As companies like Meta (formerly Facebook), Google, HTC and others make significant strides in the field of virtual reality (VR), science fiction is becoming a little less fiction. The types of virtual experiences popularized by blockbusters including Tron, The Matrix and Ready Player One truly seem close to being on a store shelf for anyone to purchase and enjoy. Further, what technology has made possible, the circumstances of the COVID-19 pandemic have made commonplace. Virtual interactions with coworkers, friends and family are the new normal. Virtual entertainment experiences, such as concerts, have become a viable alternative to the real thing.
Is Virtual Reality the New Reality?
While simple VR video games like Beat Saber have been available for some time, other virtual experiences are working to take things to the next level. The Sandbox Game and Decentraland are two open-source initiatives that seek to create an open world where users can live out an entire virtual life. You can shop for clothing, attend a concert, purchase a yacht or art and even rent apartments or buy homes.
Real Estate Development in the Virtual World
Recent interest in the acquisition of virtual property in these VR realms has been stunning. On Nov. 30, 2021, Republic Realm, which styles itself as one of the most active investors in and developers of the metaverse real estate ecosystem, set a record by paying $4.3 million for land in the virtual world Sandbox. This breaks the previous record held by the Canadian investment firm Tokens.com Corp., which paid $2.5 million for land in Decentraland’s Fashion District.
These firms can now proceed to do virtually what has traditionally been a hallmark of the real world—real estate development. Virtual land can be developed, subdivided, sold and rented. Likewise, these firms take the real-world risk of their investment depreciating should user engagement drop in the future.
The Real-World Value of Virtual Property
As the virtual world grows, very real-world questions have begun to arise around who owns the virtual property, how someone can prove it belongs to them, who it was purchased from, what value (if any) the virtual property has in the real world, and more.
While acquisitions like those by Republic Realm show that virtual property does indeed have some real-world value, the answer to many other questions lies in blockchain technology. Most notable for making cryptocurrency such as Bitcoin possible, a blockchain is, at its core, a decentralized digital ledger book. The broad distribution and self-reinforcing nature of a blockchain make it difficult to fool or modify the data contained within it. These attributes make it a perfect virtual stand-in for the local County Recorder’s office.
Virtual World Gives Rise to Legal Uncertainties
By using blockchain technology, experiences like Decentraland allow users to buy, possess, develop, rent and sell virtual property in a strikingly similar way to how it’s done in the real world. Such stunning advancement in the sophistication of virtual experiences will certainly give rise to new frontiers in the law. Who will arbitrate virtual property disputes? Do real-world property laws apply in virtual realms?
As we step into this new frontier, perhaps other aspects of real-life will be incorporated into the virtual world. Perhaps even virtual courtrooms and legislatures are on their way.