Metaverse housing: How digital spaces are becoming the new frontier for real estate — or are they?
Crazy times we live in, huh? Seems like it was just yesterday that we were laughing at the weirdos spending all their time in Second Life, and today everyone’s talking about virtual land as the next big thing in the real estate market. So what are we facing? Another economic bubble, or a genuine new frontier for investment?
In this article, we’ll take a look at what metaverse real estate is, what kinds of virtual spaces are out there and why you might want to buy land in this strange new world.
TL;DR:
- Metaverse real estate is land that exists within a digital space.
- It’s bought and sold using NFTs, enabling them to be bought, sold or traded in a decentralized, peer-to-peer manner.
- The history of virtual spaces goes back to the early days of text-based MUDs.
- More recently, games like Second Life have popularized the idea of user-created content and in-world economies.
- Today’s most popular virtual spaces are The Sandbox and Decentraland.
- As the industry matures, we can expect to see more and more virtual spaces, each catering to a different need or taste.
- You can buy metaverse real estate for speculative investment, to build a business, to socialize/play, or as a creative outlet.
- The value of virtual land is driven by the same factors as physical real estate: location, utility and community.
- As long as there are people in the world looking for a place to call home, there will be a market for real estate — metaverse or not.
What is metaverse real estate?
Metaverse real estate, also known by the names of virtual land, digital real estate and so on — you get the idea — is, simply put, land that exists within a digital space. Technically speaking, it’s not even land, but rather a set of code that designates a certain area within the digital world.
The idea is nothing new — virtual spaces have been around since the early days of text-based MUDs. But the recent advances in technology, and in particular, virtual reality, have made them more realistic and immersive than ever before.
Add to this the rise of blockchain ledgers and NFTs (non-fungible tokens), and you have a recipe for a whole new kind of real estate market, one that’s entirely digital. Moreover, one that’s not bound by the same rules and regulations as the physical world — which can be both a good and a bad thing, as we’ll see.
What virtual spaces are there?
Unlike the Earth, which we get as a take-it-or-leave-it package deal, the digital world is divided into a multitude of virtual spaces, each with its own distinct character, community and economy.
Here are just a few of the most popular ones.
Second Life: the proto-verse that sparked the digital land boom
One of the “oldest among the newest” virtual worlds, Second Life brought — or reignited — the idea of digital land ownership when it launched in 2003. By introducing things like user-created content and in-world currency, it created an economy that was largely independent from the real world.|
We must admit that its mention on today’s list of “metaverse real estate” is more of a honorary kind: Although land can indeed be sold and bought on it, the means of exchange — the so-called “Linden dollars” — are still just an in-game currency, so the transactions don’t really hold any real-world value or enforceability.
Still, it’s a fascinating place to explore, and who knows — maybe one day someone will figure out how to merge the esteemed trailblazer into the new world of NFTs and blockchain.
The Sandbox: the top dog of digital real estate
Accounting for almost two-thirds of the $500-million virtual land market, The Sandbox is currently the undisputed king of digital real estate. A voxel-based world not unlike Minecraft, it offers users a canvas of 408×408 plots, called LANDs. Each LAND is “sized” at 96×96 meters, and can be used to create pretty much anything, from games and experiences to virtual storefronts and galleries.
Each LAND is essentially an NFT — which means that it’s backed by the Ethereum blockchain, and can therefore be bought, sold or traded like any other crypto asset. This makes it possible to monetize both digital land and virtual creations in a way that wasn’t possible before.
Thanks to promotional partnerships with celebrities like Snoop Dogg and brands like Atari, Sandbox has managed to garner a lot of mainstream attention. So much so that, in November 2021, it raised $93 million in a round led by SoftBank and is said to be looking for $400 million more.
Decentraland: the metaverse world of the future?
As the name suggests, Decentraland is all about decentralization. Launched in February 2017, it was initially developed to improve on the ownership mechanics of games such as Second Life by using the Ethereum blockchain.
The result is a virtual world that’s not owned or controlled by any central authority, but rather by its users. Consisting of 301×301 land plots, it’s similar to Sandbox in that each plot can be used to build and sell all kinds of things, powered by NFTs.
