It's the stuff of nightmares: The other day, I found my property occupied by a stranger, who was renting it out, Airbnb style.
The good news: I’m OK. I wasn’t actually evicted from my own home — at least not in this world. Someone had acquired my property in Upland, a blockchain-powered game that allows people to buy, develop, rent out and sell virtual land parcels based on real-world property borders. It’s a bit like Monopoly, played on top of Google Maps, with virtual land speculation happening on a gamified version of the real world.
With bright and colorful imagery, and a goofy-looking llama as a mascot, Upland emphasizes that it’s all fun and games. That’s true for its economy as well, as most of its in-game transactions have little to no monetary value in the real world. The person who bought my property currently makes the equivalent of 4 cents a month in Upland’s in-game currency by renting it out to other players.
However, Upland has big ambitions, which include eventually expanding into AR, and providing its data via APIs to third-party developers who may one day be able to build their own game and nongame applications with it. And the company is not alone: A small but growing number of startups and crypto initiatives have begun selling and renting out AR spaces tied to real-world addresses. One day, these efforts could be key to telling your smart glasses which information to display as you look at a famous landmark, or even your neighbor’s home.
This brings up a ton of questions: Who should have the rights to an AR layer tied to a physical address? What does it mean that these AR properties are being divided up among early adopters before most people even know they exist? Will we see the same issues that have plagued real world real estate, including gentrification and displacement, replicated in AR?
And, on a more personal level: What should I do about my virtual squatter?
Inspired by Monopoly and ‘Stranger Things’
Maybe I should just let it go. Let Upland be Upland, and carry on with my life here on actual land. That’s apparently what everyone else is doing, according to Upland co-founder and co-CEO Dirk Lueth. “So far, we did not have one single case where people say: ‘OK, how can you do that?’” Lueth told me during a recent interview.
Lueth and co-founders Mani Honigstein and Idan Zuckerman came up with the idea for Upland after a night playing Monopoly in 2018. At the time, the trio was binging Netflix’s “Stranger Things,” in which the Upside Down exists as an alternative version of the real world. They also had been exploring the potential of NFTs and other blockchain-based technologies. These three things combined inspired them to create Upland, according to Lueth.
Upland players can acquire plots of land based on real-world property data.Screenshot: Upland
“We launched into open beta in early 2020, and had probably 500 daily active users the first one or two months,” Lueth said. In December of 2021, Upland crossed 100,000 daily active users.
Upland players can acquire land plots based on real-world property data the company is licensing from mapping provider Mapbox, and then develop them to generate higher revenues, similar to the way a house or hotel would increase the rent in Monopoly. And there are other in-game incentives to becoming a real estate mogul. “Let's say you collect three properties on the same street, or three museums, which are harder to get,” Lueth explained. “Once you complete that collection, your yield on those properties increases.”
This type of gamification appears to be working: The person who bought my property in Upland currently owns about a dozen land parcels, both in the Bay Area and on the East Coast. That’s comparably small fish. My neighbor’s property is owned by someone who currently holds more than 500 such parcels, and whose net worth is around 5.5 million units of Upland’s UPX in-game currency. UPX can’t be cashed out directly, but players can opt to sell their properties for U.S. dollars. If one wanted to buy 5.5 million UPX directly from Upland, the price would be around $5,000.
Upland tries to keep players engaged by limiting housing supply. At launch, players could only buy around 50,000 properties in San Francisco. Since then, Upland has regularly opened up new markets like Chicago, New Orleans, Manhattan and Oakland, which is where I call home. These days, new expansions are often met by frantic buying activity. When Upland expanded to the Bronx in December, all available properties sold out within two hours.The company has responded to this frenzy by reserving some properties for new players, and occasionally auctioning off marquee addresses. Last year, the company auctioned off the land plots tied to the Guggenheim Museum and Rockefeller Center in New York. “We want to build a stable economy,” Lueth said. “That also means [that] we have to balance supply and demand.”
My East Oakland neighborhood happens to be one with a lot of houses reserved for new players. Still, on my block, only three of the two dozen properties are still uninhabited.
