Nowadays, Metaverse is a brand-new term that is generally used to indicate virtual reality. Especially after Facebook has been rebranded as Meta, Metaverse concept has attracted more attention. Even though we are familiar with the concept thanks to online games, it has now become a buzzword. Nevertheless, it should be considered that Metaverse comes with not only advantages but also unknown liabilities and contingencies within various areas of law such as intellectual property law, GDPR, contract law and criminal law.

In order to grasp Metaverse, it is necessary to assess Blockchain Technology and its origin as well. In this regard, Cryptocurrencies are the milestone of a new era as first usage samples of Blockchain Technology. Bitcoin, one of the appearances of cryptocurrency, was first introduced by Satoshi Nakamoto on 31 October 2008 as ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ (This document is also knowns as ‘White Paper’). Satoshi’s aim was to remove third-party financial institutions from online payments. What lies behind the Bitcoin system is Blockchain Technology.

Briefly, Blockchain is a flexible and tamper-proof database where users can store data transparently. Blockchain, also defined as a peer-to-peer network, has no centralised authority, instead it is governed and used by its users. The system consists of numerous blocks of data and these blocks of data are stored on nodes connected to each other. It is important that this technology has enabled people to create and implement their own smart contracts.

Smart Contract is a type of program on blockchain and is designed to work autonomously and automatically with power to execute and enforce itself. It is mostly regarded as automated contracts to be used by users without any restriction of applicable laws. Since smart contract is an unchangeable computer code, it provides reliability, predictability and clarity even for parties who do not know or trust each other. However, not being able to intervene in smart contract in case of force majeure may cause undesirable damages. Moreover, being merely a program always bears the risk of system errors. Further, although blank parts of traditional contracts are filled/interpreted by parties or judges/arbitrators, this opportunity does not exist in smart contract.

On the other hand, NFTs (Non-fungible Tokens) are a significant tool since they are used to represent digital assets in virtual reality worlds. NFTs are frequently generated and traded in cryptocurrencies. From the legal perspective, NFTs to represent digital assets could cause trademark and copyright issues, ownership related matters and replica issues. Especially considering that the standard right protection systems are designed to protect traditional and physical assets, there is need of Digital Right Management (DRM) which ensures protection of intellectual properties in digital field. DRM appears to be a new form of legal arrangement without jurisdiction in physical world and without need for an authority to enforce rules.

As can be seen, the concepts created by developing and changing technology are closely connected to each other. Therefore, absence of proper legal regulations and interpretations creates need of professional legal support. We, as Demir&Simsek, provide legal aid for those who have queries regarding the concepts mentioned above. Please contact us for our detailed legal assessments, containing benefits and drawbacks of Metaverse, Cryptocurrencies, Smart Contracts and NFTs.