The World’s Best Land Hasn’t Been Created Yet…Welcome to the Metaverse
There’s an old saying that goes something like this: Buy land, they aren’t making any more of it. Sound advice, if planet Earth is the only place you’re looking for land, but what if there was somewhere not on Earth where you could buy property right now? If you’re thinking of the moon or Mars, start thinking more digitally…start thinking metaverse!
You’re probably familiar with Facebook’s decision to change its name to Meta Platforms Inc. to focus on online worlds in what is called the metaverse. But if you’re wondering what exactly this metaverse is, don’t worry, you haven’t been left behind, most people aren’t familiar with the metaverse…yet. Basically, the metaverse consists of online worlds that allow players (or citizens) to do virtually anything that they can do in the real world, such as shopping, going to concerts, and buying virtual goods such as clothes, furniture and even houses!
Players aren’t the only ones using these platforms, companies are making big bets on the future of these worlds to the tune of millions of dollars. That’s right, actual companies are spending millions of dollars on property that exists only in computer code. The largest transaction to date was by virtual development firm Republic Realm, which spent $4.3 million for land in Sandbox, one of the more popular worlds in the metaverse. Tokens.com, a Canadian firm, recently plunked down $2.5 million for land in another world, Decentraland.
“This is like buying land in Manhattan 250 years ago as the city is being built.”
- Andrew Kiguel, chief executive of Tokens.com
As tempting as the metaverse might seem, it’s prudent to keep in mind that digital land comes with much more risk than actual land. For starters, cryptocurrency is used in the metaverse and therefore any investment will of course be affected by the exchange at which that crypto is trading. Also, real land will always have some value; even swamps in Florida aren’t free. However, an investment in virtual land has a very real possibility of turning out to be worth absolutely nothing. Caveat emptor!
To reduce the risk, some companies are hedging their bets by buying a little land in all the virtual worlds, rather than betting on the popularity of one. If you’re wondering what companies plan to do with all this “land”, it’s surprisingly similar to what investors do with real land! Some are simply sitting on the property, waiting for the world to catch on and the land to appreciate in value, while others have begun developing homes and malls to attract players. Once virtual buildings are built, the owner can rent out the space to tenants and collect rent through cryptocurrency. Here is a description of Tokens.com’s new virtual building from The Economist:
“Ridiculous and cool.” That is the architectural brief for a new office tower under construction in the Crypto Valley, a business district of Decentraland, a virtual platform built on the Ethereum blockchain. The edifice—owned by Tokens.com, a blockchain investor—will be a cross between a nightclub in Ibiza and the Bellagio resort in Las Vegas. In a fantasy world unencumbered by something as pedestrian as physics, a rotating company logo will float above the tower as nearby clouds shoot out company-branded thunderbolts. The tower’s purpose—to provide office leases for firms and event space for crypto conferences—is humdrum by comparison.
The growth in the sale of digital assets has been helped along by the creation of non-fungible tokens (NFTs), which can uniquely identify a specific digital asset to a single owner. And people are diving in. For example, Legacy world, which is designed to resemble London, hasn’t even launched yet and already users have poured in $54 million to purchase plots of “land.” Some are even turning a profit. The owner of the Taj Mahal and Eiffel Tower in SuperWorld paid $400 apiece; those properties are now selling for approximately $200,000 and $400,000, respectively. When Decentraland launched in 2017, land parcels could be bought for $20; those same parcels are now selling for upwards of $100,000.
It’s hard to say whether the metaverse will catch on. The technology is still in its infancy and fairly clunky to use; it will need to come a long way before moving from the early adopters to the mainstream public. But the real question is not whether people will come, but whether they will spend money—both in the virtual world and in real life. To make the metaverse feel “real” requires a user to invest in equipment such as graphic cards and virtual-reality headsets, as well as have access to superfast broadband internet—none of which is cheap. In addition, the currency of the metaverse, crypto, is itself still gaining mainstream traction and may not appeal to the average user.
One thing is for sure, the next time someone tells you to buy land because they aren’t making any more, you can respectfully disagree!
REFERENCES
Putzier, K. (2021, November 30). Metaverse Real Estate Piles Up Record Sales in Sandbox and Other Virtual Realms. Wall Street Journal. Retrieved February 26, 2022, from https://www.wsj.com/articles/metaverse-real-estate-piles-up-record-sales-in-sandbox-and-other-virtual-realms-11638268380.
Virtual-property prices are going through the roof. (2021, January 1). The Economist. Retrieved February 26, 2022, from https://www.economist.com/business/2022/01/01/virtual-property-prices-are-going-through-the-roof.