What is Metaverse?
An investment business paid USD 4 million for 2,000 acres of land in 2021. Normally, this would not make the news, but the land was virtual in this case. It only existed in The Sandbox, a metaverse platform. The company acquired the equivalent of 1,200 city blocks by purchasing 792 non-fungible tokens on the Ethereum blockchain.
But did it work? It turns out that legal ownership in the metaverse is more complicated than you may think.
NFTs provide actual ownership of digital goods in the metaverse for two reasons: decentralization and interoperability, according to the popular but legally problematic narrative among crypto enthusiasts. Some argue that because of these two technological advantages, tokens give irrefutable proof of ownership that may be used across a variety of metaverse apps, environments, and games. Because of this decentralization, some believe that you can purchase and sell virtual objects on the blockchain for whatever price you choose, without the consent of anyone or any corporation.
Despite these assertions, the legal status of virtual “ownership” is far more complex. Indeed, the current ownership of metaverse assets is governed by contract law rather than property law. As a property law, technology policy, and legal ownership expert, I believe that what many corporations call “ownership” in the metaverse is not the same as ownership in the real world and that consumers are being duped.
Buying and selling (ownership) in the metaverse
When you buy something in the metaverse, it’s recorded in a transaction on a blockchain, which is a decentralized digital ledger where transaction records can’t be removed or changed. You will be given ownership of an NFT, which is a unique string of bits, as a result of your purchase. The NFT is kept in a crypto wallet that only you have access to and that you “carry” around with you everywhere you go in the metaverse. Each NFT is associated with a virtual item.
It’s easy to believe that because your NFT is stored in your crypto wallet, no one can access your NFT-backed virtual residence, clothing, or magic wand without knowing your wallet’s private key. As a result, many individuals mistakenly believe that the NFT and the digital item are the same things. Even experts mix up NFTs and their digital counterparts, claiming that because NFTs are personal property, they allow you to possess digital things in the virtual world.
However, when you join the Metaverse Platform, you must first agree to the Platform’s Terms of Service, Terms of Service, or End User License Agreement. These are legally binding documents that define the rights and obligations of users and the Metaverse platform. Unfortunately, of course, few people read the Terms of Service. In one survey, only 1.7% of users found and asked for a “child attribution” clause embedded in a service document. Everyone else unknowingly handed out their first child to a fictitious online service provider.
Interoperability and portability define the characteristics of the Metaverse. In other words, you should be able to carry virtual non-real estate assets (avatars, digital art, wands) from one virtual world to another. However, today’s virtual worlds are not interconnected, and NFTs themselves have nothing called magic wands, for example. Currently, each platform needs to connect NFTs to its own digital assets.
Virtual Fine Print
According to the Terms of Service, it is unlikely that the NFT you purchased will be the same as the digital product you received. NFTs are on the blockchain. Metaverse lands, goods, and characters, on the other hand, reside on private servers running their own code with a secure and inaccessible database.
This means that all the visual and functional aspects of digital assets, the very properties that add value to them, are completely absent on the blockchain. These features are fully controlled and under unilateral control by the private Metaverse platform.
The Terms of Service also allow the Platform to legally remove or transfer an item by unlinking the digital asset from the original NFT identification code. Even if you own the NFT that came with your digital purchase, you will not ultimately own or own the digital asset itself. Instead, the platform grants access to digital assets for as long as desired.
For example, suppose one day you own a $ 200,000 digital painting for a Metaverse apartment, and the next day you are banned from the Metaverse platform and the painting originally stored in your own database is deleted. In fact, you’re owning an NFT on the blockchain using the original identification code, but it’s functionally useless and economically worthless.
This is certainly disastrous, but it’s not an exaggerated scenario. It may not be a wise business move for a platform company, but the law has nothing to prevent it. In accordance with the Terms of Service and Premium NFT Terms of Service for managing $ 4 million worth of virtual real estate purchased in the sandbox, Metaverse Company, like many other NFT and Metaverse platforms, has the right to terminate use at its sole discretion. I reserve it.
The ability to use and access purchased digital assets. If you “reasonably believe” that you have engaged in any of the platform’s prohibited activities that require a subjective judgment as to whether the sandbox has interfered with the “fun” of others on the platform, your User account and your account will be removed NFT images and descriptions from the platform. It may do so without notice or responsibility to you.
In fact, in these cases, the sandbox claims the right to immediately confiscate NFTs acquired as a result of prohibited activities. How to get a good grasp of blockchain-based NFTs is a technical mystery, but this raises further questions about the effectiveness of what are called virtual properties.
As if these clauses weren’t alarming enough, many metaverse platforms reserve the right to amend their terms of service at any time with little to no actual notice. This means that users would need to constantly refresh and reread the terms to ensure they do not engage in any recently banned behavior that could result in the deletion of their “purchased” assets or even their entire accounts.
Technology alone will not pave the way for true ownership of digital assets in the metaverse. NFTs cannot bypass the centralized control that metaverse platforms currently have and will continue to have under their contractual terms of service. Ultimately, legal changes and innovations are needed before the Metaverse matures as promised.
You can create an OKX account for Metaverse and digital assets purchases and have an experience of the digital world.