The metaverse consists of plots of land in virtual arenas. Virtual real estate is becoming increasingly popular as people opt to buy parcels of land in the metaverse. Popular metaverse names include Decentraland, Sandbox and Somnium.

Given the upward trend, it won’t be surprising if discussions on virtual real estate become as prominent as those on real property are today. A notable fact about virtual real estate is that people can buy parcels of virtual land using cryptocurrency.

Cryptocurrency is a form of digital currency that is not maintained by any government, i.e., it is maintained by a decentralised system. Just like people consider real property to be an investment, even the metaverse has come to be recognised as an investment platform.

Metaverse allows online users to use this space to socialise and engage with others. They can also play games using the digital space. Moreover, this is a creative and unique way for new businesses to advertise their services. They can use their virtual properties to provide their customers with exceptional experiences.

Interestingly, much like real property, the costs for virtual estate or property can vary depending on factors such as location and popularity of an area in the metaverse.

Moreover, metaverse will keep growing as there will be more and more digital plots as the years go by. With regard to metaverse, we can expect a trend and frenzy quite like the one we have witnessed with cryptocurrency over the past few years.

Legal ownership of virtual real estate

Buying virtual real estate is in essence buying a non-fungible token i.e., NFT. Non-fungible tokens are associated with a digital asset on blockchains and cryptocurrency. Cryptocurrency includes Bitcoin, Ethereum and Tether among other popular names. For instance, the metaverse Decentraland is built on the Ethereum blockchain.

Notably, according to an article published on The Conversation, the legal ownership of assets in the metaverse is not governed by property law, but rather by contracts law.

It can actually raise many legal issues related to data and privacy, and intellectual property. For example, it is not possible to easily determine the identity of a creator of a certain work in the metaverse.

Therefore, verification of ownership will be extremely challenging. Naturally then, it will also be difficult to prove infringement of trademark if it ever occurs. Moreover, it will be difficult to make claims against this infringement.

Risks of Virtual Property

One of the major risks of purchasing virtual property is currency conversion. Furthermore, much like the real estate market, the virtual estate and property market is very volatile. This means that it is quite possible for the property market to “crash.” What happens then? Can people really lose much?

Of course. After all, cryptocurrency is money. Purchasers are using money to buy this virtual property. It is quite possible for some of them to lose a substantial amount of money.

Moreover, although it is becoming increasingly popular, not everyone still knows the ins and outs of the metaverse and the virtual property market. We as a society need to define boundaries when dealing with such advanced forms of digital technology. Importantly, we need to create boundaries so that we are not affected psychologically.

For example, our virtual selves can be manipulated, indirectly harming our real selves. There are real world implications if things go out of control when dealing with virtual property. As we know, laws make it possible to regulate real property. The lack of these laws when dealing with virtual property is concerning. We need to explore the metaverse further before making any significant monetary investments and commitments.

Lastly, many analysts and experts themselves warn and advise people to use metaverse as a source of entertainment, and not as a source of investment. Therefore, while it is interesting to see how the metaverse booms in the years to come, it is also prudent to exercise caution when dealing with virtual real estate.

Author bio:

John Bui is the Principal Solicitor of JB Solicitors – a law firm based in Sydney, Australia. John has extensive knowledge in the areas of family law and commercial litigation.