How to Prevent the Metaverse From Becoming a Nightmare

Covering everything from zero-knowledge proofs to interplanetary file storage.

AccessTimeIconMay 26, 2022 at 7:36 p.m. UTC
Updated Sep 19, 2023 at 4:04 p.m. UTC
AccessTimeIconMay 26, 2022 at 7:36 p.m. UTCUpdated Sep 19, 2023 at 4:04 p.m. UTCLayer 2
AccessTimeIconMay 26, 2022 at 7:36 p.m. UTCUpdated Sep 19, 2023 at 4:04 p.m. UTCLayer 2

Editor's note: As part of CoinDesk’s “Metaverse Week,” we asked a number of engineers, executives and experts to weigh in on the substantial issues raised by the crypto industry. This roundtable covers how to prevent the metaverse from becoming a nightmare, and touches on privacy-preserving layer 1s, decentralized data management and the necessity for consumer choice.

Bitcoin’s world

The word “metaverse” was coined by Neal Stephenson in his sci-fi classic “Snow Crash,” which describes a virtual world owned by corporations, where end users are treated as citizens in a dystopian corporate dictatorship. While the metaverse holds great promise, it clearly has the potential to become a dystopian nightmare where big tech has control over our data, experiences and privacy – which they have violated time and time again.

The good news is that there is a different model, one built on Bitcoin (the network) and using bitcoin (the native currency, BTC). By embedding the ethos of decentralized ledger technology – and the independence, privacy and freedom it fosters – the metaverse should instead empower humanity. It shouldn’t be hard to choose freedom (over your money, your data and your value) and a closed system with centralized currencies controlled by big tech. However, the philosophical differences between these two competing ideologies will intensify as projects develop.

– Will Reeves, CEO and co-founder of Fold

Content addressing

If all the virtual land, avatars, wearables and other forms of digital collectibles in the metaverse are just references to a file stored in a proprietary server, we’re only expanding the errors of Web 2 into Web 3. Even worse, in terms of data extraction, these digital objects could even give corporations and the government more information about us than Web 2 platforms ever did.

Our lives in the metaverse could produce new data points for our identity, economic behaviors, value judgments and more layers of social interaction. That valuable NFT (non-fungible token) art piece that could hang on the walls of a private room in the metaverse wouldn’t look as good next to the same pesky ads that are fed into our social media feeds.

Switching to peer-to-peer systems for decentralized storage and building the metaverse on this stack would ensure more privacy as well as true user ownership of the objects that produce this data. They would be fully owned and operated at all times by the users who upload it, with no disclosures to third parties.

The metaverse could also benefit from capabilities such as content addressability and persistent storage that are native to the existing Web 3 storage infrastructure. All the information that renders beautiful digital landscapes, lavish 3D homes and personalized avatars would be stored redundantly in nodes across the world and retrievable at any time regardless of location. This would make metaverse worlds censorship-resistant as well.

If we want to prevent the metaverse from facing the problems imagined in “Snow Crash,” our digital property and data has to be privately distributed among peers. It shouldn’t end up in servers owned by a real-life L. Bob Rife figure.

– HQ Han, ecosystem growth lead for Protocol Labs

4 imperatives

The metaverse has the potential to become one of the most creatively empowering digital innovations in history. On the other hand, it could also evolve into surveillance capitalism at an unprecedented scale. Will we favor community-led, rich, authentic and fragmented decentralized networks? Or fall for simpler, user-friendly and tightly coordinated closed platforms?

From a philosophical point of view, the correct choice seems obvious. From a technical standpoint, things are more complicated. The trajectory of the metaverse will depend on the data architecture choices we make as users and builders. The path in favor of a more equitable metaverse is being charted today, built upon a few key imperatives:

  • Decentralization: Credible neutrality and provable persistence are all prerequisites to make the metaverse a welcoming place.
  • Standardization: In order for fragmented worlds and assets to express their full value, establishing standards early on is paramount.
  • Access: Usability and affordability are two elements preventing Web 3-based metaverse adoption. In order for decentralized ecosystems to thrive, many barriers to access need to be lifted.
  • Agency: The metaverse needs to be built with user agency in mind. This is a topic involving design, technical and behavioral challenges.

