The Metaverse

Economy
MM5006 Business Ethics, Law and Sustainability
ENEMBA 7 Midterm Exam

SYNDICATE V
1. Andry Nugraha Sudana 29321434
2. Dadang Suryana 29321418
3. Fakhreza Samudera Budi 29321368
4. Ida Bagus Dwija Bhaskara 29321578
5. Minaco Rino 29321375
OUTLINE
BACKGROUND
01 Metaverse Phenomenon

ISSUE, ANALYSIS & RECOMMENDATION

02 Problem identification, analysis and recommendation
of Metaverse Economics

a Data Privacy

b Cryptocurrency

c Non-Fungible Token (NFT)

d Law & Regulation

e Metaverse & Society

CONCLUSION & RECOMMENDATION

03 Conclusion & Recommendation for Metaverse
Economy
What is the Metaverse
The metaverse is a seamless convergence of our
physical and digital lives, creating a unified, virtual
community where we can work, play, relax, transact
and socialize.

The metaverse will be a combination of virtual

reality (VR) and augmented reality (AR), which will
be created as a layer of abstraction above the
physical world and interoperate with how we
currently live.

The metaverse offers opportunities to…

Transact Create
$ 54B Every year, $54 billion is spent $ 80B GDP for Second Life was about
on virtual goods. $650M in 2021 with nearly
$80M USD paid to creators

Socialize Own
$ 41B Non-fungible tokens (NFTs)
60B Approximately 60 billion
messages are sent daily on Roblox currently have a market cap of
$41 billion

https://www.jpmorgan.com/content/dam/jpm/treasuryservices/documents/opportunities-in-the-metaverse.pdf
 Metaverse
Historical
The term "metaverse" originated in the 1992 science fiction
novel Snow Crash as a portmanteau of "meta" meaning
transcendent and "verse“ from universe

How The Metaverse Has Involved

The metaverse is evolving from two decades of gaming and
will be built upon gaming infrastructure

Fortnite nets Epic Games $3 billion in Virtual land adjacent to Snoop Dogg’s
World of Warcraft reaches 12 million subscribers profit for the year Sandbox estate sells for $450,000 in ETH

Runescape reaches 1 million memberss Roblox (RBLX) tops $39 billion in

Amazon acquires Twitch for $970 million market cap in its IPO
Jan 18,
2022
Dec 11, Aug 31, Sep 15, Feb 20, Oct 28,
2008 2013 2014 2020 2021

May 4, Oct 7, Aug 25, Dec 27, Mar 11, Dec 4,

2007 2010 2014 2018 2021 2021
Second Life is released Riot sells out League of Legends finals Decentraland is released Microsoft announces plans to acquire
at Staples Center Activision Blizzard for $68.7 billion

Playstation Home is released on Playstation 3 Microsoft acquires Minecraft Facebook changes company
for $2.5 billion Source: JP Morgan
name to Meta
 Approach to the metaverse

Blockchain 1.0 vs 2.0 vs 3.0

Source: J.P. Morgan. (2022)

 The Bright Side
Some advantages that can be provided by the Metaverse may only be revealed in
time, but the following can be speculated:
• Evolution of Gaming: The Metaverse or Virtual Reality can evolve how games
are played as it allows a more physical involvement allowing a more immersive
gaming experience. Other entertainment such as attending a concert through the
Metaverse may also be possible.
• Shopping: Metaverse may help in allowing people to shop more efficiently. The
virtual reality can help show a 3D model of products. Hotel rooms or houses can
also have 3D model to better showcase their amenities. Through the metaverse,
people can also see how a furniture may fit inside their homes before buying.
• Training and education: the immersive function of the Metaverse allows a more
hands-on approach learning. Simulations can also be made for training employees,
doctors, or pilots. Students may learn better as a simulation of history may be
more engaging than reading from a book.

Translated by Content Engine, L. L. C. (2022, Apr 11)

 The Bright Side
• Virtual Health Aides: The metaverse will provide new ways to take care of our health.
Virtual counseling allows services to be ubiquitous. A new therapy method of helping
patients with phobias in safe controlled environment can also be done through the
Metaverse. Wellness apps such as sports games or guided yoga may also help. Doctors
may also use the Metaverse to create 3D models of the patient for simulation and to better
understand the problems.
• Traveling: Through virtual reality, simulation of events or landmarks can allow people to
travel and experienced far off places without having to spend a fortune. This can help
people broaden their horizons.
• Arts and Craft: The Metaverse can also revolutionized how we create things. Interactive
3D models can help engineers, architects, entrepreneurs, and creators to show a more
advanced blueprint. They may also stimulate them in the real world to see how a car,
house, or skyscraper will look like.

