivity and efficiency. Though they are not immune to security breaches, telcos can build on the inherent security of the 5G community to fortify the protection of data and therefore trust and assurance with its users.
What’s more, user-controlled systems like blockchain and non-fungible tokens (NFTs) create newfound opportunities for cross-brand collaborations and synergies. As both the providers of 5G – the foundation of the metaverse – and the most experienced parties when it comes to bundling, telcos can seize a natural and unique opportunity to build intuitive packages and partnerships in the metaverse realm. Right now, we’re seeing this play out with streaming service bundles, but we’ll see an extension of this B2B2X model as telcos serve as a single middleman for a bustling ecosystem of metaverse enablers and participants. By removing several layers of middlemen in the transaction process, users will benefit from speed, assurance of delivery, fewer fees, and less complexity.
As telcos take on a new role as techcos (technology companies) and embrace a role beyond connectivity at the heart of the puzzle, they will uncover new ways to do business with consumers, enterprises, and governmental bodies – not to mention partners like device OEMs, vendors, hyperscalers, decentralised banks (think crypto), and other metaverse enablers. In turn, telcos will reduce churn, more successfully monetise in-metaverse services, and create stronger customer communities with trust and secure decentralisation at the centre.
Nobody said the metaverse would be easy. With such a wide and diverse ecosystem of enablers tackling something completely new, they are bound to misstep. However, the most important factor that everyone must get right is trust – through security and user identity management. The very existence of the metaverse hinges on consumers’ desire for identity control, a hope to chart their own path in the digital realm and build community in an entirely new world. For the telecom industry, this represents a fresh opportunity to go beyond connectivity and step into the tech company role, building bridges for ecosystem partners and forging new architectures and entry points for metaverse participants.