There’s no legal precedent
Turns out I wasn’t the only one who was weirded out by Upland's virtual land grab. “I share the instinct of your reaction: It seems like there's something wrong with this,” agreed Stanford Law School professor Mark Lemley. Lemley and UCLA Law School professor Eugene Volokh authored a paper about legal aspects of AR and VR in 2017, and I was hoping that he would be able to tell me whether Upland selling a virtual representation of my property was legal.
“I don't know that there is an answer,” Lemley said. “This is not something the law has dealt with before, and it's even hard to find a particularly close analogy.”
The data that Upland is using to build its game on top of the real world, including addresses and property borders, is publicly available or easily licensable, and there are good reasons against restricting access to it: Without such data, we would have no Zillow, no Yelp, no Google Maps.
But while using this data in aggregate might be fine, a lot of issues remain unresolved. Lemley cited Pokemon Go as an example: When the pioneering AR game started to take off in 2016, some people filed lawsuits after finding Pokestops on their private properties. “Those cases mostly don't succeed, and to the extent they have any merit, they seem to be because of the triggering effects of physical presence,” Lemley said. “I put a Pokestop on your property, and a bunch of strangers randomly come onto your property.”
In other words, the issue is not the AR layer itself, but the real-world behavior it could provoke. There are also some potential issues around trademarks, which is why Upland doesn’t sell its players specific stores, but only the properties they reside on. “We would never say: We are selling this brand-name property,” Lueth said. “All we do is sell addresses, which are public goods.”
Still, the mere fact that money is involved does add some complexity, and could be seen as something akin to free riding, Lemley said. “We don't actually have a legal doctrine that really fits this well, but it definitely heightens the instinct that you are doing something that ought to belong to me,” he said. “Someone's taking the house that I've built, or the property that I have purchased, and profiting from it.”
Get ready for AR eminent domain
That concern is not lost on Ray Shingler, co-founder and vice president of product development at Spotselfie, an app that’s been trying to establish itself as an AR-powered alternative to traditional social networks. Spotselfie launched in May with a focus on AR sharing. “Content [is] just floating around outside in the real world, at GPS locations, and you can now walk through content and digest it as you move through and interact with people,” Shingler said.
To kickstart adoption, Spotselfie has been rewarding users who share content with an in-app currency, which they can trade for virtual land tied to real-world locations, something the company calls Spotland. “I can go claim, through the augmented reality lens, a location of land at the Eiffel Tower, or New York City, or at a beach in Hawaii,” Shingler said. Land ownership gives people access to additional AR features, including monetization. “People can get a revenue share on any ads that we will be placing in the future at these particular locations throughout the world,” he said.
There are some notable differences between Spotland and Upland. For one thing, Spotland isn’t based on property borders, but on GPS locations. Instead of owning my entire property, someone might just own a smaller circle of land in my backyard. Unlike Upland, Shingler’s company is also giving property owners opt-out rights. “If you just want to shut down any particular land, maybe your house, maybe your business, you can contact Spotselfie and we will go ahead and pull that area out of our availability,” he said.
In the Bay Area, Upland mirrors the real housing market: Most properties have already been sold.Screenshot: Upland
Shingler hopes that businesses and owners of private residences won’t take that step, and will instead go on the app and claim their own properties. Of course, this still requires that people actually know about Spotland before someone else snaps up their properties. Otherwise, the app would have to take that property away from the person who first acquired it — a kind of eminent domain redistribution of AR wealth, if you will. “There are some things that we have to work out yet,” Shingler said.
Upland has no such plans, and instead wants to build out its platform to give latecomers other opportunities. Lueth told me that early adopter advantage is simply something a company like Upland couldn’t avoid. “It eventually becomes like the real world,” he said. “You have some real estate mogul [who owns] more land than others, but then others do other things in the metaverse. Maybe they provide services and earn money in the metaverse, maybe even for their real lives, and not necessarily even own a piece of land.”
Democratizing AR land ownership
The idea of an AR world with real estate moguls that snap up countless properties, leaving others to compete for service jobs, doesn’t sit well with everybody. And while the law might be slow to catch up to the new realities of virtual property ownership with real-world implications, some are hoping that tech can actually provide a solution. This includes the folks behind the Geo Web, who are trying to use a combination of blockchain technologies and novel taxation schemes to build what they call a “public good AR metaworld.”
