The one thing you need to know about the metaverse

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ISSUE 19.19 • 2022-05-09 LEGAL BRIEF By Max Stul Oppenheimer, Esq. Nike is trying to convince a court that the metaverse is a real place, where the ru
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ibe98765, AlexEiffel, rc primak, geekdom, Fred, wdburt1, Simon_Weel, abbodi86

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NFT’s make my brain hurt. I still don’t understand how something in the virtual world, like a NFT, can be attached to something physical like a shoe in the real world. I imagine you can take a picture of the shoe and embed that picture into the NFT, thereby tying the NFT to the shoe. But hey, there’s lots of similar shoes, so one NFT could cover literally a truckload of shoes. So it looks to me that if you buy a NFT, you buy a NFT. You’ll never know exactly what physical thing comes attached with it?

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You don’t seem to understand what an NFT is. The “T’ in NFT stands for Token. Let me explain what that Token is, under the hood.

The Token is a Blockchain-verified Transaction Record. It is real in the sense that Blockchain is a Ledger, secured and validated using complex math problems and either designated persons who are trusted validators, or a concensus method of all interested parties. Once a block is validated, its place in the Blockchain is secured, and it is extremely difficult to alter these timestamped, interconnected records. The Record of the transaction is the NFT.

The first two letters — “NF” — refer to the nonfungible nature of a Blockchain Transaction Record. Such nonfungible entities are unique and can’t (easily) be altered.

So, no one owns anything “real”– the ownership is of a Token which exists only in the (virtual) Metaverse.  How much value such Tokens accumulate depends on how much buyers are willing to pay for the next resale of the Tokens. They have zero intrinsic value. And therein lies the problem of evaluating anything in the Metaverse and correlating these valuations with real-world currencies, goods and services.

Also, don’t lose the keys which allow you to access your Tokens or Coins. No one can recover those keys. There are Digital Wallets for the “things” and “currencies” of the Metaverse. But like password managers, you still need a key or password to access your Wallet. And if the Exchange or (Meta-)warehouse where your Metagoods are stored is hacked or destroyed, where do you go to collect the insurance? Oh yeah, there is NO insurance on these “investments”!

All things in the Metaverse are based on Whom Do You Trust. So, whom do YOU trust?

-- rc primak

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Simon_Weel wrote:

So it looks to me that if you buy a NFT, you buy a NFT. You’ll never know exactly what physical thing comes attached with it?

NTF buys you a digital thing like : a tweet, gif, …and you are still not the owner as anyone has access to that digital thing.

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Biiljoy, rc primak

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As I stated, the ownership of an NFT is not ownership of any object or any image, but it is proof of the Blockchain Transaction Record of the sale of those things. There can be multiple Tokens for a single NFT object. (Like numbered prints of a book or a work of art.)  And therein lies one of the problems in evaluating NFTs.

-- rc primak

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…rights in a metaverse — in which case there is an exciting new world (and maybe multiple new worlds) to exploit, and prospectors should start lining up to buy metapicks and metashovels.

Don’t scoff at this notion. There is already a hot market in Metaverse real estate. And mining for Bitcoin and Ethereum comes very close to using those Metapicks and Metashovels. In fact, in some online games, you have to do “proof of work” (play the game for a certain time or up to a certain level) to “earn” those Metapicks and Metashovels.

Ethereum has looked at substituting Proof of Stake as an alternative, due to complaints from the Philippines and Southeast Asia of young people actually “working” (gaming) for less than local minimum wages, given how long it takes them to “earn” their Metagoods or Cryptocurrency Coins.

The governement of India is of the official opinion that all cryptocurrency and the entire Metaverse are Ponzi Schemes, and therefore cannot be allowed in India. China has taken a similar position. On the other extreme, El Salvador now considers Bitcoin an Official National Currency. Right alongside of the American Dollar.

Strange days in this brave New World!

-- rc primak

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What would happen to these NFTs if Stockx were to go belly up? What would happen to the shoes, if in fact there are any shoes (Nike alleging otherwise)?

As for myself, I only buy shoes to wear, not collect. And anything I collect I want in my possession. But the concept of NFTs (aside from shoes I wouldn’t be caught dead wearing) is something I would like to fully understand. Thanks.

