In the Metaverse, ‘Crypto-states’ Will Compete With Corporations


Which type of metaverse would you choose to inhabit?

The war for the future of cyberspace has begun with Facebook’s rebranding to “Meta,” in which the social media behemoth creates and builds “the metaverse” and claims the next digital frontier.

What exactly is the “metaverse”?

Virtual environments that blur the lines between digital and physical space are referred to as “the metaverse.” The metaverse has been defined as “a massively scaled and interoperable network of real-time rendered 3D virtual worlds that can be experienced synchronously and persistently by an effectively unlimited number of users and with continuity of data, such as identity, history, entitlements, objects, communications, and payments” in more detail.

People plug in to do business and interact in commercially owned digital worlds, as described in Neil Stephenson’s 1992 novel “Snow Crash,” the book turned film “Ready Player One,” and the current Netflix film “Free Guy,” where a non-player character becomes a sentient artificial intelligence.

Matthew Ball, a metaverse investor, and writer predict that the metaverse might be worth up to $30 trillion in the next ten years. Shortly and for generations to come, how this impending digital reality is developed and regulated will influence societal outcomes. This article claims that the battle for the metaverse’s future is a hardware battle.

Visions that are centralized versus decentralized visions

Private versus public are the two major opposing visions for the metaverse. The privatized metaverse is a future in which large corporations, such as Facebook’s “Meta,” control how individuals “socialize, learn, collaborate, and play.” Virtual reality (headsets that project a digital world) and augmented reality are used to achieve this (such as glasses, that project digital things over the physical world).

Facebook owns and governs the private metaverse, and value is derived from users as customers. First, with Libra, Facebook attempted a blockchain and cryptocurrency experiment (rebranded to Diem). Now, crypto enthusiasts are once again enraged at Facebook for attempting to monopolize another Web 3.0 (participatory web) idea, as Facebook stated that their metaverse will use non-fungible tokens (NFTs) to represent and exchange digital assets.

An anonymous group of crypto community members recently released a “Declaration of the Interdependence of Cyberspace,” which builds on the principles of John Perry Barlow’s famous “Declaration of the Independence of Cyberspace,” which was published in 1996. “Your cookies, copyrights, and capital may temporarily centralize your authority, but they will not function in a world where power will soon be distributed,” the text warns Facebook. Crypto groups are adamant about jointly owning the metaverse by creating it.

The public metaverse, on the other hand, is a concept of many decentralized digital worlds that people can roam between and that is created and controlled by participants. The public metaverse is built on a decentralized, open, and interoperable technology framework. It incorporates several decentralized finances (DeFi) for payments and non-fungible tokens (NFTs) for digital in-world things with real value developed by the crypto community.

Furthermore, “decentralized autonomous organizations” (or DAOs) administer and own the public metaverse, where distributed, goal-aligned groups cooperatively own, govern, and labor in digital environments.

All the way to the hardware

Hardware is the metaverse’s most fundamental layer.

The metaverse can only be accessed and interacted with through tangible equipment. Through the Oculus virtual reality headset (which they bought for $1.6 billion) and a partnership with Rayban on augmented reality (AR) glasses, Facebook is seeking hardware interfaces to the metaverse.

Along with computing, networking, payment services, and interoperability standards, hardware is a key facilitator in making the metaverse a reality.

Hardware, on the other hand, is difficult. Andrew “Bunnie” Huang, a well-known open hardware hacker, claims that “hardware is all about supply chains,” with microchips posing a particular issue in securing reliable supply.

Microchips are the components that makeup computer hardware. Chips require a lot of skill and time to make. Building a factory costs billions of dollars, and there are just a few throughout the world. Taiwan Semiconductor Manufacturing Co. (TSMC) is the world’s largest and most advanced chip manufacturer, producing over half of the world’s made-to-order chip supply and valued at $550 billion. Mobile devices, “internet of things” hardware, refrigerators, vehicles, 5G telecommunications networks, and artificial intelligence are all powered by these little wafer-sized semiconductors.

COVID-19 caused substantial supply chain disruptions owing to lockdowns, shipping delays, and supply interruptions, resulting in cancellations in some industries like automotive and increased demand in others like consumer electronics. As a result, nation-states’ technical growth is sensitive to supply chain shortages. The fragility of the semiconductor supply chain has been shown as a result of these disruptions, resulting in rising geopolitical conflict between nation-states over microchip production.

Now, “crypto-states” seek to compete in the microchip sector to supply the open metaverse with the necessary hardware. “Network-states” and “cloud cities,” according to Balaji Srinivasan of A16z, are virtual political entities that can collaboratively negotiate, fund, develop, manage, and reproduce without relying on external resources. In their potential to bootstrap a digital economy, collaboratively bargain, and crowdfund territory in the real world, blockchain-based DAOs are just that.

Crypto cities and network-states are springing up all over the place, with CityDAO buying land in Wyoming, ConstitutionDAO wanting to buy and co-own an original copy of the United States Constitution, and Kong Land aiming to mass-produce open microchips.