Translated by Content Engine, L. L. C. (2022, Apr 11)

 Issue, Analysis & Recommendation

Data Data privacy issues is crucial in

Privacy 1 Metaverse economy. As it
may relate to a person's digital
asset.

Cryptocurrency Relate to the Metaverse

2 currency.
Metaverse Click to add text & NFT
economy
phenomenon
Law and Potential laws & regulation
3
regulation that should be applied.

Metaverse & How the Metaverse may

society
4 develop its own society with
its own culture and issues.
DATA PRIVACY

Censoring
Sensors attached to
users (e.g., gyroscope to
track their head
movements) can
realistically control their
avatar.
Privacy Attack Flowchart on Metaverse
Interaction Data Collection Privacy Attack Challenge
The relation and social Metaverse uses data Users can be subject to Developers, designers,
interactions can be collected from the real privacy attacks such as practitioners, regulators,
valuable to infer users’ world to provide eavesdropping by other and users will face in
habits, activities, and immersive experiences. platform users. creating the metaverse.
choices in the metaverse. To regulating privacy
attack.
 RECOMMENDATION

Privacy Governance
solutions solutions

Privacy in Privacy of Safety of users Code & rules Blockchain & Modular Online
sensory level behavior & and bystanders decentralized Governance platform & the
communication autonomous social good
organizations

Source: Carlos Berjemo Fernandez, Life, the Metaverse and Everything: An Overview of Privacy, Ethics, and Governance in Metaverse
 PRIVACY SOLUTION
ANALYSIS RECOMMENDATION

Privacy at sensory level

XR devices can capture a vast amount of
information from biometrical data (head
movement, eye tracking) of users to spatial
data, including surroundings such as
bystanders’ physical space (rooms)

Privacy of behavior & Use secondary avatar

communications
The relation and social interactions can be
valuable to infer users’ habits, activities, and
choices in the metaverse. This information
could be helpful to track and regulate the
behavior of users.
Users can use secondary avatars to obfuscate their real avatar and
any possible data that can leak information about users’
demographics, cultural, and economic background. Other avatars
in the metaverse cannot recognize the real owner of this
secondary avatar and, therefore, cannot infer any behavioral
information about the users.

Safety of users & bystanders

The current HMDs that are used to display Visualization of real users (individuals located in the same room as the user)
the metaverse can occlude the physical world as virtual (‘shadow’) avatars to avoid collisions in multi-user VR experiences.
and the ability of users to detect nearby
objects, increasing the risk of falling
Source: Carlos Berjemo Fernandez, Life, the Metaverse and Everything: An Overview of Privacy, Ethics, and Governance in Metaverse
 GOVERNANCE SOLUTION
Code & rules
software code of the metaverse as an analogy
to our physical laws of nature, where code can
constrain the shape of the metaverse.
Modular governance
Governance in online platforms is a high-stakes challenge that
yet has few basic features of offline (physical) governance
legacies. The authors propose a modular bottom up
governance approach for online platforms in this work.
This modularity can enable the development of portable tools
that can be adapted to different platforms and use cases. The
governance layer should include a broad spectrum of processes
(juries, formal debates) and interact with other governance
systems.

Blockchain & decentralized autonomous

Online platforms and the social good
organizations
online platforms should consider tools to deal with players’
Blockchain is a transformation driver for online
misbehavior (i.e., punitive approaches) and tools for
platforms as it enables the creation of information
encouraging positive behaviors (i.e., preventive approaches).
integrity and smart contracts Blockchain has been
They also propose incentive
seen as a disruptive technology that supports
information exchange and transactions that mechanisms to promote positive behavior and restrain negative
players. These incentive systems can also encourage
require authentication and trustee relation and social
collaboration, shared planning, and teamwork. Finally, the
interactions can be valuable to infer users’ habits,
metaverse should consider implementing tools (e.g., DAOs) to
activities, and choices in the metaverse. This
allow users to engage in discussion, reflection, and decision-
information could be helpful to track and regulate the
making processes.
behavior of users.

