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Blockchain Won’t Save The Metaverse

Blockchain Won’t Save The Metaverse
Blockchain secures digital transactions, but it isn’t perfect. Image: Adobe Stock [Licensed]
  • Blockchain is widely touted as a mechanism for securing digital property.
  • Multiple problems exist for driving metaverse transactions.
  • A new review highlights the challenges, some of which may be insurmountable.

Blockchain has been touted as a potential solution to securing users’ digital content and data due to its decentralization, immutability, and transparency. However, there are many significant issues with relying on blockchain to solve security in the metaverse. A multinational review of blockchain technology for the metaverse [1] highlights these challenges, including scalability, data interoperability, and the proliferation of illegal activities.

Scalability Issues

An enormous amount of data will be generated in the metaverse, which poses logistic challenges to existing data acquisition systems. Duplicate and inaccurate data will likely be collected, affecting data quality and authenticity. While these constraints can largely be overcome using blockchain, processing can be slow because of the complexity and distributed nature of the system. Blockchains are only capable of processing a limited number of transactions, and “blockchain bloat” occurs as more and more data is added to the chain; This slows processing times, with some transactions taking days to complete. The likely result will be higher transaction fees and network overloads, leading to limitations on the number of users allowed into the network.


The metaverse will undoubtedly produce a massive amount of data, putting significant strain on the real-world’s storage capabilities. The main problem is that data is copied as it travels along the blockchain; added data must be mirrored on all participating nodes through the entire chain. This increases the requirement for more storage.  Currently, cloud computing doesn’t have the networking capability to address the storage issue. Edge computing is one possible solution, where computing is performed close to the original data source. However, edge computing is far from a perfect option because of its limited capacity, potential for lost connectivity, and the insecurity of IoT devices.

Data Interoperability

Using an application in the metaverse will rely on interconnected virtual worlds. Cross-blockchain technology will allow the exchange of virtual possessions and payments, but blockchains in different worlds don’t share a common language. Different platforms also approach consensus processes, smart contracts, and transaction architecture in different ways, severely limiting interoperability of these systems.

Data Privacy Preservation

While issues surrounding data privacy in Web 2.0 are well known, we don’t yet know if those issues will trickle over to Web 3.0 or what new issues have yet to emerge. Blockchain technology provides users with more control over their data, with audit trails ensuring complete and consistent transactions. However, blockchain doesn’t guarantee data privacy for two main reasons:

  • Human error, like losing a private key, could compromise data security.
  • Third-party applications, which tend to have inadequate security, would be a target for hackers.  

 The proliferation of illegal transactions

The fact that blockchain is extremely secure comes with a significant downside: it makes it difficult to track down illegal transactions.  Law-breaking smart contracts are cloaked in anonymity. A recent report from blockchain data platform Chainalysis [2], states that cybercrime, money laundering and terrorist financing made up 0.15% of crypto transactions conducted in 2021. While this may seem like a small percentage, consider that the total transaction volume in 2021 totaled $15.8 trillion. That means 23.7 billion dollars of 2021 blockchain transactions revolved around illegal activities – and we’re still in the early stages of metaverse development.

The Environment

While the report didn’t touch specifically on the environmental impacts of blockchain, the authors did note that if the metaverse is to move forward, existing systems for storing and sharing information will have to be changed or replaced completely. As well as the logistical challenges with such an enormous task, new infrastructure adds another layer to blockchain technology’s environmental issues.  We already know that the inefficient way blockchains are secured comes at an enormous environmental cost. We probably shouldn’t build an entirely new planetary computing infrastructure to solve a problem that will benefit a small fraction of the world’s population. Plus, when you add in the fact that the precious metals needed in the computer manufacturing process are already in short supply, a blockchain-enabled virtual utopia may not be a practical reality.


[1] Blockchain for the Metaverse: A Review

[2] Crypto Crime Trends for 2022