Friday 24 August 2018

VR Crypto Coin Speculation Rife as High Fidelity Starts Cash Out

The Virtual Technology landscape is evolving rapidly. Virtual reality is forecast to reach $30 Billion (US) by 2020 and major brands are lining up to do battle for dominance in the market. VR companies have raised multi-million dollar backing in venture funding but there are growing numbers of start-up's that are selling their own crypto currencies to help fund their development and this is attracting speculators hungry for profit. It is into this bubbling cryptocurrency market that High Fidelity have just announced they will cash out and exchange their crypto coins for U$ dollars.

According to the latest news from High Fidelity blog. Philip Rosedale wrote, "High Fidelity users can now convert High Fidelity Coin (HFC) into U.S. dollars. This opens the possibility for people to earn real money creating and selling virtual goods and services within High Fidelity. We see this as a vital step in the emergence of a thriving High Fidelity economy: the flywheel of innovation and creativity in any marketplace starts when creators have positive incentives to contribute to the growing body of content for sale. In time, we hope creators will be able to support themselves by selling items in the Marketplace, charging for the experiences they create, and offering useful in-world services to other creators and performers."

The currency is called HFC and is tied to the US dollar at a fixed rate (100 HFC = 1 USD). The High Fidelity company controls the rate to prevent inflation in an attempt to avoid speculators treating it as an investment like happened to Bitcoin. Rosedale thinks there is great value in a digital currency that has low speculation value.

Other virtual worlds like Decentraland have also issued a crypto coin "Mana" and then used it in a bidding auction selling 10-metre-by-10-metre plots of virtual land. Last August the two Argentinian co-founders, Esteban Ordano and Ari Meilich raised 24 million dollars in an initial coin offering (ICO) and sold out so fast that the vast majority of users waiting for the launch never got any of their orders filled. Apparently, over 28 million dollars change hands in the bidding war, making it what Decentraland calls the largest ever virtual land sale.


Decentraland uses the Ethereum blockchain to store information about land ownership and its content so they are using similar methods to High Fidelity. They are using Ethereum smart contracts to validate that modifications were made by the owner of the land and content will be distributed using the IPFS network, while data hashes are stored in the blockchain.

They base everything on the theory of land scarcity. "Without scarcity, most LAND would be left abandoned, which would hurt content discoverability and the user experience overall." they say on their web site. Incredibly, some 10m by 10m parcels of land actually sold for over $120,000! So the hype must work.

This does seem fantastic when you consider that land is so cheap in the Opensim Metaverse, one wonders why anyone would buy land for such a high price in Decentraland - land that doesn't even exist yet I might add! That's right, they still have to finish building the virtual platform. The founders have hit on the idea they can fund development by selling crypto coins so they have to push the scarcity factor to the speculators. But there it is, this is all about speculation and the hope that the land will rise in value at some point because there is only a limited amount. They are effectively trading futures. It is not a new idea though if anyone remembers people bidding up the price of virtual land to unheard-of prices when Bay City was launched in Second Life.

Talla visits Aech's Garage from the movie, Ready Player One in Sansar
Presently, I see very little "scarcity" (to use Decentraland thinking) in High Fidelity or Sansar to speculate on but perhaps there could be in Opensim grids if it wasn't for the fact there is so much empty land spread around. However, if some of the commercial grids started building in value-added proprietary features that are not found in the standard Opensim code which is so easy to set up that could all change, especially if it coinsided with a faster frame rate for VR. Kitely did introduce value-added features and code fixes to Opensim but negated any land scarcity value by giving land away free as an inducement, much like Sansar does. High Fidelity on the other hand is open source and running on private servers so, in theory, someone could set out to add value by coding in advanced features. It could then happen that users would gravitate to those grids with the best features and start buying up land if the grid owners decided to limit the amount of land available and put up prices like Linden Lab did in Second Life and auction it off or do deals with land Barons. It is an interesting thought and I wondered if crypto currency could play a part too so I asked Christopher Colosi, the former Linden Lab employee that worked on the Linden dollar exchange and the developer that issues the Gloebit universal tokens presently, if he saw any way to offer crypto currency in Opensim? He gave me a very detailed answer on how it could be done which I will save for another article but his short answer was "I think it is possible in theory, but very challenging in practice, and it would likely make commerce much more complex for the end user."
Talla visits High Fidelity too.

Other VR platforms see the advantage in adding feature value rather than land value as an inducement. For example Virtual Universe looks impressive, they are ahead in development and they are selling their own crypto currency. Ukledo, the company behind VU, say it is part game, part social network, and part social creation platform, blending elements of Minecraft, Second Life and Simcity with innovative artificial-intelligence technologies that drive engagement. It combines AI, VR, and blockchain to produce a virtual world that looks and feels real, with non-player characters such as animals reacting and interacting with the player in ways that feel intelligent and natural.

AI driven creatures in VU not too unlike Opensim has had for years!
Well VU is not exactly a decentralized social VR in the sense Decentraland claims to be but it is feature rich. Sansar is graphically ahead of High Fidelity but land has zero value and Linden Lab is the Master Controller which is blah for anyone that knows the company's history. If any platform was truly decentralized it has to be Opensim because anyone can set up their own grid and there is no central authority they are dependant on, or answerable to, like High Fidelity. And what about those NPC creatures in VU, haven't they existed in  Opensim for years? The drawback, of course, is the viewer which depends on third party cooperation to get features added that are needed in Opensim. But when you look at the graphic rendering in Niran's Black Dragon,  formerly known as Niran's Viewer, it shows Opensim could be seen in a much better light if only Niran were to support Opensim, or another developer ported some of its code. Opensim has plenty of features that make it impressive but a faster frame rate and the kind of improvements that could come with Halcyon ported code, PhysiX and a viewer like Black Dragon could make all the difference for it's longer term survival.

This is an example of Black Dragon and in the HiFi forums Niran says "All in all Second Life could do much much more, what Second Life is really lacking is someone skilled and willing enough to add to the graphics." This can also be said of Opensim.
As far as High Fidelity is concerned, Rosedale says in his blog article, "Enabling people to convert HFC to real tender is important to us. Our vision is for people to work in virtual worlds creating content, offering novel experiences, teaching lessons, staffing events, having meetings, being greeters, or a myriad of other tip-worthy tasks. And now they can." He goes on to add, "At the same time, our 3D import tools will open the door to bringing content which already exists into High Fidelity with the protection of marketplace certification."

Rosedale is ever the forward thinker so I have faith he can make it work but it remains to be seen if crypto will give High Fidelity the edge and help to propel the platform onto the world stage as a major player, something he never managed with second Life although it is still very profitable for Linden Lab, the Land Barons and the top content brands that hang in there.

It was late when Talla arrived back at her own Opensim place, the Principality of Steam. She took a mono tram from central station to her office at the Babel Tower. She was tired but the (NPC/AI) tram driver was chatty and kept her entertained during the short journey. It was good to be back.