In November 2021 a plot of virtual real estate in Decentraland’s metaverse has sold for a record $ 2.43 million in cryptocurrency – more than double the previous record for $ 913.000. The land was sold to NFT-based virtual real estate company Metaverse Group for 618,000 MANA, an Ethereum based token used as currency in Decentraland.
Quite bizarre, especially if we stop for a moment to think about what an operation like this would actually mean.
So, what buying “land” in the Metaverse mean? It is true that automation and immutability of blockchain-based transactions lends a high degree of certainty to NFT token transfers; but this does not mean that this is matched by an equally high degree of certainty in the rights that are conferred on a user who purchases such a token.
The question to ask, then, before buying an NFT corresponding to a so-called parcel of LAND on Sandbox or Decentraland, is, basically, what are we buying, what can we actually do with our LAND, and what risks are we running that we might irreparably lose it. The main elements to keep in mind are two. The first is that there is no law governing “real estate ownership” in the Metaverse and the second one that, for this reason, the fate of the virtual plot of land depends essentially on contractual rules that are set (basically at the discretion) by a more or less centralized entity.
In order to access Decentraland or any other virtual world management platform, you must agree to the Terms and Conditions established by it. In the case of Decentraland, the T&Cs state that “All title and ownership rights over each piece of LAND lies with its owner. Each LAND owner decides the Content to be included in the LAND and may impose its own terms and conditions and policies“; which, of course, is a good start: at least it is clearly written that the LAND is the subject of a traditionally understood property right.
At the same time they provide that the platform entity “may decide to discontinue or suspend all or part of the Site and Tools and User’s access to the Site and Tools immediately, without prior notice or liability” and that ” In the event of your breach of these Terms or any suspected fraudulent, abusive, or illegal activity, the DAO and/or the Foundation may, without limitation, suspend your Account, block any infringing Content and adopt any other action deemed necessary to prevent future breaches, in addition to any other remedies the DAO and/or the Foundation and/or any User may have at law or in equity“.
From this kind of provisions we get immediately the sense of what buying “real estate” in the Metaverse implies, something that in real life doesn’t even seem possible: basically, it is as if it were written in the Constitution of a state that the state itself can decide to prevent, literally overnight, its own citizens from entering its territory, resulting in the immediate loss of everything they left there, including real estate.
Certainly what has just been envisaged is not desirable, to put it mildly, although we have to say that it shouldn’t be taken for granted that such clauses can be held valid in court. For example, an analogy can be made with those cases where, notwithstanding the presence of similar clauses, large platforms such as social networks have been held liable for the unjustified deletion of accounts, resulting in the loss of data, followers and the possibility of earnings or, in any case, the production of a financial and reputational damage.