Geo Web co-founder Graven Prest told me that he at one point shared my gut feeling about AR layers and land ownership. “My initial reaction was: Whoever owns the physical property should be able to have exclusive rights to put the digital stuff [there],” he said. “That makes sense, because our conception of property rights is pretty hammered in at this point.”
However, over time, he realized that this wasn’t always the best solution. In some cases, property records are lost, or disputed, or land belongs to the public. Also, what if a property goes into foreclosure — should a bank also take ownership of any AR layers attached to it? And what about rentals: Should property owners have a right to control the AR layer of their tenants? And will you have to call your landlord whenever your AR breaks?
Prest’s thinking also evolved for what he said were more philosophical reasons. After immersing himself in the topic, he concluded that traditional property rights may not be the best way to build shared AR layers that encompass the world and benefit the people living in it. “I don’t believe private property rights should be a sacred cow,” he told me.
Instead, the Geo Web is using something known as Harberger Taxes, named after American economist Arnold Harberger. The idea is that people self-assess the value of their properties on the Geo Web, and then pay a percentage of that value as an annual tax or licensing fee to the network. At the same time, they have to agree to sell their property if anyone is willing to pay them the self-assessed value for it.
In other words, if I wanted to make sure that no one could ever get their hands on the AR layer associated with my house in Oakland, I could tell the world that it is worth $1 million. The downside: At a 10% licensing rate, I would have to pay $100,000 a year to the Geo Web. If, on the other hand, I wanted to just give all of this a try without going broke, I could assess its value at just $5. This would lower my annual fee to 50 cents, but make it a lot easier for someone to snap it up from under me, just like what happened in Upland.
This means I’d have to figure out how much value this AR layer actually poses for me. How much would I be willing to pay to keep control over it?
“It creates these nice balancing, opposing forces to create a better equilibrium for a market price,” Prest said. And at least in theory, it could also prevent some of the worst effects of the real-world real estate market. “Some people will speculate, but they won't be monopolists forever,” he said. “There will be opportunities for people long into the future to own land, to control it, to tap into the wealth of knowledge and tools that have been created on the network.”
The Upland version of downtown San Francisco. This is near Protocol’s Bay Area office.Screenshot: Upland
For now, the Geo Web project is still in its very early stages, with plans to launch on an Ethereum-based network this year. Eventually, the Geo Web team imagines that licensing fee rates, and the ultimate use of those proceeds, will get democratically decided, and they’re banking on a network effect. “Some people will opt in, money will go in and be used on public goods,” Prest said. “As public goods create more value for those people, more people will choose to opt in.” At least that’s the hope. “Time will tell if our theories work out in practice,” he added.
A fighting chance against the big guys
Even if the Geo Web succeeds, it inevitably won’t be the only provider of geospatial data for AR. Just like there are already competing virtual representations tied to my real-life home in Upland and Spotland, there will be multiple AR layers, serviced by different companies and governed by different rules. Companies like Apple, Google and Meta will likely provide their own geospatial AR ecosystems, which could even get preferential treatment in their respective devices. This scenario is a key reason the Geo Web exists, Prest told me. “We want geospatial AR to look a lot more like the open web than the App Store,” he said.
In order to have a fighting chance against the big guys, both startups and enthusiasts alike will probably have to start early, and deal with messy problems like property rights from day one. “Start now, build a groundswell of support [and] figure these things out,” Prest said. “Hopefully, when consumer smart glasses come around, consumers will demand that they are able to have these open experiences rather than a siloed, controlled experience.”
Part of that work will also force initiatives like the Geo Web and companies like Upland to figure out how to deal with people who are disturbed by the fact that someone else owns an AR layer tied to their physical property. Lemley said that lawsuits over these issues are inevitable. “People are going to be objecting to this and starting to try to bring cases,” he told me.
But will the courts get it right? Lemley sighed. “I'm not that confident,” he said.
As for myself, I ultimately decided to just let my Upland squatter be, and hope they make the best out of their meager monthly rental income.