You can visit your land in the metaverse. You can also build on it, but is it worth the risk?
To most (sane) people, the idea of buying virtual land, that doesn’t have a physical attribute is the musings of crazy people.
Why on earth (real or digital) would you throw money at this? Well, this hasn’t stopped real estate sales in the Metaverse from being hot property (pardon the pun) for a small while now.
But the sheer hype around this highly risky investment opportunity is huge, if not at times somewhat dangerous for the average punter. HSBC, Nike, Samsung, Warner Music Group, Snoop Dogg, Paris Hilton, and more have purchased their slice of the Metaverse land pie.
Is it even real?
The reality is, metaverse land isn’t real land. This land only exists in digital format, online, where it can be purchased and sold on platforms such the two largest in the space at present – and The Sandbox or Decentraland, along with an array of other smaller players such as Somnium space, PartyNite and Nifty Island. Ownership is guaranteed via way of land being sold as non-fungible tokens, with it then stored on the blockchain. In almost all cases, virtual land can only be purchased or sold using crypto currencies.
I own it, now what do I do with it?
It’s a fair question. In the real world, when we buy a block of land we either sit on it hoping it accumulates in value over time, turn it into workable land such as agriculture or farming, or we build residential or commercial properties on it. All of these have an eye on the future value of the land and how we develop it to hopefully make a profit or pass it on through family.
Not so oddly, metaverse land is similar. You can visit your land in the metaverse. You can also build on it. The famous Indian artist, Daler Mehndi purchased land in the Indian Metaverse – PartyNite – calling it Balle Balle Land, where he plans to host concerts and setup a merchandise store with sales as Non-Fungible Tokens (NFT’s).
So, for anyone prepared to take a huge risk and buy land in the metaverse, while it varies somewhat from platform to platform, here’s a general overview:
Choose your platform: which metaverse you will buy land in. Choose wisely, this is a critical decision. Visit each. Do you research on other sales and values along with price changes.
Setup your wallet: you will need to setup a crypto wallet and link it to the platform you selected. Be careful, there’s loads of wallets out there, you need to make sure the one you choose works with the platform you chose. You’ll need to fill the wallet with some crypto, meaning you need to convert your hard earned into crypto. Again, do research on this. It carries risk and complexity.
Buy your slice of the virtual land pie
Once your account is setup, it’s time to start land hunting. In most metaverses, there’s typically a map showing which plots of land are for sale. Take a walk around the land, and also the surrounding area. Who else has purchased there etc? Make an offer. If accepted, you are the new owner of virtual land.
The good
I’m going to admit it right now. The good is outweighed by the bad for me at this stage. Buying land in the metaverse is insanely risky at the moment and should be treated with the utmost financial care and comprehensive due diligence.
Once you own land in the metaverse, pesky real-world issues such as local authority permits etc don’t exist, so you are free to use your land immediately, however you fancy. You can use the land to simply play games and socialise on the platform or build on it to create other opportunities.
Owners can monetise the content of their virtual land and properties through fees for access or by trading NFTs. Businesses can make use of their land and properties to advertise products and services, arrange virtual product launches, and craft unique customer experiences.
There’s land available in the metaverse at relatively reasonable prices. As at the time of this article, there are some plots available for under $10,000. So, if the interest is there to jump on the virtual land train, but your risk appetite isn’t massive, this is a seemingly small step into a speculative space. And it would seem that it’s this speculation and concept of virtual land increasing in value over time that’s driving sales in the metaverse.
The bad
At the moment, its guess work and hype. There’s next to no history or experience to fall back on. It’s fair to say we are moving toward a more digitised society, however there’s no valid reasoning to suggest that should or will include virtual real estate.
Digital land doesn’t live by the same rules as real-world land, which is scarce and has a fixed maximum volume point (within reason). Not only can virtual land be created across multiple metaverses, without any limits to the number that are created now or into the future, but metaverse land can be expanded with a few lines of code to open up new spaces and plots available for purchase. Consider also the popularity of a metaverse. If you own land in one and for some reason it loses popularity, your land value will fall.
Cryptocurrencies are volatile. The time gap between buying the required currency and closing out the purchase of your virtual plot, could at times leave you needing to top up your crypto with more real money due to a drop in crypto value.
Legal ownership questions abound, too. When buying virtual land, you are buying a non-fungible token. These exist on the blockchain. But your land only exists on the server, running the code that created the property in the first place. When signing up to a platform user are asked to agree to terms of service, some of which allow the platform to delete metadata if breaches are committed.
Virtual concerts, product launches and fashion shows are fun, but they’re not a patch on the real thing. Over time these may improve, but you need to have made the right choice now, hoping your metaverse choice is the one that evolves into offering those excellent experiences.
Closing thought
It’s free to create an avatar on most platforms. Do it. Take a look around. Get familiar. Take your time before you open your virtual wallet.
Nathan Sinnott is chief executive officer at Newpath
This article represents the views only of the contributor and should not be regarded as the provision of advice of any nature from Forbes Australia. The article is intended to provide general information only and does not take into account your individual objectives, financial situation or needs. Past performance is not necessarily indicative of future performance. You should seek independent financial and tax advice before making any decision based on this information, the views or information expressed in this article.