IMGL Magazine April 2022

NFTs and virtual digital assets

wear a headset that immerses you in a 3-D environment. You carry motion-sensing controllers to interact with virtual objects and use a microphone to communicate with others” 4 . The promise that the metaverse offers is that people can spend their time someplace over the Internet, whether talking to other people, playing games, or just relaxing with the realism of landscapes and other natural beauties in the “outdoors” of virtual reality. Nonetheless, since one of the ideas is to mirror real life with virtual reality, it is to be expected that the metaverse will replicate some forms of the physical world despite the fact that the digital space has no physical limits. Owning NFTs As already mentioned, NFTs are virtual assets made possible by blockchain technology. However, unlike cryptocurrency, NFTs cannot be easily exchanged, thus one of their characteristics is their uniqueness. Being unique pieces, NFTs acquire collectible value. An NFT can be something as simple as an image that can be download for free on the Internet, but it is important to understand that its value lies in the blockchain attached to the asset acting precisely as an ownership title. “An NFT authenticates a person’s possession of a digital asset, meaning you can’t copy the deed of ownership. This move creates scarcity and builds desirability into digital terms” 5 . In this respect, NFTs have revolutionized one of the oldest legal concepts in existence: that of ownership. Now it is possible to own intangible assets that have the capability of acquiring an unforeseen value in the market since they are non-fungible, exclusive and indivisible. However, as with cryptocurrency, the NFT market is not regulated and is therefore highly volatile. Developers must be prepared to weather any regulatory or economic storm since “market swings can dramatically change the demand for NFTs – which again underscores the importance of building community and other sources of direct value for NFT ownership” 6 . Above all, NFTs are still a novelty and an example of how reality has surpassed the capacity of legislation to regulate it. Countries in which the regulation of NFTs is currently

The metaverse will be a place where we can deal not only with digital currency, but with digital or virtual assets as well. From art to fashion, one of the most profitable ventures happening right now is the generation of non-fungible tokens (“NFT” or in plural “NFTs”), which essentially use the same blockchain technology as cryptocurrencies to assure its inviolability. The popularity of the NFTs is rapidly increasing, and the gaming sector is no exception, as we will explore throughout this article. The dawn and evolution of the Internet The antecedent of the Internet was known as ARPANET 2 , a network created as a medium between several academic and government agencies to share information. Of course, ARPANET had its own set of limitations that were later surpassed by having developed a protocol “ called Transfer Control Protocol/Internetwork Protocol (TCP/IP). This allowed different kinds of computers on different networks to “talk” to each other. ARPANET and the Defense Data Network officially changed to the TCP/IP standard on January 1, 1983, hence the birth of the Internet . All networks could now be connected by a universal language” 3 . It is remarkable how much progress has been made in barely four decades. A few years after the Internet was born, Tim Berners-Lee created the World Wide Web or the Web 1.0. The Web, understood not as the network itself but as the content online or the pages people visit, is now evolving into its fourth generation, Web 4.0. The fast-track evolution of the Internet and the Web has brought so many upgrades to our lives and has changed the way we interact with others, the way we work, the way we shop and the way we consume entertainment. This has inevitably had an impact in the way human conducts and relationships are being regulated. A whole new world is being created digitally and is arguably moving faster than our ability to adapt to it particularly in a legal sense. Technology is making possible the concept of an alternative universe where we can all live our lives: the metaverse, where virtual reality “serves as a computing platform for living a second life online. In virtual reality, you

2 Acronym for Advanced Research Projects Agency Network. 3 Online Library Learning Center of the University System of Georgia. A Brief History of the Internet. 4 Chen, B. (2022, January 18). What’s All the Hype About the Metaverse? The New York Times. 5 Allen, N. & Floyd, E. (2022). Understanding the Metaverse. The National Law Review, Volume. XII, Number 101. ing-metaverse#:~:text=Currently%2C%20people%20understand%20the%20Metaverse,reality%2C%20and%20the%20Internet.%22. 6 Kaczynski, S. & Kominers, S. (2021). How NFTs Create Value. Harvard Business Review.

IMGL Magazine • April 2022 • 49

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