Since the hype surrounding the metaverse digital world in 2021 sent major cryptocurrencies, like Bitcoin (BTC) and Ethereum, to record highs, the crypto market has experienced significant fluctuations. However, the Covid-era momentum for Bitcoin has been challenging to recapture in 2023, partly due to tech companies scaling back their metaverse plans and global monetary tightening led by the Federal Reserve. Nevertheless, the Chief Executive of major crypto exchange Binance hints at the potential for the next crypto bull run.

Amid this backdrop, a leaked European Union (EU) draft document has surfaced, indicating the trading bloc’s interest in creating a system of “global governance” to harness the “unprecedented opportunities” presented by virtual worlds. The document recognizes the positive impact of virtual worlds on various societal areas, including healthcare, education, and culture. It also acknowledges the emergence of crypto-based decentralized autonomous organizations (DAOs) as new forms of global governance.

The EU is expected to encourage international cooperation on topics like technological standards, identity management, censorship, and surveillance to shape the next generation of the internet as an open, secure space, aligned with EU values and regulations.

By early 2024, the European Commission plans to establish “regulatory sandboxes” to test innovative projects. The document also highlights the risk of dominant “gatekeeper” companies blocking competition from smaller players. To address critical aspects of virtual worlds and the evolution to Web4, beyond existing internet governance institutions, the EU proposes a technical multi-stakeholder governance process.

Web4 represents the next phase of the internet, starting from email-based Web 1.0, progressing to the social media-centric Web 2.0, and now being challenged by the decentralized blockchain and crypto technology of Web3. Web4 envisions seamless integration between the physical and virtual realms.

Meta, known for major platforms like Facebook, Instagram, and WhatsApp, initially explored Web3 and cryptocurrencies. However, the company has now shifted its focus to Web4 development, particularly in the realm of virtual reality with its chief executive, Mark Zuckerberg, committing fully to the company’s virtual reality headset.

Apple, the company that disrupted the internet landscape with the iPhone launch 15 years ago, has also ventured into virtual worlds with its augmented reality headset slated for release next year.

Cryptocurrencies, including Bitcoin, Ethereum, Binance Coin, XRP, Cardano, Dogecoin, Solana, Tron, and Litecoin, have become intertwined with metaverse sentiment, with traders and investors speculating on which cryptocurrencies will shape the digital economy or create artificial scarcity in virtual worlds.

As the EU’s vision for virtual worlds unfolds, the convergence of crypto, metaverse, and Web4 evolution promises to reshape the internet landscape and drive innovations across various industries.

By Impact Lab