The idea of spending millions on land that only exists on the internet may sound ridiculous, but the fury sparked by the metaverse, a future of virtual reality, are encouraging some investors to buy digital real estate.
This week, the New York company Republic Realm announced a $ 4.3 million operation to purchase digital land in The Sandbox, one of several “virtual worlds” websites where people can socialize, play games or go to concerts.
In late November, the Canadian cryptocurrency firm Tokens.com had acquired for 2.4 million dollars some land in the rival platform, Decentraland.
Days earlier, Barbados had announced a plan to open a “metaverse embassy” in Decentraland.
These types of portals are promoted as prototypes of the metaverso, a internet of the future where current online experiences like talking to a friend will feel like face-to-face thanks to virtual reality devices.
The word “metaverso”Has been very much in vogue in Silicon Valley for months, but interest multiplied in October when the parent company of Facebook renamed “Meta”In his strategy of betting on the virtual reality.
The name change of Facebook “Introduced the term ‘metaverso‘to millions of people much faster than I ever imagined, “says Cathy Hackl, technology consultancy that advises companies to enter the metaverso.
The data website Dapp collects that, in the last week, virtual lands valued at more than 100 million dollars were sold in the four main sites of the metaverso: The Sandbox, Decentraland, CryptoVoxels y Somnium Space.
Hackl is not surprised by this boom, which is accompanied by the development of everything a digital real estate ecosystem, from developers to rentals.
“We try to transfer the way we understand physical goods to the virtual world.”
Cathy Hackl, technology consultancy
And although it will take time for these websites to operate as real metaversos, your digital terrain already functions as a real life asset.
“It can be built on it, it can be rented, it can be sold.”
Cathy Hackl, technology consultancy
The fifth Avenue
Tokens.com bought an excellent plot in the district of Calle de la Decentraland fashion, which the platform wants to promote as the headquarters of virtual stores of luxury brands.
“If I hadn’t researched and understood that this is valuable property, this would seem absolutely insane,” admits Tokens.com CEO Andrew Kiguel.
For him, who spent 20 years in investment banking focused on real estate, the Decentraland operation is governed by the same criteria as in real life: it is a fashionable and busy area.
“It is a space for advertising and events where people are going to congregate,” he said, taking as an example a recent music festival on that platform that attracted 50,000 spectators.
Luxury brands are beginning to enter this parallel world: a virtual Gucci bag was sold on the Roblox platform in May for a higher price than the real version.
Kiguel hopes that Fashion Street will become a kind of Fifth Avenue from New York.
Your land can make you money as advertising space or even “having a store with a real employee,” he explains.
“You can come in with your avatar and have 3D digital representations of a shoe that you can hold, and ask questions” of the clerk, he says.
A little absurd
Back in 2006, a real estate developer made headlines after having won a million dollars with virtual land sold in the famous Second Life. But there is a key difference between that still-active platform and those of the new generation.
On Decentraland, Everything from land to virtual works of art comes in the form of non-expendable tokens (NFTs). Some people have spent tens of thousands of dollars on these digital items that have generated skepticism and excitement.
Kiguel foresees that this form of digital ownership will be very widespread in the coming years, because the “blockchain” technology behind it creates trust and transparency when doing transactions.
“I can see the history of ownership, how much has been paid for it and how it has been transferred,” he says.
But it is not an investment without risk, particularly due to the volatility of the cryptocurrencies used to buy NFT and because the value of these investments depends on the number of users of these platforms, for now far from Facebook O Instagram.
“It all sounds a bit absurd,” acknowledges Kiguel. “But there is a vision behind.”