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Legal worries in the Metaverse as NFTs and Blockchains Don’t Protect Virtual Property

Turns out that legally, you may not actually own your digital assets…

Zoan Cornerstone

Just when we were getting used to the concepts of property and land ownership in the metaverse, things may not be as simple as we thought. Many believe non-fungible tokens offer undeniable proof of ownership. However, as of now, virtual land ownership falls under contract law rather than property law. According to João Marinotti, Professor of Law at Indiana University, meaning that ownership in the metaverse differs from ownership in the real world. 

“I believe that what many companies are calling “ownership” in the metaverse is not the same as ownership in the physical world, and consumers are at risk of being swindled,” says Marinotti in an article for The Conversation.

The Problem With Terms of Service Agreements

While NFT and blockchain technologies seem full proof on the surface, Marinotti points out that many metaverse platforms’ terms of service and end-user license agreements can allow companies to change how purchases work on a whim. And, of course, to join any metaverse, users must first sign on the electronic dotted line.

 “Unlike the blockchain itself, the terms of service for each metaverse platform are centralized and are under the complete control of a single company,” says Marinotti. “This is extremely problematic for legal ownership.”

Additionally, while many metaverses, such as HTC’s VIVERSE, boast plans for interoperability, currently, the various virtual worlds are not connected. Therefore, porting digital assets between metaverses is currently tricky.

Marinotti explains that while NFTs exist on a blockchain, digital assets such as land and virtual clothing only exist on the company’s private servers. “This means that all visual and functional aspects of digital assets – the very features that give them any value – are not on the blockchain at all,” says Marinotti, “These features are completely controlled by the private metaverse platforms and are subject to their unilateral control.”

A game of give and take

This means metaverse platforms can delete or give away users’ virtual goods by unlinking the content from its NFT identification codes, and do so all within the confines of the law. Essentially, purchasing an NFT doesn’t actually give users ownership over the digital asset. Rather the purchase means the platform will allow the user to access said digital asset for an undetermined amount of time. 

Many metaverses and NFT platforms have the right to block access to a digital purchase according to their terms of use. Additionally, if The Sandbox feels a user has interfered with another user’s ability to enjoy the platform, it reserves the right to suspend or even terminate the user’s account. Further, the platform reserves the right to delete a banned user’s NFTs.

Written By

Jack Brassell is a freelance journalist and aspiring novelist. Jack is a self-proclaimed nerd with a lifelong passion for storytelling. As an author, Jack writes mostly horror and young adult fantasy. Also an avid gamer, she works as the lead news editor at Hardcore Droid. When she isn't writing or playing games, she can often be found binge-watching Parks & Rec or The Office, proudly considering herself to be a cross between Leslie Knope and Pam Beasley.

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