Crypto-state Kong Land

The crypto-state Kong Land was created by serious open hardware hackers. Kong Land’s co-founders released the “ARX” whitepaper in 2018, after successfully exiting a physical door lock business in Silicon Valley. The whitepaper was the first to articulate the vision for trust through open silicon chip manufacturing. In 2019, open chips were put to the test in their first application: tangible “cryptocurrency” notes. The notes, dubbed “Kong Cash,” contain a microchip inserted in them that connects to a smart contract to verify and access cryptocurrency. The launch of NFT “citizen” tokens to develop the community for an open chip production and usage DAO has just concluded in “Kong Land.”

Kong Land is built on secure silicon and cryptographic key ownership, which connects to blockchain-based smart contracts to connect the real and digital worlds and usher in an open metaverse. The Kong Land chips can be used in any scenario. “At commencement, Kong Land will export crypto assets for initiatives like stablecoins, identities, and art,” according to the Kong Land credo. It would eventually strive to continue research into more secure types of tangible crypto assets if sufficient finances are available.”

The “citizens” who control this metaverse are those who buy in early, sign a “Kongstitution” social graph distribution, or work for tokens by the Kong “green card” policy plan. In response to Facebook’s plan for a centralized, corporate metaverse, Kong Land contributor Paul writes, “The infrastructure of registering real objects with virtual items shouldn’t be centralized.”

When it comes to hardware, cryptographically secured microchips allow people to keep their keys. Cameron, an early contributor to Kong Land, noted, “Through these chips, you have a method to engage without an arbitrator.” Individual ownership can be addressed at the hardware level, allowing these chips to be implanted in nearly anything for safe access to digital assets and lands.

Kong Land plans to accomplish so by addressing digital and physical asset ownership at the hardware level using “silicon locked contracts” (or SiLos). SiLos are secure element microchips that are cryptographically linked to a smart contract on a public blockchain. They are low-cost, durable, and secure. A cryptographic key pair is generated by each chip, and the public key is put to a Kong registry contract.

Anyone with a smartphone and near-field communication (NFC) reader can scan the microchip to validate the private key and gain access to the contract’s tokenized assets, confirm an identity, or even initiate real-world events. When a SiLo microchip is embedded in a tangible item, it becomes a crypto asset that can be confirmed on the blockchain and interacted with in real life.

In a blog post, the Kong Land “ambassador” claims, “While traditional tech businesses focus mostly on bringing users into virtual worlds or supplementing reality with digital experiences, we foresee a seamlessly connected metaverse that doesn’t rely solely on wearing headgear.”

With these secure element chips that match physical and digital commodities, the idea is to digitize real-world assets. NFTs allow for verified ownership of assets to be transferred between the physical and digital worlds, as well as true ownership of assets for interoperability between metaverses (they promise me that this last step is difficult).

“Metafactory,” a “digital factory” producing items that use Kong Land microchips, is one example. This enables clothing items to be scanned by a smartphone’s NFC chip reader, revealing an NFT and sharing metadata about the item.

People will be able to take NFTs and digital objects and convert them back to physical representations using chips that validate ownership of unique assets in the future, according to Kong.

Another example is “Kong card” passports, which are actual passports with an implanted chip that allows “citizens” of Kong Land to authenticate their citizenship at physical locations to gain entry to special events. The obstacle of several fake identities attacking a network (known as “Sybil attacks”), which might be a concern in governance voting, is solved by the probability of a unique identity with the passport.

“Like any other country, Kong Land has citizenship requirements, a distinct culture, a functioning government (a “DAO of DAOs”), and a thriving economy based on the creation and export of SiLo-manufactured crypto assets,” the project blog explains.

Kong Land’s goal is to become a “DAO of DAOs” with an orbit of “sub-DAOs” that incorporate microchips for whatever they can think of, thereby igniting a constellation of open metaverses. This crypto-state competes with Facebook’s vision of a closed metaverse, with the chip manufacturing hub at its core and Kong’s aim to export their secure element chips and eventually custom silicon research and development.


The growing use of blockchain-based DAOs as crypto-cities and states is showcasing new methods to connect the digital and real worlds. The conflict between an open, decentralized crypto metaverse and a closed, extractive, corporate metaverse boils down to how individuals will access digital worlds. Kong Land is a crypto-state that has the community, industrial capabilities, and skills to compete for an open metaverse.

Crypto projects that function like nations will compete with huge corporations and nation-states as new political players as they evolve. The emerging war for the future of the metaverse presents an important topic of an investigation into the risks and opportunities of cyber-civilization as the difference between physical and digital places continues to blur. To achieve its goal of “interdependence,” the crypto community will need to continue to promote the value of open technical design and democratic governance.

The Author

Samuel Adeshina

Samuel is a financial reporter whose interests include blockchain, market, business, insurance, and Crypto to provide relevant information to all interested.