Virtual assets 101: what is virtual property?
Virtual property can mean a lot of things in different situations. How is the purchase of virtual property regulated? What risks do developers and publishers face by including these kinds of transactions?
This series will cover virtual property, virtual currency and the regulations behind these assets as this space continues to grow at a rapid pace.
So what is virtual property?
Virtual property is just as it sounds – property that is solely virtual in nature. It is not tangible and has no real-world equivalent, generally.
It can be a person’s digital creations in a cloud-based platform. For example, this blog post is created in WordPress, a content management system in a cloud-based platform for creation.
It can be a person’s avatar’s belongings in a game environment. For example, Zin’rokh, Destroyer of Worlds, is a rare mount found in Archaeology digs in World of Warcraft, a massively multiplayer online role-playing game.
These are digital belongings. The digital goods and digital money that players acquire (or create) in digital worlds. A discussion of these items necessarily involves the discussion of the code underlying them.
All of the same property – and infinitely more – that exists in the real world, can exist in the virtual world. Players in a virtual world may be able to obtain legendary swords, create fashionable looks for in-game characters, build houses, sell motorcycles and a myriad of other things.
But, in a virtual world, the rights are different.
How does virtual property compare to traditional property?
Law professors often describe the rights associated with ownership of real, tangible property as a “bundle of sticks.” This is because the owner actually holds a certain “bundle” of rights related to the property.
In the case of land, for example, this could be the right to control access to the land or to build structures on the land. It could also include rights to water or minerals on or in the land. For personal property, the rights of possession and alienability (the ability to sell or transfer ownership of the item) are usually most critical.
In thinking about property rights, think: how does the owner profit from “ownership?” The owner could lease their land or condo, for example. A landowner might also “license” their property to allow someone limited access (a right to hunt or mine for coal, for example). Of course, an owner can also sell the property.
With virtual property, “ownership” is a bit different. It lives in a virtual world, and that virtual world is governed by the rules of the program running it (as well as the terms of service or license agreement entered into when accessing the platform or software). More on that in our next part of the series: virtual currency and the regulations that support both virtual property and virtual currencies.