The idea of spending thousands or even millions of dollars to buy a fictional “land” in a virtual world may sound absurd. But in recent months we have seen significant investments in virtual land within the metaverse.
Consulting firm Price Waterhouse Coopers is among the latest firms to enter the real estate market of The Sandbox, one of the virtual world platforms where people can socialize, play games or go to concerts.
PwC paid a sum that could be considerable, although the final amount was not disclosed.
Someone else recently bought a plot of land in Snoopverse for $ 450,000, a virtual world that rapper Snoop Dogg is developing within The Sandbox.
Meanwhile, the Metaverse Group, a real estate company focused on the economy of the metaverse, purportedly purchased a piece of land in Decentraland, another virtual platform, for 2.43 million dollars.
Let’s go over what the “metaverse” is, because you probably heard the term a lot when Facebook rebranded as Meta in October 2021.
Other companies, such as Nike and Microsoft, have also announced that they will launch into this space.
The metaverse describes a vision of a connected 3D virtual world, where the real and digital worlds are integrated using technologies such as virtual reality (VR) and augmented reality (AR).
To this virtual universe can be accessed through devices such as virtual reality or augmented reality glasses and smartphone applications.
Users will meet and communicate through digital avatars, explore new areas, and create content.
The idea is that the metaverse will develop to become a collaborative virtual space where we can socialize, play, work and learn.
There are already several metaverses, for example, on platforms of virtual games like The Sandbox and virtual worlds like Decentraland.
In the same way that a website is part of the larger 2D world network, individual metaverses will form a larger connected metaverse.
It is important to note that, as in the real world, it is and will be increasingly possible buy things in the metaverse, including real estate.
The money of the metaverse
Transactions in the virtual world are generally carried out using cryptocurrencies.
Apart from cryptocurrencies, tokens no fungibles (NFT) they are the main method for monetizing and exchanging value within the metaverse.
An NFT is a unique digital asset.
Although they are mainly digital art elements (such as videos, pictures, music, or 3D objects), there are many things that can be considered NFT, including virtual properties.
On platforms like OpenSea, where people buy and trade NFTs, there are now land or even virtual houses.
To ensure that digital real estate has value, the offer is limited, a concept in economics called “scarcity value.”
For example, Decentraland is made up of 90,000 pieces or “parcels” of land, each approximately 15.5 meters by 15.5 meters.
We are already seeing examples where the value of virtual real estate is increasing.
In June 2021, a digital real estate investment fund called the Republic Realm reportedly spent the equivalent of more than $900,000 to buy a parcel in Decentraland.
According to DappRadar, a website that tracks NFT sales data, it was the most expensive purchase of NFT land in Decentraland’s history.
However, as we know, in November 2021, the Metaverse Group bought his land in Decentraland for $2.4 million.
The size of this purchase was actually smaller than the previous one: 116 parcels of land compared to 259 purchased by Republic Realm.
But it’s not just the Decentraland platform that is experiencing a shopping buzz.
In February 2021, Axie Infinity (another world of virtual games) sold nine of its parcels of land for the equivalent of $ 1.5 million, a record, the company said.
But just a few months later, in November of that same year, he sold another parcel for $2.3 million in November 2021.
Although it seems that prices are rising it is important to recognize that real estate investing in the metaverse remains extremely speculative.
No one can be sure if this boom is the next big investment or the next big bubble.
What do they buy for?
Financial incentives aside, you may be wondering what businesses and individuals will actually do with their virtual properties.
For example, the purchase made by the Metaverse Group took place in the Decentraland fashion venue.
According to the buyer, the space will be used for host digital fashion events and sell virtual clothing for avatars, another potential area of growth in the metaverse.
Although investors and businesses dominate this space for now, not all metaverse real estate will cost millions.
But,what could owning you offer of a virtual terrain?
If you buy a physical property in the real world, the result is tangible: a place to live, to have security, to receive family and friends.
Even if virtual properties do not provide physical shelter, there are some parallels.
By buying virtual real estate you could build on them.
Or you can choose an already built house that you like.
You can personalize it with various (digital) objects.
You can invite friends and visit virtual homes of other people too.
This vision is still distant.
But although it seems completely absurd, we must remember that there was a time when people had doubts about the potential of the internet and later from social networks.
Technologists predict that the metaverse will mature into a economy in full swing in the coming years, in addition to a synchronous digital experience as closely tied to our lives as email and social media are now.
This is a strange fantasy come true for someone who was a gamer in a previous life.
A few years ago, a younger version of my conscience was telling me to stop wasting time playing video games.
Go back to studying and concentrating on my “real” life.
Deep down, I always had the desire to see the games overlaid with real life, Real Player One style.
Now I feel this vision getting closer and closer.
* Theo Tzanidis is Senior Lecturer in Digital Marketing at the University of the West, Scotland. This note originally appeared on The Conversation and is published here under a Creative Commons license.