TITLE:
Architecting the Metaverse: Blockchain and the Financial and Legal Regulatory Challenges of Virtual Real Estate
AUTHORS:
James Hutson, Gaurango Banerjee, Naresh Kshetri, Kurt Odenwald, Jeremiah Ratican
KEYWORDS:
Blockchain, Digital Real Estate, Digital Retail, Digital Twin, Digital Content, Finance, Metaverse
JOURNAL NAME:
Journal of Intelligent Learning Systems and Applications,
Vol.15 No.1,
February
7,
2023
ABSTRACT: There has been disagreement over the value of purchasing space in the metaverse, but many businesses including Nike, The Wendy’s Company, and McDonald’s have jumped in headfirst. While the metaverse land rush has been called an “illusion” given underdeveloped infrastructure, including inadequate software and servers, and the potential opportunities for economic and legal abuse, the “real estate of the future” shows no signs of slowing. While the current virtual space of the metaverse is worth $6.30 billion, that is expected to grow to $84.09 billion by the end of 2028. But the long-term legal and regulatory considerations of capitalizing on the investment, as well as the manner in which blockchain technology can secure users’ data and digital assets, has yet to be properly investigated. With the metaverse still in a conceptual phase, building a new 3D social environment capable of digital transactions will represent most of the initial investment in time in human capital. Digital twin technologies, already well-established in industry, will be ported to support the need to architect and furnish the new digital world. The return on and viability of investing in the “real estate of the future” raises questions fundamental to the success or failure of the enterprise. As such this paper proposes a novel framing of the issue and looks at the intersection where finance, technology, and law are converging to prevent another Dot-com bubble of the late 1990s in metaverse-based virtual real estate transactions. Furthermore, the paper will argue that these domains are technologically feasible, but the main challenges for commercial users remain in the legal and regulatory arenas. As has been the case with the emergence of online commerce, a legal assessment of the metaverse indicates that courts will look to traditional and established legal principles when addressing issues until the enactment of federal and/or state statutes and accompanying regulations. Lastly, whereas traditional regulation of real estate would involve property law, the current legal framing of ownership of metaverse assets is governed by contract law.