NFT’s & The Metaverse

traverselegal - October 6, 2022 - Non-Fungible Tokens (NFTs), Uncategorized

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The Metaverse is coming and in many ways is already here. Virtual reality has made its way into thousands of homes and VR headsets ( Oculus Quest , HTC Vive & others) are common consoles for families and individuals to own. Stepping into a virtual world full of new opportunities and experiences is exciting. One highly anticipated opportunity in the Metaverse is the production and use of NFTs. NFTs are proving themselves to be a successful venture on several other platforms and gaming consoles. 

What are NFT’s? What is the Metaverse?

If you are new to NFTs or looking to expand your NFT use to the Metaverse, it is beneficial to understand what an NFT is and what the Metaverse is anticipated to be. 

NFTs

An NFT or “non-fungible token” is a digital asset that links ownership to unique digital items (songs, pictures, videos, tweets and items in online games or virtual worlds) that cannot be replicated or copied. The original creator of the NFT can still retain copyright and reproduction rights, just like any piece of physical artwork. An NFT shows proof of ownership for a digital object.

Metaverse

The Metaverse is young ,still growing and developing into something larger and all encompassing. The idea of the Metaverse, a virtual reality world that allows you to connect in real time with others from any location (with internet) in a 3d space has potential to be more than a recreational activity. Currently several large tech companies and game studios are developing their own versions of a Metaverse. 

We may be several years away from reaching a Metaverse that can be used for social events, educational training, business meetings( remote employees) and more. Now is the time to dive in and explore NFTs potential in the Metaverse. 

NFTS in the Metaverse

NFTS in the Metaverse are anticipated to function in a similar fashion to NFTs in video games. Almost anything can be turned into a non-fungible token. What becomes an NFT will largely be up to developers who are creating experiences (games, virtual concerts, exclusive events and locations to explore) within the Metaverse. Many of the same NFTs that are used in video games could also cross over into a virtual reality world including: player cosmetics (hairstyles, clothing), virtual land plots, virtual homes (decorative items within the home) and personal vehicles (items used for player traversal). The Metaverse could see unique character NFTs that could be used in any experience within the Metaverse. The options are endless, limited only to our creativity and imagination. 

Why Are NFTs Important for the Metaverse?

The perceived value of NFTs and the Metaverse is greatly determined by the relationship between these two digital assets. The Metaverse provides a space for digital creators and developers to display digital goods, NFTS. NFTs control the price of those digital goods with proof of ownership. Metaverse is the art studio and NFTs are the works of art, the owner of that art sets their price based on perceived value. 

NFTs are what will cultivate personal identity and community within the Metaverse. Social interactions are the backbone of the Metaverse; personal identity and community are vital to social engagements. 

Regulations on NFTs in the Metaverse

There are no set industry standards for NFTs within the Metaverse (or video games) at this time. We can anticipate that these virtual assets could be subject to traditional financial regulations. Any item with that much potential customization is at risk of breaching various federal and state regulations. While there is currently limited guidance on NFTs, in some circumstances NFTs can be considered securities by state and federal regulators. 

NFTs in the Metaverse Best Practices

  • Know what you own (limited use) when purchasing a digital asset
  • Set limitations on use when purchasing a digital asset
  • Keep detailed records of all NFT transactions
  • Be prepared to pay taxes on any money earned from buying and selling NFTs
  • Consult with an NFT lawyer to mitigate your liability and risk 

NFTs & Metaverse Effect on the Economy 

The global economy is expected to get a huge boost with the development of the Metaverse. This new virtual reality world is a reflection of the real world, that eliminates many of our own physical limitations. In addition to money making opportunities, education will advance with the expansion of new learning and training opportunities. Job training will be far more advanced in the virtual world than what we have here in our physical world, producing more highly skilled workers.  The Traverse Legal Team has you covered, whether here or in the Metaverse.

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