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This article was contributed by Asaf Naim, cofounder and CEO of Kirobo
Imagine a house—a small house lost in the Metaverse, a fantastical landscape made up of all sorts of mansions, cottages, castles, spaceships, caves, any dwelling a human mind can imagine. But as bustling and vibrant as its surroundings are, its windows never light up, and its door never opens. It’s a weird one, and people say weird things about it. The word goes, if you happen to be around it when a full moon is in the digital sky, you may catch a glimpse of a pale woman standing next to the Pepe statue in the backyard…
No, this isn’t a Meta-ghost story. You see, the woman is the heiress to the house’s late owner and she’s not very fond of the statue. She thinks that an animated Shiba Inu in a spacesuit would work much better. But to remove the (in)famous frog, or, in fact, to exercise any power over the house at all, she’d have to hold the NFT for it. Unfortunately, the token is sitting in the late owner’s crypto wallet, and the private key to that wallet was lost forever with his passing.
Let’s take a quick step back here and clarify something first. Many projects are building their own Metaverses now, and in those, a house or a building can have different designs and applications. For all we know about Meta’s own Horizon Worlds, a home there could be just a VR rendition of the home page on your browser, with no NFTs involved. At the same time, on other popular Metaverse platforms, such as Decentraland and Sandbox, NFTs are the preferred way for handling ownership over actual virtual properties. And seeing how many companies are already shopping for virtual lands in those, these projects aren’t going anywhere any time soon.
So with millions worth of Bitcoin and other coins already rendered inaccessible due to lost or forgotten private keys, the above scene isn’t that much of a stretch. Besides blowing up into a $40 billion market over the past year, NFTs are already forcing us to re-think property and ownership as such, with ape jpegs and virtual coins among people’s most prized possessions. So while we’re at it, we might as well start thinking of how to pass those treasures on to our children.
Inheritance is an intricate legal mechanism that oftentimes leaves ample room for lawsuits and family feuds. It typically incorporates various procedural complexities, such as taxes, which vary from country to country. Bringing this concept into the Metaverse makes the matter even more convoluted. Should a personal cottage in Decentraland be counted as actual real estate? From today’s perspective, hardly. After all, you don’t often hear of an inheritance tax slapped on someone’s castle in an online video game. But there’s a first for everything, I guess.
In the future, of course, this could change, especially once these castles become both valuable enough and mainstream enough as an asset type to draw attention from the authorities. This is where things could get funky, especially given possible differences in inheritance laws across various jurisdictions. Is a Metaverse house a piece of real estate or rather something akin to an artwork? Which laws apply to a Japanese-owned Metaverse house or castle hosted on a server in Brazil? What about its backups in Arizona and Switzerland? What if it’s sharded across multiple nodes, with the living room hosted in Equador and bedroom in Russia? And we haven’t even gotten to the NFT part, which brings a whole new layer of complexities.
In most cases, the NFTs today’s enthusiasts represent assets stored off-chain. In other words, their tokens include links to a server holding the actual ape picture, audio file, video clips, or anything else. Blockchains don’t handle big data chunks too well, and the heavy graphical assets making up a Metaverse house may overwhelm this kind of database.
Assuming that our proverbial digital castle comprises a multitude of graphical assets, as well as their associated logic, and the NFT as the proof of ownership, we can then get started with a few straightforward solutions for inheritance. The first one is to mint tokens for the house on multiple blockchains, or even mint multiple NFTs for the same property on the same chain, much like you can have multiple keys to a real-world house. As long as at least one of them is in a wallet the heir can access, the problem is solved, right?
Not exactly, since you might face an uphill struggle selling Metaverse platforms on that. Imagine you just bought a CryptoPunk and minted a few more NFTs for the same .jpeg file. What happens next? First, it would likely earn you a copyright infringement claim from the project, since the NFT license it ascribes to is pretty restrictive on commercial use. Second, it would slash the value of your purchase, as there are now literally more tokens of the same Punk, and that is exactly what makes the project unhappy, as it cares about the Punks’ value. The same logic would likely apply to blockchain Metaverse platforms, which like to stick to the one NFT per property/land rule. Similarly, they would hardly be too thrilled about issuing a new token for the same property for the heir or making a copy of the underlying assets to effectively launch a new house with a new token. The latter, by the way, is some proper cyberpunk, as it makes one wonder: Is owning an exact copy of a digital house the same as owning the original? Is there any sentimental value baked into the new ones and zeroes?
The better way to do it
As it often happens, there is a better way to handle inheritance on-chain, at least from the technical standpoint. Legal intricacies aside, a will is a set of instructions—an algorithm, one could say—ordering the distribution of assets owned by the deceased. In the blockchain realm, this algorithm can be codified into a smart contract, an on-chain application that can be set off by a specific condition and is very hard to meddle with.
This is what the process would look like: First, the user has to stake the assets (for example, a house or land in the metaverse) they want to pass on to their heirs into the contract. This is an important step, as the contract won’t be able to manage the assets that aren’t associated with its address, and it does not mean losing access to the assets, as the user can still pull those out at will. Then, the user would have to define the heirs for their assets. Once the user dies, the contract would automatically execute their will by redistributing the staked assets in line with the pre-defined algorithm.
The first problem with this approach is the fact that the smart contract has to first somehow learn about the user’s passing. There are many solutions for that. The simplest option is to set up a timer for auto-executing the will and have the user go through a manual “I’m alive” check every week to renew it. Those with a penchant for the exotic could opt for something more creative, like a heart rate monitor working as a data oracle for the smart contract.
The other problem is that the process ignores the standard legal procedures, skipping the probate and executor to hand out the assets in line with whatever algorithm is being run. Thus, a situation where this algorithm ignores any legal intricacies we’ve already touched upon can result in further litigation. The good news here, though, is that a court can still compel an heir to hand over the held in a breach of the law. It is way harder to imagine a court compelling a blockchain address to hand over anything to anyone if the private key is lost.
Fundamentally, the concept of inheritance is rooted in the human desire to pass on value to the next generation, making sure that your kids do better than yourself and leaving a legacy. As the changing tides of the digital realm reshape our idea of what can hold value, this concept, as well as its associated legal and technological frameworks, must also evolve to encompass this change.
Asaf Naim is the cofounder and CEO of Kirobo.