Returns as of 03/15/2022
Returns as of 03/15/2022
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In many parts of the world, there’s a strong belief in magical realms inhabited by beings similar to, but not exactly like, us. In these worlds, all sorts of mischief is possible, and all kinds of dreams can come true. To the technologically savvy investor, ancient folklore might as well be describing a modern vision of another collection of worlds: the metaverse.
This alternative universe where people can do almost anything is drawing all sorts of investors, from the merely curious to the deeply passionate, but all this interest is generating a lot of myths about metaverse real estate as well. Let’s bust some myths today!
Image source: Getty Images.
Much of the imagery concerning the metaverse centers on people wearing virtual reality (VR) helmets and other specialized gear in order to access the metaverse. While the metaverse contains platforms that do cater to this kind of tech, the most popular platforms, Decentraland and The Sandbox can be accessed using tools you already have: a desktop computer or a smartphone. Lesser-known platforms like CryptoVoxels also have a bonus VR mode, but it’s hardly a requirement for access.
Although it’s easy to look at metaverse platforms and see nothing but a video game, the truth is that people are already using them for work and as a way to increase their income. Companies like PricewaterhouseCoopers and Prager Metis have opened metaverse branches so they can be where their corporate clients are, and there are brands breaking into the metaverse every day in order to reach customers they couldn’t before. Not to mention companies like eXp Realty, which have given workers ways to interact in business-specific metaverse platforms like Virbela for a decade now.
Virbela has been around since 2012, an impressive feat, but there are other platforms that have lasted even longer. Second Life is probably the best example of an early metaverse platform that’s still in operation and has active users who buy, lease, and sell metaverse real estate. It was founded in 2003, and still has 200,000 active users visiting daily, with about 43,000 on average logged in at any given time. That’s not small potatoes for a community that existed before social media was even a thing.
Despite the severe dip in the stock market taking place right now, interest in metaverse real estate is strong. The top sales in Decentraland for the seven days ending January 29, 2022, included a lot that just nabbed its former owner $425,100 (they purchased it on 8/23/2019 for $7,720.93); run-of-the-mill lots continue to bring in at least $10,000 every single day. Correction territory for stocks or not, virtual real estate doesn’t seem to be hurting, and this is the kind of financial atmosphere that will trial metaverse real estate by fire.
I suppose this could be true, depending on how you look at real estate in general. Real estate of all kinds generally increases in value until people give up faith in the location where the property is located. This has always been the case, and it’s the cause of real-world ghost towns: once popular havens for residents and visitors that fell out of favor and got swallowed up by the environment over time, losing pretty much all value.
Metaverse real estate has many of the same characteristics of real-world real estate, including uniqueness, scarcity, and immobility. There are a limited number of properties, each is completely unique, and they’re not going anywhere else. They’ll always be where you left them (except when the platform gives in to the digital wild).
Given these characteristics, an increase in demand is simply going to do what it does in a properly functioning economy: It’s going to drive prices up. There’s not a “race to the top” for values so much as there’s simply normal appreciation due to interest and increased utility. It’s only a scam if you consider capitalism to be a scam.
A lot of bad information is going around in the frenzy of reporting by people who don’t completely understand what the metaverse is about. And while it’s admirable that they’re trying, we should be thinking of the metaverse as another universe rather than a pretend world or “just a game.”
Because each metaverse platform has its own economy and local culture, investing in real estate in one world should necessarily reflect your goals as an investor and your ultimate purpose for the property. It’s important to research metaverse platforms carefully — the same as you’d research buying multifamily real estate in different neighborhoods in, say, the Sun Belt — but ultimately, this is a new opportunity for so, so many investors.
Don’t let the fear of the unknown or the unchained myths get you down. Choose your metaverse platform and your real estate there with a robust understanding of what it means to be a metaverse real estate investor. Go forth boldly — the doubters can choose to be left behind.
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