Legal | Tax | Compliance
Legal | Tax | Compliance
What’s the MMEtaverse? Metaverse combines digital economy, gaming, blockchain, decentralisation and many other topics we from MME like the most. MMEtaverse is a serie of articles published in the coming months addressing Metaverse and legal challenges involved in Metaverse.
Imagine the real world, just online. This is what metaverse is about. The concept of the Metaverse refers to an online hyper-realistic digital virtual world that combines augmented reality (AR), virtual reality (VR), 3D holographic avatars, gaming, digital and remote working, digital economy and other forms of digital communication. In the metaverse, users interact with digital content and other users within a single digital environment, rather than being separated into different, isolated areas controlled by individual providers. The term Metaverse does not refer to any specific type of technology or any specific digital world but rather to a new way of interaction with technology. Metaverse means a shift from a two-dimensional usage of the internet to a three-dimensional digital world where users interact with digital content and other users within one and the same digital environment. This is the biggest difference to the current Internet: Our current Internet is divided into many, largely separate areas, each controlled by a single provider. This is supposed to be different in the Metaverse. The idea is that it is not controlled by anyone. Objects, currencies and much more can simply be taken from one element of the metaverse to the next and thereby enable an interoperability between applications.
Users in the metaverse are represented byavatars, and they can communicate, build virtual communities, and own virtual assets such as virtual land, office spaces, art and other digital collectibles (such as NFTs). Users can also travel through the metaverse, visits digital shops or events, and interact with each other.
It is yet unclear exactly how the metaverse will look like in the future, but it is likely that some aspects of our lives may be moved to the digital world, and people live partially in the metaverse. They may buy clothing, attend events, and communicate with friends all within the same digital environment.
While this may for some people sound like the plot of a unrealistic science fiction movie, other have already made their first steps in the metaverse. The development of the metaverse is facilitated by advances in technology, such as blockchain, online gaming, e-commerce, display technology, computer vision, sensor technology, communication technology and the development of Web 3.0 technology and non-fungible tokens (NFTs). The increase in digital communication and interactions due to the COVID-19 pandemic has also spurred the development of the metaverse.
There is no such a thing as one single Metaverse, but many existing and upcoming digital environments. To better understand how the metaverses differ, they can be divided into three dimensions: Centralized vs. Decentralized (1), Blockchain based vs. traditional (2) and Open (Public) vs. Closed (Private) (3):
Centralized Metaverses are controlled by a single organization that is responsible for planning, decision-making and controls the users’ data. In contrast, decentralized metaverses the power and complete control over all decisions is not in the hands of a central organization, but in the hands of the users or appropriately distributed among different levels.
A traditional metaverse does not integrate blockchain technology, so virtual assets cannot be tokenised and cryptocurrencies cannot be used.
In contrast, blockchain-based metaverses allow users to tokenize their virtual assets and use cryptocurrencies within the metaverse. This creates a digital economy within the metaverse and enables users to monetize their creations and acquisitions. These metaverses may also include non-fungible tokens (NFTs) and cryptocurrencies that can be traded or exchanged.
Open metaverses are open for anyone to join and use without the need for any kind of permission or verification. Closed metaverses, on the other hand, are only accessible to a specific group of users and require some kind of verification or permission to join and use.
In summary, metaverses can be divided into six dimensions: centralized vs. decentralized, blockchain-based vs. traditional, open vs. closed, and public vs. private. Each metaverse may have different characteristics in these dimensions, resulting in a unique user experience. It can be said that the higher the decentralisation level and the blockchain technology involved the closer the project is to Web 3.0 (Web 3.0 is built upon the core concepts of decentralization, Trustless and permissionless, and greater user utility). On the other hand the more centralised a project is and the less interaction with blockchain the it get’s to Web 2.0 (Web with interactivity, social connectivity and user-generated content).
Some well-known companies have already jumped on the Metaverse hype. However, some of these projects are decentralized project while others are more centralized project with a focus on AR and VR or metaverse supporting companies.
Some examples of well-known Metaverse projects are listed below. You can also find more information and further examples under 5 most promising Metaverse projects for 2022 & 10 Best Metaverse Projects to Keep an Eye on in 2022 (metaverseinsider.tech).
Decentraland is one of the big companies developing Metaverse as a platform and is based on the Ethereum-Blockchain. Decentraland is a decentralised 3D virtual reality platform consisting of 90,601 parcels of virtual land. Virtual properties in Decentraland are NFTs that can be bought with the cryptocurrency "MANA".