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The last section of Mr. Oppenheimer’s article has me confused.

He says that “Intellectual property protection is limited to things that have real-world consequences.” However, NFTs clearly have monetary value, so does that value not constitute a real-world consequence, and thus make them protectable? Surely this is the case or else anyone could create an NFT of anything, and you seem to not be legally able to create an NFT of trademarked items unless you own the trademark.

I follow the rest of the article, and would conclude that Nike’s argument that a document of title (or, as in this case, a document of title along with a storage service) is somehow their IP makes no sense, but I would have thought that’s because a document of title has no IP intrinsic to it, not because it’s an NFT, as, as I said in my previous sentence, NFTs do seem to be protectable.

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Douglas wrote: “What would happen to these NFTs if Stockx were to go belly up? What would happen to the shoes, if in fact there are any shoes (Nike alleging otherwise)?”

Good question.

For my part, I never would buy online something I need to wear and has to fit me well, such as a pair of trousers or a pair of shoes. Unless the measures are clearly the correct ones for me, and in the case of shoes, I have worn those before, so I know exactly which type, size and brand I am going to buy.

As to using NTFs: I am quite happy waiting to see how that goes. I think it is very early days to jump on this particular bandwagon, joining the usual mad rush of the early adopters.

With thanks to Mr Oppenheimer for bringing this interesting topic to us loungers attention.

Ex-Windows user (Win. 98, XP, 7); since mid-2017 using also macOS. Presently on Monterey 12.15 & sometimes running also Linux (Mint).

MacBook Pro circa mid-2015, 15" display, with 16GB 1600 GHz DDR3 RAM, 1 TB SSD, a Haswell architecture Intel CPU with 4 Cores and 8 Threads model i7-4870HQ @ 2.50GHz.
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Metaverse hoax like NFT, Web3, cryptocurrency (crypto market lost 56% or $1.6 Trillion since 11/2021).. will vanish.

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Alex: “Metaverse hoax like NFT, Web3, cryptocurrency (crypto market lost 56% or $1.6 Trillion since 11/2021).. will vanish.”

As the legendary social critic, journalist and maverick writer H.I. Mencken (a.k.a. “The Sage of Baltimore”) once wrote:

“Nobody ever went broke underestimating the intelligence of the American people.”

(And after a fairly long life lived in several different countries, I am of the opinion that one could replace “American” with any other nationality, and probably Mencken’s judgement would still apply.)

Ex-Windows user (Win. 98, XP, 7); since mid-2017 using also macOS. Presently on Monterey 12.15 & sometimes running also Linux (Mint).

MacBook Pro circa mid-2015, 15" display, with 16GB 1600 GHz DDR3 RAM, 1 TB SSD, a Haswell architecture Intel CPU with 4 Cores and 8 Threads model i7-4870HQ @ 2.50GHz.
Intel Iris Pro GPU with Built-in Bus, VRAM 1.5 GB, Display 2880 x 1800 Retina, 24-Bit color.
macOS Monterey; browsers: Waterfox "Current", Vivaldi and (now and then) Chrome; security apps. Intego AV

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Alex5723

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Lots of interesting questions. Unfortunately, most are still open questions at the moment.

For those who are confused by NFTs, here’s how I think about them. (For those who are not confused by NFTS – yes, you are.)

An NFT is (almost always) nothing more than proof of ownership of something that is located somewhere else. (The reason actual digital goods are not usually stored on the blockchain itself is because storage cost per byte is high.) What the “something” is depends on the terms of the contract that created or transferred that something. For example, an NFT linked to digital artwork does not typically convey ownership of the copyright in the artwork, any more than purchase of a copy of a real world book would transfer ownership of the copyright in the book or purchase of a Ford 150 would transfer ownership of the plant that built it.

In a sense, the certificate of title to your car or the deed to your house is an NFT if you take a broad view of what a token is. Both are non-fungible, because there is only one of your car or house. What distinguishes blockchain NFTs from these forms of “proof of ownership” is that no government authority controls the records. That means that there are no standards for what transfer means – again, that is determined by the contract that creates or transfers the NFT. And if one party to the contract goes out of business – or just decides not to perform – the NFT will establish ownership of the right to complain about that.

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