Self-sovereign identity and protocols like IPFS represent an unavoidable piece of the toolkit required to build a welcoming metaverse.

– Justine Massicotte, chief technology officer and co-founder of Lighthouse Labs

Self-sovereign data management

Self-sovereign identity will play a crucial role in the metaverse. Being able to manage our own data and identity will give us more control over who has access to our information and what they are allowed to do with it. We believe data sharing should be off by default in the metaverse, with users opting in only to experiences of interest. Being able to approve instances of data sharing independently will provide users with more granular control over information they share. The ideal Web 3 identity component will also be programmable, composable and dynamic in being able to reveal only data that is needed at any given time.

The emergence of the metaverse with decentralized, self-sovereign identity as a standard will change everything about how we interact with digital platforms, and how those platforms are able to interact with our data. We will have more control over how we are represented, who knows what about us as well as secure, effortless access to everything the metaverse has to offer.

– Chris Hart, CEO of Civic


The metaverse has become a term associated with the future of the internet, evoking imagery of an interconnected web of virtual worlds, each guided by their own aesthetic, capabilities and set of rules. The "set of rules" component is important. None of us wants to participate in a digital universe where our data and identity are vulnerable to exploitation, and this is a very real fear given the history of data breaches, identity thefts, ransomware attacks, stolen funds and surveillance. This is why private digital identity is so key to the metaverse's success and long-term viability.

The best method we have for making private digital ID a reality is by leveraging zero-knowledge proofs to give users control over their digital ID. If we continue to give this responsibility to the applications themselves, as we have done in Web 2, our data will remain vulnerable to hacks, thefts and fraud. By granting users control over their data via zero-knowledge proof-based protocols and applications, users are empowered with the tools they need to share only as much information as is necessary to access a good or service without rendering themselves vulnerable to data exploitation.

– Kurt Hemecker, chief operating officer of the Mina Foundation

Negative trends

The more data that is online, the more vulnerable we are to data hacks and phishing scams. COVID-19 proved this by spurring a mass data migration to online as companies around the globe transitioned to remote work, which led to an enormous uptick in cyber attacks. Perhaps most alarming is how the health care industry was impacted. As more of our lives transition into the metaverse – including medicine and banking – expect these negative trends to replicate and multiply. Such vulnerability to data exploitation will be the reality unless we implement solutions to protect sensitive user information. The only way to achieve this is to ensure data is stored in a decentralized manner, eliminating single points of failure that are inherent to centralized cloud storage systems and giving users local control over their information.

– Anthem Blanchard, CEO of HeraSoft

Private layer 1s

Given the abundance of user data generated within metaverse platforms, this online ecosystem has the potential to become the most valuable, diverse source of consumer data in the world. But as more people spend more time in the metaverse their data will increasingly be gathered in the background or inferred through their online activity, rather than manually input into a website or other observable query.

That’s why it isn’t enough for user data management to be relegated to a decentralized network of anonymous node operators. The safest and most effective approach is to integrate next-generation privacy tools such as zero-knowledge proofs into everyday metaverse interactions so that users can verify their identities and execute transactions without disclosing any of their personal information to anyone – not even the other parties they’re interacting with.

Many crypto exploits occur at the intersection between different blockchain networks, or on layer 1 networks that attempt to retroactively apply privacy protocols atop their base architecture. As the metaverse balloons in size and integrates across different projects, it will be increasingly crucial to built atop a privacy-enhancing L1 network that have user protections embedded in its core.

– Antoni Zolciak, co-founder of Aleph Zero

More from Metaverse Week:

Verifiable, immutable ownership of digital goods and currency will be an essential component of the metaverse.

Executives from Adidas, Budweiser, Clinique, NARS Cosmetics and other big consumer brands explain why the metaverse is “seismic” for their businesses.

The future possibilities of the metaverse are presumably limitless, but is there anything you can do in the metaverse right now?

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Daniel Kuhn

Daniel Kuhn is a deputy managing editor for Consensus Magazine. He owns minor amounts of BTC and ETH.