In 2005, Chinese gamer Qiu Chengwei was sentenced to life in prison for murdering his competitor Zhu Caoyuan. A dispute arose between the two over a virtual sword used in the online video game Legend of Mir 3. After investing significant time and resources to obtain the virtual sword, Qiu lent it to Zhu. Rather than return the sword, Zhu sold it on Ebay for $861. Qiu reported the incident to the police, but there was nothing they could do for him because the virtual sword was not technically property. Qiu, frustrated by the lack of a legal remedy, stabbed and killed Zhu despite his promises to repay Qiu for the sword.

Law professor Aaron Perzanowski refers to these kinds of objects as “intangible personal property.” The market for intangible personal property in the gaming world commands billions of U.S. dollars and continues to grow substantially every year. Many online game platforms permit users to pay for in-game goods with real cash. But a person who buys a virtual sword, for example, does not necessarily own it. Generally, whoever owns the intellectual property rights to the game itself actually owns the sword. This arrangement is usually memorialized though End User Licensing Agreements (EULAs). As the law currently stands, “These phantom objects are yours only as long as, and only to the extent that, their creators allow it.” There are serious normative concerns with this situation, especially where the line between games and markets becomes blurred.

Consider Decentraland, a virtual world built using the same blockchain technology as the cryptocurrency Ethereum. Decentraland provides users with the opportunity to develop, buy, sell, and trade “virtual real estate.” Users can also develop new applications and commodities for use within the virtual world. Decentraland’s creators do not view the world as a game despite the obvious comparisons to games like SimCity. Instead, they envision a new kind of decentralized virtual market. One virtual city within Decentraland–known as GenesisCity–has already attracted significant attention and real-world investment.

GenesisCity is a fixed area of virtual land subdivided into 90,000 individual plots. Many of the plots have been auctioned off to individual owners. Unlike most online games, assets in GenesisCity are not governed by EULAs. The blockchain technology on which the world is built allows plot owners to retain control over their investments free from interference by the creators. Virtual land and other assets are transferable from user to user using the platform’s exchange system. The real-world market potential of Decentraland caused investors to pour $26 million dollars into the system within thirty seconds of its initial coin offering. The legal issues implicated by this type of virtual world are innumerable. For example: How will virtual land use disputes be resolved? Will virtual agreements  made between users be legally enforceable? Will the law recognize property rights in Decentraland assets?

The concept of property rights predates history. Philosophers and scholars have filled volumes on the nature and origins of property and yet a uniform understanding remains elusive. However, human intuition is a useful place to start. Returning to the story of Qiu Chengwei and Zhu Caoyuan–Zhu offered to pay Qiu the money he received for the sword. But Zhu didn’t want money, he wanted his sword. Despite the fact that the law did not recognize the sword as “belonging” to Zhu, in his mind at least, it was just as much his property as his house. Obviously, a viable property regime cannot be built entirely around human intuitions, but our deepest rooted emotions ought not be overlooked. As Justice Oliver Wendell Holmes, Jr. eloquently noted, “A thing which you have enjoyed and used as your own for a long time, whether property or an opinion, takes root in your being and cannot be torn away without your resenting the act and trying to defend yourself, however you came by it. The law can ask no better justification than the deepest instincts of man.”


Erik Peterson

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