The Sandbox is a blockchain game in the metaverse, which allows users to explore a virtual world. The virtual world in The Sandbox includes NFTs, user-created environments as well as other content. The Sandbox has evolved into a complex environment that leverages Ether and its native token, SAND, for powering in-game economy.
Star Atlas is a gaming metaverse built on the basis of multiplayer video games, real-time visuals and experiences, decentralized financial technologies, and blockchain. One can clearly notice how Star Atlas bridges the gap between metaverse and blockchain technology and is based on the Solana blockchain.
Microsoft Mesh is a mixed reality platform for digital collaboration. This means that Microsoft Mesh uses holograms to give users the feeling of being together in the same place during online meetings - even if they are actually on different continents.
Snapchat is one of the growing Metaverse companies that announced the launch of a new avatar lens showing how people will look in the Metaverse. The avatar filter leverages augmented reality that allows avatars to change clothes and faces as per the mood. The company is developing Metaverse through the launch of 3D Bimojis. It can be assumed that this update is promoting the speed of the Metaverse technology.
Alien Worlds is a simulated economy where players compete for the scarce resource, Trilium (TLM), which they use to enhance their power in the game by staking and voting in Planet Decentralized Autonomous Organizations (Planet DAOs). Both planets and players compete for Trilium, leading to intense competition and collaboration between groups.
Workplace from Facebook (new “Meta”) is a business communication tool that facilitates online groupwork, instant messaging, video conferencing, and news sharing even when working remotely.
Earth 2 is a Metaverse with a mix of virtual and physical reality. On real places shared on a map, users can create digital virtual environments. These environments can be owned, bought, sold, and in the near future deeply customized.
The possibilities of Metaverse are vast, and innovative companies can basically implement Metaverse applications in a variety of areas. Some examples of commercial metaverse applications include:
Real Estate: Sellers and potential buyers can meet virtually in the property for sale Travel time becomes unnecessary and the seller does no longer have to welcome all potential buyers in his house.
Retail: Customers can try on clothes virtually in virtual shops, with the option to receive advice from sales people. This allows shops to save on expensive retail space.
Tourism: The metaverse opens new opportunities for the tourism industry, such as virtual tours of difficult to reach places, like the Mount Everest or the moon. Guided tours can be offered 24 hours 7 days a week.
Finance: Personal interaction with financial professionals’ manager, tax advisors, accountants, lawyer etc. can be conducted virtually. Transactions that could otherwise only be carried out in person can be done via individual avatars and online.
Metaverse is expected to have a significant impact on various areas of our future. But how and in which areas? While it is certain to early to predict and give a clear answer on this question, it can already be seen that the Metaverse will affect our future in the following fields:
Hardware
One major challenge is the development and availability of hardware that allows users to access the metaverse. High-performance hardware is currently expensive, and it is unclear what technology will be used to access the metaverse in the future.
Furthermore, it should also be noted that the development of the new hardware, for example virtual reality glasses, are still in the early stages and it remains to be seen whether reality glasses will be the only way into the metaverse. There is already a significant development in this area, but more progress will certainly be needed for the new technologies to become mainstream.
Identity / Data protection
Another challenge is related to identity and data protection. The metaverse relies on users' personal data, and it is crucial to ensure that this data is secure and that users are who they claim to be. How does the technology ensure that the person who is being claimed to be is really that person? How secure are my data if they are stored on different computers? Many questions related to the control and protection of data and information have not yet been resolved. It could be assumed that a lot of companies will collect additional private information by using the Metaverse technology and therefore it is always recommendable to review carefully what data are collected during use of the new technology.
Currency and digital payments
The use of cryptocurrencies and digital payments is likely to be an integral part of the metaverse. However, the large number of existing cryptocurrencies and non-fungible tokens (NFTs) may make it difficult to facilitate easy and seamless exchanges within the metaverse.
Law and jurisdiction
Finally, the lack of a physical location for the metaverse raises questions about jurisdiction, the application of laws and the respective right to levy taxes and duties. Proper legislation is needed to address virtual crimes and other legal issues that may arise within the metaverse. Governments and authorities will need to figure out how to apply jurisdiction in a virtual world beyond international borders.
Stay tuned, the next MMEtaverse articles are already in the pipeline. The metaverse offers endless opportunities for businesses and individuals. In future articles, we will discuss topics such as commercialization and opportunities in the Metaverse for businesses, including buying land property in the Metaverse. We will also address the legal challenges related to regulation, intellectual property, taxation and privacy in the metaverse.