Source: Carlos Berjemo Fernandez, Life, the Metaverse and Everything: An Overview of Privacy, Ethics, and Governance in Metaverse
CRYPTOCURRENCY
MetaFi : Finance in The Metaverse

What Does Money Look Like in the Metaverse?

• The Metaverse of the future is likely to encompass more

digitally-native tokens, but also embed traditional forms
of money
• Money in the Metaverse could exist in different forms,
i.e. in-game tokens, stable coins, central bank digital
currencies (CBDCs), and cryptocurrencies
 Potential Issues, Facts & Solutions

Regulatory Digital Finance : Regulatory status and legal

and Legal 1
characteristics of the Metaverse

Enormous amount of energy

consumption -and
Energy environmental impact- for
Consumption
2
Cryptocurrency mining is likely
POTENTIAL to keep growing
ISSUES
Legal considerations when
User
3 building financial Metaverse
Identification
platforms : Authentication of
User Identification

Source:
Cryptocurrency, NFTs and the metaverse threaten an environmental nightmare – here’s how to avoid it (theconversation.com)
Digital Finance: Current Issues and Laws | Article | Chambers and Partners
 Potential Issues, Facts & Solutions
- There is no domestic law that has been separately enacted
or that directly regulates the Metaverse
- There are no guidelines issued by the supervisory
authorities, and no self-regulatory measures implemented
Regulatory by the industry itself
and Legal 1
- There is thus much uncertainty about the existing legal and
regulatory framework that should apply to the Metaverse

- As the US committee heard, a bitcoin

transaction adds around 400kg of CO²
Energy to the atmosphere
Consumption
2 - Together, Bitcoin and Ethereum
mining operations emit more than 70
million tones of CO² into the
FACTS atmosphere.

- The usage of avatars within the

User Metaverse may give rise to legal issues
3
Identification such as identity verification, attribution
of liability, and non-repudiation
- If an account-based financial transaction
occurs on the Metaverse, the person
who uses the avatar must undergo real
name checks and KYC and AML checks

Source:
Cryptocurrency, NFTs and the metaverse threaten an environmental nightmare – here’s how to avoid it (theconversation.com)
Digital Finance: Current Issues and Laws | Article | Chambers and Partners
 Potential Issues, Facts & Solutions
- Financial transactions in the metaverse can be considered
to be similar to financial services and technologies that
are available in mobile apps.
- It is therefore possible that the entire operating system
Regulatory will be viewed as an electronic device, or broadly
and Legal 1
interpreted as electronic financial infrastructure under
the Electronic Financial Transactions Act (EFTA)
- Using renewable energy as a power for
some cryptocurrency activities.
- Encouraging cryptocurrency miners to use
Energy "proof of stake" instead of "proof of work"
Consumption
2 mechanism in validating crypto
transactions.
- Proof of work is more secure than proof of
SOLUTIONS stake, but it’s slower and consumes more
energy.
User
3 - Need to issue Law/Regulation to
Identification prohibit anonymous avatars for
financial transactions.
- Current procedure under the Financial
Supervisory Service Regulations need to
be reviewed regularly to conduct
financial transactions on a safe and
reliable platform
Source:
Cryptocurrency, NFTs and the metaverse threaten an environmental nightmare – here’s how to avoid it (theconversation.com)
Digital Finance: Current Issues and Laws | Article | Chambers and Partners
NON-FUNGIBLE TOKEN (NFT)
Non-Fungible
Token
Non-fungible tokens (NFTs) are
cryptographic assets on
a blockchain with unique
identification codes and metadata
that distinguish them from each
other.

-investopedia.com
 What is NFT's role in the metaverse?
Virtual Real Estate
As in the physical world, people in
metaverse will need a place to stay
and to store their things (NFTs). The
NFT technology provides places and
lots to be traded by the people.
Virtual Marketplace
Shopping in metaverse will feel like
shopping in the real-world where
people can look around and try the
products. NFT will enable a unique
tradeable spaces for sellers & buyers.
Digital Assets Ownership
People will have items and
collectibles in the metaverse just like
in the real-world. NFT in the
metaverse can also link to the item in
the physical world.
 Just bought this NFT a
week ago. How come
there is an exact NFT copy
of the painting?
Is this really the
original painting?

