METAVERSE LAW : Who owns the virtual property and real estate


Author : Debolina Ghosal, Brainware University, Kolkata


ABSTRACT

This topic portraits the rise of metaverse which outlines the surrounding complexities  of vertual properties and NFT – based real estate. The metaverse refers to the convergence of physical and virtual space accessed through computers and enabled by immersive technologies such as virtual reality. The digital assets and virtual property deffer from the traditional and physical real estate and generally  defines the ownership in digital market. Metaverse is governed by blockchain technology, smart contracts and platform specific terms of service rather than established property law which question the ownership of the digital market of real estate, while  NFT provide proof of ownership but doesn’t have the control over the underlying digital assets, leads potential conflicts between buyers and platform operators. The future of metacerse law is depend on the further development of regulatory framework concerning the digital property rights, and legal clarity for virtual transaction.


INTRODUCTION

The developing and evolving culture of technologies, AI, and digital platforms has given arise to metaverse  world . This era of digital evolution brings a thought of modernisation over the traditional ownership of real estate and focus mainly on the digital practice of it. This generation have a hype of owning virtual properties regardless of knowing the consequences which may involve the risk and challenges of fraudulence for which legally no legal rights are available , and doesn’t provide rights under traditional property law.


NFT ( NON-FUNGIBLE TOKEN) :
A Non-Fungible Token (NFT) is a special digital asset that uses blockchain technology to signify ownership of a particular thing, such as collectibles, music, films, artwork, or virtual real estate. NFTs have different values and cannot be traded one for another, unlike cryptocurrencies, such as Bitcoin or Ethereum, which are fungible.


METAVERSE AND IT’S FUTURE MARKET SHARE :
Evaluation of the Market and Forecasts The market for the metaverse is expanding significantly, and both big IT businesses and entrepreneurs are investing heavily in it. The market in 2023 had a valuation between $60 and $80 billion. According to projections, the metaverse may be worth between $800 billion and $1.5 trillion by 2030. Improvements in VR headsets, faster internet, and blockchain technology, as well as increased user and investor interest, are driving this rapid expansion. Principal Forces Behind Metaverse Development Numerous sectors are supporting the expansion of the metaverse, each making a distinct contribution, Platforms like Decentraland and The Sandbox, as well as games like Roblox and Fortnite, are already providing metaverse-type experiences where users can not only play but also own real estate.


CONCERNED CHALLENGES AND FUTURE OUTLOOK:
Despite its rapid growth, the metaverse still faces several challenges:
Regulation: Governments are unsure about how to regulate virtual spaces, digital goods, and NFTs.

Cybersecurity: As more people engage in virtual transactions, the risk of hacking, scams, and fraud increases.

Technology Barriers: High costs of advanced VR headsets and fast internet connections may limit widespread adoption, especially in developing regions.

However, as technology advances, these challenges may be addressed, and the metaverse could redefine how we interact socially, do business, and engage with digital content.

DEPENDENCE OF SEVERAL LEGAL FACTORS :
Ownership of NFTs and smart contracts In the metaverse :  we usually acquire an NFT (Non-Fungible Token) that symbolizes ownership when you buy virtual land or property. Legal rights are confirmed by the blockchain, which records this ownership. However, the ownership is governed by the terms of service of the platform, which means the servers and environment are still under the jurisdiction of the corporation that runs the metaverse.

Control of the Platform and Terms of Service: Although  the owner of the NFT, platform such as Roblox, Meta’s Horizon Worlds, etc has final say over the virtual environment. Platform regulations allow them to change, limit, or even remove virtual characteristics. virtual land may lose all of its value even if the NFT is still present on the blockchain if a platform goes down.

Legal Recognition and Practical Laws: The majority of nations lack explicit laws pertaining to virtual property. NFTs are seen as license agreements rather than true ownership by certain courts, while others have viewed them as personal property (similar to digital art or collectibles). Contract issues concerning virtual land, inheritance, and taxes are all still developing legal topics.

Physical versus Digital Ownership : Metaverse land is not protected by government. property rights like real estate is only present for  legal practice. In blockchain-based metaverses, ownership is distributed, but in corporately operated virtual worlds (like Meta and Fortnite), it is centralized.

MITIGATION OF POTENTIAL RISK:

Protection under the Law and Due Diligence Examine the platform’s terms to see if there is actually “ownership” of the asset or if there is any license.

More ownership rights are offered by platforms such as Decentraland and The Sandbox than by centralized platforms.

Make that the NFT is correctly coded and free of hidden hazards, including revocable ownership, by checking the smart contracts.

Recognize Jurisdiction Issues: Because metaverse assets are not governed by conventional legal systems, it is uncertain how courts will resolve conflicts.

Examine contracts that specify jurisdiction in the event of a dispute.

CONCLUSION

The metaverse is a rapidly expanding digital universe that combines virtual reality (VR), augmented reality (AR), blockchain technology, and artificial intelligence (AI) to create immersive online experiences. It allows users to interact, socialize, and transact in digital environments, and is becoming a key component of various industries, including gaming, real estate, retail, and business. The main drivers of this growth include the increasing popularity of virtual worlds like Decentraland, Roblox, and The Sandbox, where users buy, sell, and develop virtual land as NFTs. Additionally, companies in the retail sector, such as Nike and Gucci, are selling digital products in virtual spaces, while big corporations like Meta and Microsoft are creating virtual offices and collaboration tools. NFTs and blockchain technology are crucial in establishing ownership and driving economic activity within these virtual realms, particularly in the buying and selling of virtual land and digital assets. While the metaverse presents exciting opportunities for innovation, it also faces challenges such as regulatory uncertainty, cybersecurity concerns,  As technology advances and these issues are addressed, the metaverse is expected to continue reshaping how we interact socially, conduct business, and engage with digital content.

FAQS

How are NFTs related to the Metaverse?
NFTs allow true ownership of digital assets in the Metaverse, including:
Virtual land & property
Digital avatars & wearables
Gaming assets
Art & collectibles
Virtual event tickets

What are the most popular Metaverse platforms using NFTs?
Some of the leading Metaverse platforms include:
Decentraland – Virtual real estate & gaming
The Sandbox – Play-to-earn gaming & land ownership
Otherside – Bored Ape Yacht Club’s NFT Metaverse
Horizon Worlds – Meta’s social Metaverse

Can I earn money from NFTs in the Metaverse?
Yes! You can earn money by:
Selling or renting virtual land
Creating & selling avatar wearables
Hosting paid events or concerts
Selling NFT art & collectibles
Playing play-to-earn (P2E) games


REFERENCE


https://www.wolftheiss.com/insights/the-metaverse-ownership-of-virtual-properties/

https://www.iiprd.com/understanding-metaverse-and-law-challenges-and-solutions/

https://ceelegalmatters.com/editorial-policy/7630-partners/onur-kucuk/22329-owning-real-estate-in-metaverse

Leave a Reply

Your email address will not be published. Required fields are marked *