Unlike Sandbox, though, it’s less about gaming and more about socializing. With thousands of virtual art galleries, meetups organized by developers and even a virtual festival that drew in over 50,000 visitors, it’s easy to see why.
It’s also not limited by the voxel-based aesthetic: Decentraland uses the Unity game engine, making it possible to create highly realistic environments. This, along with its substantial inroads into VR, makes it the closest to being — or becoming — the closest contender for being a “metaverse” in its purest sense.
The others: alt-spaces for every taste
Obviously, when the majority of the market is controlled by just two players, the others have to find their own niches to get a piece of the metaverse pie:
For example, there’s the VR-first Somnium Space, which goes as far as planning to release its own VR headset. There’s the fantasy-themed Mirandus, which appeals to all the elf-lovers and dragon riders out there. Or how about Voxels — formerly Cryptovoxels, — with its distinctive Minecraft look and feel?
With the entire metaverse thing expected to become a trillion-dollar industry within the decade, it’s only a question of time before we see more and more virtual spaces springing up like mushrooms after a rain. Tailored to every taste, need and budget, they’ll provide a digital home or a business venue for everyone, — whether they’re looking to game, socialize, create or simply invest.
Why buy metaverse real estate?
DISCLAIMER: We are not financial advisors, and nothing in this article should be construed as financial advice. Please do your own research before making any investment decisions!
So we know what metaverse real estate is, and we know what kinds of virtual spaces are out there. But why would anyone want to buy land in a digital world?
Here are just a few reasons:
1. Speculative investment
With the rise of NFTs, digital land has become a hot commodity, with virtual plots bought at $20 back in 2017 reselling for thousands of dollars. Of course, this is still a very new market, and it’s hard to say how sustainable these prices are. But for those who are willing to take a risk, there is certainly potential for profit.
Shameless plug: here at DOKO, we’re building a DeFi-for-metaverse platform that lets you handle your virtual property just like you would any other physical asset. For example, you can rent it out, take out loans against it or chip into a joint ownership scheme — all powered by smart contracts. If you’re interested in learning more about what we do, check us out!
2. Building a business
Another reason to buy virtual land is to build a business within the metaverse. This could be anything from setting up an ecommerce shop to offering services like avatar customization or virtual tours. With the right business model, metaverse real estate can be a very lucrative investment. And since there are no physical premises to maintain, overheads are relatively low.
3. Socializing and gaming
For many people, the appeal of virtual land is simply that it’s a fun place to hang out with friends. Whether you’re exploring strange new worlds or taking part in multiplayer games, the metaverse can be a great way to socialize and have fun.
4. Creative outlet
Finally, virtual land can be a great creative outlet. If you’re the kind of person who enjoys building and designing things, the metaverse is your playground. You can let your imagination run wild, creating anything from entire cities to intricate sculptures. With no physical constraints, the only limit is your own creativity.
The challenges for metaverse real estate
Of course, not everything is rosy in the world of digital real estate. If you’re in it for an ROI, there’s always the risk of a market crash. Building a successful business in a virtual world is arguably no easier feat than in the physical world, and socializing online can sometimes be a lonely experience.
Do these challenges turn the whole thing into a bubble? We don’t think so. And to explain why, we have to think about the factors that drive any real estate market — digital or otherwise.
In a nutshell, there are three things that make land valuable: its location, its utility and the community around it. And all three of these factors are just as relevant in the virtual world as in the physical one.
Moreover, as the VR technology matures, it will become harder and harder to tell the difference between virtual and physical spaces. This might sound like a scene from a dystopian sci-fi movie, but a lot of things sound like it when first said aloud.
In the end, it all comes down to human behavior. People will always value things that are rare, that are useful to them and that make them feel good.
And as long as there are people in the world, there will be a market for real estate — metaverse or otherwise.
All Your Metaverse Real Estate in One Place
To learn more about Metaverse Real Estates, please check out “What is DOKO?”
and DOKO web-app (beta) and other articles on this publication.
Stay tuned for more insights!
Website: www.doko.one
Twitter: @doko_metaverse
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