The seller that this is his

own original work. But I
Digital Assets Ownership think I have seen this
People will have items and painting somewhere...

collectibles in the metaverse just like

in the real-world. NFT in the
metaverse can also link to the item in
the physical world.
NFT and Plagiarism
Case Examples:

Aja Trier (IG: @sagittariusgallery) G Sujan, an NFT photography

claimed that her work has been artist came across duplicates of
stolen and sold in NFT for 86,000 his photos in OpenSea (an NFT
times. [1] marketplace). [1]

[1] https://www.hindustantimes.com/lifestyle/art-culture/the-flip-side-of-nft-art-world-theft-and-plagiarism-101646458700163.html
https://www.forbes.com/sites/forbestechcouncil/2022/04/22/nft-fraud-menace-of-the-metaverse/?sh=59534e072959
NFT and Plagiarism
Analysis and Recommendation:

• Regulations

So far, there is no regulating bodies that oversee the NFT system. There is no system whatsoever to verify the originality of
an NFT.
--> There should be an internationally-recognized body that can guarantee the originality of an NFT.

• Technological Obstacle

Even before the metaverse was introduced, since the Internet era, people can easily rip-off visual designs from Instagram,
Pinterest, Twitter, etc. Until now, there is no technology that can prevent someone on the internet to copy-paste a visual
design.
--> A good education & understanding regarding plagiarism and its impact could help prevent cases mentioned before.
LAW & REGULATION
 Laws and Regulation Issues
• Several issues / open questions in governing the
metaverse economy (1) :

• There is no international recognized body

that govern the metaverse globally
• Who will set the regulation in the virtual
world? Who will govern?
• The regulations to support the virtual world
are globally accessible, but it may be
required to follow the local jurisdictional
requirement and rules in commerce and
payment.
• Tax and accounting treatment in the virtual
world commercial transactions and digital
assets.
• Ethical framework regarding data collection
through a metaverse.

(1)https://www.jpmorgan.com/content/dam/jpm/treasuryservices/documents/opportunities-in-the-metaverse.pdf
 Key areas of
law/regulation (2)
Potential key areas of
law/regulation application
in metaverse economy

A boundless marketplace Data privacy & User Interactions

The ownership of the purchase of cybersecurity The interaction between one
digital assets / NFT. Data protection of personal data. virtual person (avatar) with
The transaction of illegal items or others could break the law and
acts that can harm other virtual ethic.
persons.

(2) https://www.brunel.ac.uk/news-and-events/news/articles/The-metaverse-three-legal-issues-we-need-to-address
Key areas of law that are ethically questionable
A boundless marketplace
Analysis
• In a boundless marketplace, digital asset transactions can be an issue. Digital assets such as 3D objects, digital art,
music, or videos can be purchased through the marketplace by using cryptocurrency or NFT. For example, in the
transaction of digital art through metaverse, what kind of ownership that the buyer will acquire? Based on the
International law firm Reed Smith, the ownership of digital assets is only in form of licensing, therefore the buyer
cannot sell the item without permission from the true owner. Other questions are also raised for virtual real estate, is
the property law in the real world can be applied? (2)
• It is quite difficult to prevent the marketplace from dealing with illegal drugs, weapons, or other criminal acts to harm
other virtual persons.
• Who will govern the metaverse? To make sure consumer protection.
Recommendation
• Intellectual property right in the metaverse shall be clearly regulated.
• To clearly appoint the Government body or Non-profit Regulatory Body to govern and regulate the operation and
transaction to prevent such unethical business transactions happen and promote the fairness of the policy applied
which is not controlled by platform providers for instance Facebook. This effort is also part of consumer protection.
• The integrated accounting and tax system need to be applied in order to have an accountable and transparent
transaction. In addition, blockchain technology will benefit tax administrators to combat fraud by moving the taxes
closer to the transaction (3).
(2) https://www.brunel.ac.uk/news-and-events/news/articles/The-metaverse-three-legal-issues-we-need-to-address
(3) https://www.ciat.org/blockchain-in-tax-administrations/?lang=en&utm_source=CIATBlog&utm_medium=Blog&utm_campaign=+Blockchain-en-las-Administraciones-
Tributarias+&utm_content=marzo2022
Key areas of law that are ethically questionable

Data privacy and Cybersecurity

Analysis
• User identification and privacy will be important for both interacting and transacting in Metaverse.
• Eye tracking data – what we are interested in and interact with, this can be used to profile the person(4).
• By using data in Metaverse, Companies / other persons can use our irrational decision-making to sell products, shift public
opinion, and set political agenda(4).
• The immersive nature of the metaverse can create sensory overload, leaving us vulnerable(4).
• Cybersecurity – the vast amount of data collection, malware, phishing, scams, and hackers are potential security risks that
must be prevented.

