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Existence and Challenges in Metaverse & NFT



The term "Metaverse" refers to a fusion of multiple virtual environments like virtual reality and augmented reality which is linked to the real world. It is an internet and virtual reality technology extension that allows users to interact in a 3D environment. Metaverse has been the subject of science fiction, novels, films, video games and other audio-visual content, but in today’s time it is becoming a reality. It is a shared environment in which users can interact and trade with digital objects. Metaverse uses standard set of protocols, enabling users to move between platforms seamlessly and interact with one another regardless of their platform. Virtual environments, avatars, and digital assets are the three main components of Metaverse.


To participate in this Metaverse, users create their digital avatars to represent themselves in the virtual world to interact and trade with their digital assets and to explore different virtual environments such as housing colonies, theatres, homes, schools, cities etc. Metaverse is completely decentralized environment, having no central authority to control it, as. it is governed by a set of agreed protocols and standards existing in Metaverse.


Metaverse is exploited even on commercial basis, the users through their avatars conduct online transactions to create and sell their digital assets such as virtual real estate, avatar clothing, digital art etc. Metaverse has the potential to create entirely new forms of entertainment and the users could participate in games, attend virtual concerts, and watch movies in a fully immersive virtual environment.


On the other hand, one of the most difficult challenges in Metaverse is to make it a safe and secure environment, since there is no central authority to police the environment because it is completely decentralized, it is up to the community to establish and enforce its own standards and protocols for successfully running the Metaverse.


There are laws which govern the Metaverse in the best possible manner, all the digital artwork created and uploaded in Metaverse is subject to applicable copyright law. If a user creates an avatar that impersonating another person, brand, entity, without permission then the courts will order to cease usage of the same and the grieving party will also seek monetary remuneration from such fraudulent user. Contract laws also apply to activities in Metaverse to govern the commercial transaction between the Parties towards their virtual goods and services. In Metaverse, user will be held liable for defaming and/or derogatory remarks and actions in the digital world if they are inflicting damage to the reputation of another person and entity unjustly.


This craze of Metaverse is seeping in the Bollywood Industry, as the film production house has purchased a virtual land in its name in Metaverse to release and/or promote its film which shall be the first Hindi film to be released in the Metaverse. Thus, now even the film producers are indulging into the Metaverse to showcase their film to the users, thereby opening doors to an entire new way to exploit audio-visual content.


Further, since Metaverse is a software computer programme, it is subject to copyright protection under the Indian Copyright Act 1957, but it is difficult to ascertain the copyright protection and ownership in the underlying works and the artwork which are created in the open Metaverse since it can be owned by the platform and/or the user. However, in a closed Metaverse, the platform owner owns all the Artwork and the underlying materials in such artwork since the users do not have autonomy to create any works/features.


Under the Indian Copyright Act in the real world, the author of the copyrighted work is the owner, unless if the work is subject to work made for hire. In Metaverse, the user who is a real person or entity creating the art work is regarded as the author of the work and hence its owner. In open Metaverse the users are indeed the owners of the copyright of the works they create, thus making the platform owners intermediaries only and absolving them of liability for any infringement.


In metaverse, multiple rights of numerous people are being exploited simultaneously, for instance a metaverse music concert may require a public performance and reproduction license, since the concert is being streamed virtually in the real world. This causes overlapping of the music exploitation rights. Also if a third party duplicates this music concert in the real world, within the metaverse, without permission from the user or the platform such exploitation would amount to copyright infringement.


There are no territorial boundaries governing the Metaverse hence it is difficult to determine the depth of infringement which occurs in the Metaverse and what kind of usage can be carved out as fair use. The extent and co- existence of multiple metaverses may lead to the real-world tests of fair use, that is the purpose and character of the work, the nature of the work, the portion of the work used and the effect on market value, losing their effect.


In metaverse, it is difficult to identify the real owner of the copyrighted work and the extent of infringement occurred by the infringer. Thus, there should be legal mechanisms in place to ascertain the jurisdiction and courts before which such infringement matters will be resolved and remedy would be given to the real user whose work has been infringed and to legally govern this ever-expanding metaverse.


Non-fungible tokens (NFTs) are the digital assets that are unique, indivisible, and non-interchangeable and are stored on a blockchain by the user of Metaverse. NFT is used to showcase ownership of digital and physical assets of the user namely art, music, collectibles, content etc. NFTs are stored on a blockchain, which provides a secure and transparent record of the asset's ownership and transfer. Each NFT is one-of-a-kind and cannot be replicated, exchanged and/or duplicated in any manner by the user with another NFT and thus making it a valuable digital asset.


In order to give effective protection to the NFTs, Smart contracts are executed. Smart contracts are nothing but self- executing contracts that are stored on the blockchain and they enforce the contract's terms automatically. NFTs are built on these contracts, which define the NFT's rules and logic and further specify the NFT's unique characteristics, such as ownership, transferability, and authenticity for transferring or selling the NFT. Some NFTs, for example, may be restricted to specific buyers or transferable only after a certain amount of time has elapsed.


NFT is minted on the blockchain and given a unique identifier when it is created and the NFT's creator can then specify the NFT's characteristics, such as its name, description, and image. Once NFT is created it can be purchased, sold, and traded on various NFT marketplaces. Each of such transaction is recorded on the blockchain, providing a transparent and secure record of asset ownership and transfer.


NFTs can be used to represent ownership of music allowing artists to monetize their work through exploitation while also allowing collectors to own a one-of-a-kind piece of content. NFTs can be used in gaming to represent in-game items and assets, allowing gamers to buy, sell, and trade items in a safe and transparent manner. NFTs can be used to represent ownership of real estate and other property, providing a secure and transparent record of ownership and transfer. NFTs are a game-changing technology that has the potential to change the way we think about digital and physical asset ownership and transfer.

 

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