Virtual Real Estate is Real and Growing

When Facebook changed its name to Meta, a lot of us saw it as a strategy to get away from the dark clouds that had been dampening Facebook’s status.

But what Meta really equates to is Facebook’s pivot towards the “Metaverse”, a cryptocurrency-powered collection of virtual worlds. Within these worlds, people can interact with each other, transact in business, enjoy concerts, and make investments just as they would in real life, but in a simulation that’s akin to a video game.

Well, November turned out to be a breakout month for the metaverse.

Virtual real estate is real

It may sound crazy, but Metaverse Group, a vertically integrated real estate investment company focused on digital assets, recently purchased virtual real estate for 618,000 mana in a metaverse called Decentraland ($MANA). In this transaction, 618,000 mana equaled about $2.43 million at the time of purchase.

It’s the largest digital real estate purchase to date, but we’re just getting started. Ever since Facebook’s name change, metaverse cryptocurrencies have exploded in growth.

On October 26, $MANA was worth $0.75 per token. One month later, it reached an all-time high of $5.47 per token—but has since tapered to about $4.70, which is where it stayed at the end of November.

The Sandbox ($SAND), another popular metaverse world, followed a nearly identical upward trajectory. On October 25, it was trading at $1.15 per coin. A month later, it was worth over $6.

At this point, the cheapest plots of land on Decentraland sell for about $15,000. If you were lucky enough to stake a position in one of these coins before their boom, you might be primed for a lofty future.

But what are you going to do with a virtual plot of land? It’s not something you can go visit yourself—aside from seeing it in your virtual world.

One of the use cases includes brand advertising. For instance, companies like Atari have bought huge parcels in The Sandbox for advertising purposes. Other larger and more powerful brands are flocking to and competing in the virtual advertising space as well.

A long-time popular game and one of the original iterations of the metaverse, Roblox, just welcomed Nike to their platform. “NIKELAND” is a space for Roblox players to hang out, buy NFTs (non-fungible tokens), and more.

Another use case is to rent out your digital parcels. Metaverse platforms allow you to simply lease out open lots to brands and other players for their own use. Or you can build on your land and expand your opportunities.

One example is Wave, an entertainment company that puts together live concerts in virtual worlds. Some of their previous shows have hosted global music icons like The Weeknd and Justin Bieber. While the shows have been hosted in neutral zones rather than rented parcels, there’s a real business opportunity in building locations that can support a concert and renting out the space.

Other ideas may include office buildings to bridge the gap between remote workers and in-person staff, malls, or standard brick-and-mortar storefronts where NFTs can be sold for cryptocurrency.

The possibilities are limitless in this new realm.

Is it hype or the future?

It’s still too early to call. With the crypto markets becoming increasingly popular, along with Facebook’s shift, huge investments, and an adamant belief that the world is turning towards virtual reality at a quick rate, it seems likely that we’ll be talking about virtual land and avatars for the near future.

What is certain, however, is that the value behind virtual real estate is only as good as the popularity of the metaverse. The willingness of major brands to enter the space for advertising and investment purposes will continue to bring more into the virtual worlds.

However, we’re still in the buzz phase. When the buzz dies down, what happens to the prices of MANA, SAND, and other metaverse tokens?

One hedge protecting the perceived value of virtual real estate is that while there could easily be an infinite supply of land for these worlds, most have capped their parcels.

Decentraland, for example, has just 90,000 parcels of land. The limited number of parcels will help to keep the price of any given parcel higher since scarcity is a legitimate factor.

A similar project, Starlink ($STARL), which is a metaverse project focused on space, is limiting the number of space stations and satellites available in the world for the same reason.

However, many of these metaverses are built on the Ethereum blockchain. Ethereum is the leading alternative coin to Bitcoin and is worth about $4,500 through the end of November.

What’s unique about Ethereum is that there’s a limitless supply of coins. It’s infinite. Despite that, its value has continued to increase due to the number of applications that are built on the Ethereum network and its utility.

Therefore, it’s hard to make any predictions right now, but we should definitely be paying attention.

Final thoughts

There’s a lot to unpack with crypto, the metaverse, and the longevity of these platforms.

Justin Banon, co-founder and chief executive at Boson Protocol, was recently quote in a New York Times article, stating: “Everybody recognizes that we’re very early and these things are going to be modern-day antiques. So buying at this stage is hugely lucrative.”

And, if you look hard enough, some investments in the crypto space are still extremely cheap. For instance, Starlink tokens currently trade at $0.000069 per token. A $100 investment buys nearly 1.5 million tokens.

Say the price reaches $0.01 per token at some point. You could sell them for $15,000 or simply buy yourself a fancy space station in the metaverse.

It’s hard to go wrong for just $100.

2021-12-01 19:35:01

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