An increasingly popular topic in the tech world is the process of acquiring virtual real estate in the Metaverse. Is investing in Metaverse land the same as purchasing physical land? This article explores these queries in detail.
Not too long ago, the idea of engaging extensively in the virtual world seemed absurd. Up to that point, the most interaction people had with the virtual realm was through VR (Virtual Reality) and similar devices.
Nowadays, the situation has undergone a significant shift, with anyone being able to purchase virtual property in the digital realm. Various virtual worlds, such as Decentraland (MANA) and Sandbox (SAND), provide opportunities for individuals to interact and engage in transactions. The recent surge of interest in the metaverse has attracted significant attention.
Before delving further into this topic, it’s essential to understand what the metaverse encompasses.
Exploring the Metaverse
The term “metaverse” was coined by Neal Stephenson in his 1992 novel Snow Crash. Essentially, the metaverse integrates augmented reality (AR), virtual reality (VR), and extended reality to create a platform where individuals can digitally interact, play, work, and almost live.
The term gained widespread attention when Facebook announced its rebranding to Meta, signaling the company’s intention to immerse itself in the metaverse. While the term has been in existence for nearly thirty years, recent developments have propelled it to the forefront of public consciousness.
Naturally, alongside consumers, investors have sought out opportunities for investment and profit in this swiftly expanding space. As a result, the acquisition of digital real estate in various leading digital realms has emerged as a lucrative subsidiary for modern investors.
Virtual Real Estate and Its Growing Appeal
It’s common knowledge that land is an enduring financial asset that appreciates over time and is one of the most reliable and sought-after asset classes. This also holds true in the digital realm.
Virtual land, existing in the digital domain, operates similarly to physical land. Transactions mirror those in the physical realm, with parties buying and selling plots using the currency specific to the land.
Several digital realms and worlds offer opportunities for users to engage in transactions involving virtual land. Decentraland stands as one of the most popular among these, where virtual real estate is traded using its currency MANA, alongside other investment opportunities.
The Value of Land in the Metaverse
It’s important to emphasize that virtual land is being traded for hundreds of thousands of dollars in the metaverse. Corporate entities and investors are also capitalizing on this opportunity, pursuing various investment strategies.
In the case of Decentraland, a piece of land sold for an astounding $900,000 USD in June, sparking a series of similar transactions.
As interest in the cryptocurrency space continues to grow, investors have seized the opportunity presented by the metaverse, reaping substantial returns on their investments. Astute speculators and modern investors have recognized the potential of this emerging market.
Investors Leveraging Virtual Real Estate
Unsurprisingly, investors have acquired virtual land and are leveraging it to generate income and secure profits.
To illustrate, a landowner can host exclusive events and parties on their virtual property, charging entry fees for attendees.
An example of this is the renowned American rapper Snoop Dogg, who hosted an exclusive event on The Sandbox’s platform. By incorporating non-fungible tokens (NFTs), Snoop Dogg planned to replicate his real-world mansion in the digital realm. Admission to the event required possession of an NFT as a gate pass.
Janine Yorio, an established real estate investment executive, foresees substantial transformations in Web 3.0, with the gaming and entertainment industries playing pivotal roles. As the Co-founder and CEO of Republic Realm, her company has acquired the equivalent of a city, purchasing 24*24 parcels, each spanning 100 meters.
Reportedly, Mike Novogratz’s Galaxy Digital has made a $10 million investment in Republic Realm.
Generating Steady Income Similar to the Real World
An individual who owns virtual land can generate recurring income from it, much like in the physical world. An investor might build a virtual house using NFTs on their land and rent it out for monthly income.
Whether it’s a house generating rental income, an art gallery charging entry fees, or a space for emerging artists to showcase their work in the metaverse, income generation closely parallels real-world mechanisms.
Acquiring Land in the Metaverse – A Decentraland Guide
As previously mentioned, Decentraland is a prominent digital realm within the metaverse. Based on blockchain technology, it offers a virtual reality platform where users can engage in land transactions, interact with others, play games, host events, and access numerous other opportunities.
Decentraland has its own currency and tokens: MANA and LAND. It stands as one of the leading virtual realms in the non-fungible token space, with each parcel of LAND in Decentraland measuring 16 meters by 16 meters. The total number of land parcels is capped at 90,000 to create scarcity.
There are no restrictions on land transactions in Decentraland, and users can buy, rent, or sell land via the official Marketplace, NFT marketplaces, or platforms like OpenSea.
Accessing the Official Marketplace
Users must visit the official Decentraland Marketplace and register to access the platform. Once logged in, they can browse through ‘Parcels and Estates’ to view available options.
Selecting a Parcel of Land
Users can then browse the marketplace to select their preferred parcel of land, enabling them to assess the proximity to other notable areas.
Upon making a selection, users can click on the parcel to view additional details. The price, listed in MANA, the owner’s information, and the land’s availability are provided. Interested parties can proceed to purchase by clicking ‘Buy’.
Completing the Transaction
After clicking ‘Buy,’ users will need to link their wallets for seamless payment processing. Once purchased, the land will be sent to the user’s wallet as a non-fungible token.
Wallets such as MetaMask and Trust Wallet are easily accessible and are used to facilitate the transactions, requiring MANA or ETH (Ethereum) for completion, along with a transaction fee.
Confirmation
Upon completion, users can confirm the acquisition of LAND in their wallets. Trust Wallet users can navigate to the ‘Collectibles’ tab, while MetaMask users can confirm under the ‘NFTs’ tab.
Assessing the Value of Digital Land
Digital land, like its physical counterpart, is evaluated using similar metrics. Factors such as scarcity and limitations influence its market value, with The Sandbox’s land designed to be scarce, featuring only 166,464 parcels, each measuring 96*96 meters.
Some parcels may be valued higher due to associations with popular personalities or hosting unique events or gatherings. Corporate entities may also invest substantial amounts based on their strategic objectives and profit forecasts.
Is It a Viable Investment?
Real estate, both physical and digital, has demonstrated consistent appreciation. The virtual realm has experienced a surge in value, driven further by prevailing market trends and advancements. Investors are increasingly interested in the metaverse, with Web 3.0 and modern investors aligning favorably with this concept.
Virtual assets are viewed as lucrative business opportunities and asset classes, making them an attractive option for investors already active in the crypto market.
As with any investment in emerging markets, prudence and due diligence are crucial. The virtual real estate market is experiencing rapid growth, but it also presents challenges and uncertainties as it burgeons.
