Posted over 2 years ago

Metaverse, Technology & Real Estate

Metaverse, Technology & Real Estate

Researched and Written by Deb Bandyopadhyay (@debadipb) | Profit & Solutions Media Publication | LonelyStar Consultancy Research

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Investors are now flocking to the metaverse, or a virtual immersive 3D world, where anyone can create their avatars and interact with others in real-time and buy/sell products including real estate. A plot in this virtual universe sold for a whopping $2.43 million in what was the biggest real estate deal in Metaverse.

A virtual plot of land in the metaverse just sold for a whopping $2.43 million, the largest deal so far in the virtual universe. The Metaverse Group, under the ownership of Tokens.com bought Decentraland’s Fashion District. "The market opportunity for bringing the Metaverse to life may be worth over $1 trillion in annual revenue," crypto asset management firm Grayscale said in a report without giving any specific timeline.

There are multiple such virtual platforms—Decentraland, Axie Infinity, Sandbox, among others—from where user-generated digital environments can be bought and sold. Since the deals are in the virtual world, the mode of payment is also digital or cryptocurrency. The Decentraland deal, for example, was done in the native currency, MANA, which is currently trading at roughly $5 on coinmarketcap.com.

The idea of spending thousands or even millions of dollars to buy fictitious “land” in a virtual world sounds, to be frank, absurd.

But in recent months, we’ve seen significant investments in virtual land within the metaverse. PwC is among the latest to dive in, having purchased real estate in The Sandbox, a virtual gaming world, for an undisclosed amount.

If other reported sales are anything to go by, it would have been a handsome sum. One person recently bought a plot of land in the Snoopverse – a virtual world rapper Snoop Dogg is developing within The Sandbox – for US$450,000 (around £332,500).

Meanwhile, the Metaverse Group, a real estate company focused on the metaverse economy, reportedly bought a piece of land in Decentraland, another virtual platform, for US$2.43 million.

Virtual land as an NFT

Transactions in the virtual world are generally monetised using cryptocurrency. Other than cryptocurrenies, non-fungible tokens (NFTs) are the primary method for monetising and exchanging value within the metaverse.

An NFT is a unique digital asset. Although NFTs are primarily items of digital art (such as videos, images, music or 3D objects), a variety of assets may constitute an NFT – including virtual real estate. On platforms like OpenSea, where people go to buy and trade NFTs, there are now plots of land, or even virtual houses.

To ensure digital real estate has value, supply is limited – a concept in economics called “scarcity value”. For example, Decentraland is made up of 90,000 pieces or “parcels” of land, each around 50 feet by 50 feet.

Technologists believe the metaverse will grow into a fully functioning economy in a few short years and offer a synchronous digital experience that will be as integrated into our lives as email and social networking are today.

Money in these digital worlds is cryptocurrency, as finance in the metaverse is powered by the blockchain - a digitally distributed public ledger that eliminates the need for a third party, like a bank.

Anyone entering a virtual world can buy or trade art, music and even homes as nonfungible tokens, or NFTs, which are blockchain-based collectibles that are digital representations of real-world items.

The NFT serves as proof of ownership and is not interchangeable.

And in recent months, the volume of transactions for commercial real estate in the metaverse has ramped up.

The future of metaverse real estate

Financial incentives aside, you may be wondering what companies and individuals will actually do with their virtual land. As an example, the Metaverse Group’s purchase is in Decentraland’s fashion precinct. At the time of the sale, the Metaverse Group said the space would be used to host digital fashion events and sell virtual clothing for avatars – another potential area for growth in the metaverse. The company has since revealed it will stage the impending Metaverse Fashion Week on that very plot of virtual real estate.

While investors and companies are dominating this space at the moment, not all metaverse real estate is expected to cost millions. But what could owning virtual land offer you? If you buy a physical property in the real world, the result is tangible – somewhere to live, to take pride in, to welcome family and friends. Virtual property does not provide physical shelter, but there are still some parallels. In shopping for virtual real estate, you could buy a piece of land to build on – or you could choose an already-built virtual house that you like. You could make it your own with various digital objects, and invite visitors, and visit others’ virtual homes, too.

This vision is likely a while away, but if it seems completely absurd, we should remember that once upon a time, people had doubts about the potential significance of the internet, and then social media. Technologists predict the metaverse will mature into a fully functioning economy in the coming years, providing a synchronous digital experience as interwoven into our lives as email and social networking are now.