According to the theory, we are encoded at the edge of a black hole in a much larger universe.

Black holes are strange objects which (though we have
learned plenty about them) confound our understanding of physics. In an attempt
to reconcile some of the paradoxes discovered when studying them, physicists
have proposed stranger hypotheses still, with one suggesting that they imply we
live in a holographic universe, where all of what we see and perceive is in
fact encoded at our universe's boundary, a 3D (plus time) representation of a
two-dimensional (plus time) universe. Further than that, some have suggested
that it could imply that our universe is within a black hole of a larger
universe.

Black holes, formed when massive stars collapse, are areas
of space where gravity is so strong that not even light can escape. Their
existence posed a problem when studying them in terms of thermodynamics. The
final state of a black hole, when it reaches equilibrium, is dependent only on
three parameters: its mass, angular momentum, and electric charge.

"In classical general relativity, a black hole prevents
any particle or form of radiation from escaping from its cosmic prison,"
French astrophysicist Jean-Pierre Luminet explains in a 2016 review. "For
an external observer, when a material body crosses an event horizon all
knowledge of its material properties is lost. Only the new values of M [mass],
J [angular momentum], and Q [electric charge] remain. As a result, a black hole
swallows an enormous amount of information."

Sounds simple doesn't it, or at least as simple as physics
can get? But if a black hole has mass (and they have a lot of it) then they
should have a temperature according to the first law of thermodynamics, and in
line with the second law of thermodynamics, they should radiate heat. Stephen
Hawking showed that black holes should emit radiation – now termed Hawking
radiation – formed at a black hole's boundary.

"Hawking then pointed to a paradox. If a black hole can
evaporate, a portion of the information it contains is lost forever,"
Luminet continued. "The information contained in thermal radiation emitted
by a black hole is degraded; it does not recapitulate information about matter
previously swallowed by the black hole. The irretrievable loss of information
conflicts with one of the basic postulates of quantum mechanics. According to
the SchrÃ¶dinger equation, physical systems that change over time cannot create
or destroy information, a property known as unitarity."

This is known as the black hole information paradox, and –
given how it appears to violate our current understanding of the universe – it
has been the subject of a lot of study and debate.

One proposed solution, of sorts, was found by looking at the
thermodynamics of black holes in the context of string theory. Gerard ’t Hooft
showed that the total degrees of freedom contained inside a black hole is
defined in proportion to the surface area of its horizon, rather than its
volume. This allows for looking at the entropy of a black hole.

"From the point of view of information, each bit in the
form of a 0 or a 1 corresponds to four Planck areas, which allows one to find
the Bekenstein–Hawking formula for entropy," Luminet continues. "For
an external observer, information about the entropy of the black hole, once
borne by the three-dimensional structure of the objects that have crossed the
event horizon, seems lost. But on this view, the information is encoded on the
two-dimensional surface of a black hole, like a hologram. Therefore, ’t Hooft
concluded, the information swallowed by a black hole could be completely
restored during the process of quantum evaporation."

While this is reassuring in one way (black holes do not
violate the second law of thermodynamics, yay) it lead to a pretty out there
idea that the physics of a three-dimensional volume can be described at its
two-dimensional boundary.

While this is not true of space outside of a black hole,
there are proposals that the universe itself could be a black hole, where all
processes take place at the boundary and what we observe emerges from these
interactions. It's a wild idea, with even wilder tag-ons. For instance, it has
been suggested that gravity could arise as an emergent force from entanglement
entropy at the boundary.

The theory is not the most compelling idea out there to
explain our universe, with standard physics still describing best the universe
that we see. But there are reasons why people take it seriously.

For one thing, for the model to work, the universe's Hubble
Radius – the radius of our observable universe – must be the same as its
Schwarzschild radius, or the size of the black hole that would be created if
all the matter within it was condensed to a single point. These two figures
are, in fact, surprisingly close, though this can also be put down to a cosmic
coincidence.

There are other reasons, such as this chart of everything,
which suggests that we could be living within a black hole of a larger
universe. But until such a theory comes up with compelling evidence and
predictions beyond our current understanding of physics, we'd suggest not to
plunge into an existential crisis just yet, whether you are a 3D object in
conventional space-time or a holographic projection from a 2D boundary inside a
larger universe.