Recommendation
• The general data protection regulation shall be applied in Metaverse to ensure the user’s rights are protected.
• Investment in cybersecurity safeguard by the platform provider and user is a must to prevent the data breach.

(4) https://research.tees.ac.uk/files/36046468/Ethics_of_the_metaverse_conference_paper.pdf
Key areas of law that are ethically questionable
User Interactions

Analysis
• When users interact with others in Metaverse, there may be some actions that break the law if they took place in the
real world. For example, if one virtual person (avatar) assaults others, could we apply the criminal laws to this
situation?(2)
• In Metaverse, there will naturally be no actual bodily harm therefore the proving assault would also be much more
difficult as it requires actual bodily harm (2). However, Cyberbullying does exist and has lead to deaths.
• Sexual harassment is already emerging in Metaverse, masking the identity behind the avatar. In the example, there are
incidents of groping, where users in Metaverse can wear a haptic vest or other technology to feel the sensation if they
were touched (2).

Recommendation
• To make it clear the rule of the legal person of an avatar, in which a legal person who makes the avatar shall be
responsible for their action in the Metaverse.

(2) https://www.brunel.ac.uk/news-and-events/news/articles/The-metaverse-three-legal-issues-we-need-to-address
METAVERSE & SOCIETY
 A New Society
The Metaverse can be described as a hub
where the collective physical and digital
experience of humanity can meet. This in
turn means that the Metaverse may become
the future of human coexistence. Creating a
new form of society made from different
culture, views, experience, and opinions.

Whether the Metaverse can become the

successor of the internet or still be one of its
features is up to debate as the technology is
still in development and few still has access
to it. However, it is extremely important to
know the how, who, and why of the
development for Metaverse as it will heavily
shape what could be the new form of
humanity. And whether it would bring an
improvement or detriment to society.

Translated by Content Engine, L. L. C. (2021, Dec 29)

 Echo Chamber
A social concern of the Metaverse is the Echo
Chamber. Where a person only encounters
information or opinions that reflect and reinforce
their own. Which leads to misinformation.

Echo Chambers are usually experienced is social

media, due to the algorithm that was made to
make users be more engaged, active, and involve.1

An example observed is the Brexit (2016) Debate

that happened in Facebook. People are observed
to be fed content that further reinforced their
beliefs which may result to some misinformation
for those against and for Brexit. 2

1. Kompella, K. (2022, 04)

2. Bastos, M., ⨯, D. M., & Baronchelli, A. (2018).
Explicit A Majority of Internet User has seen
explicit content in the internet whether
by accident or on purpose. Even with
Content the many regulations in place. As the
internet is a place that empowers
freedom of expression no matter how
virtuous or vile.

This may be nothing new for those who

have experienced the internet. The
Metaverse on the other hand is still
new, unregulated, and Experimental.

An example is when the BBC News

discovered how easy it is to access one
of the Metaverse online forums
without having to verify their age.
Some users behave inappropriately in
an environment where minors and
adult can easily meet.1

1. Translated by Content Engine, L. L. C. (2022, Feb 23)

 Desensitization
Desensitization refers to diminishing emotional
responsiveness due to overexposure. As the
internet is a gateway to any information. People
tend to be more exposed to death, violence,
racism, and misogyny. Resulting in being less
sensitive and understanding of the real world.
"The "anything goes" aspect of media has not
only increased victimization of kids, but also to a
death of sensitivity among youth1"
Metaverse technology allows a more physical
involvement than the internet. This may fasten
the pace of desensitization of users2.

1. Moore, C. (2009)
2. Translated by Content Engine, L. L. C. (2022, Apr 11)
 Conclusion
• The Metaverse is a new technology, where its potential has not been fully
realized.
• As different region have different culture, beliefs, and societal norm, the
Metaverse may become a hub where those point of views meet.
• Just like the internet there are several issues that plagues it
from an personal, economical, social, and judicial point of view.
• The problems that arises though a detriment can be handled as the technology
become more developed and usage become more widespread.
• As it is still in its infancy, its detriment and improvement for society can only be
speculated by comparing it to the development of the internet but it can be
speculated that it would eventually become a huge asset for humanity.
Bibliography
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metaverse.pdf
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