On April 11, a plot of land on the Decentraland platform was sold for $572,000, on March 21 a deal was made for $283,567, and on March 16, real estate for $500,000 was purchased on another Somnium Space platform. Impressive, isn't it? Most likely, now you have a logical question: why buy land that does not exist? In my article, I will explain where this trend originates and how investors are guided when making such investments.

What is the Metaverse?
Metaverses are the future of the online world and the online life of society as a whole: as a technological concept, it is a common virtual space based on the digital reproduction of our universe, supplemented by a huge number of possibilities and embodying fantasies. Real-time presence, social interaction (parties, conversations, outings with friends, virtual festivals, concerts, fashion shows, sporting events, galleries and more). All of the above contributes to the development of a new economy - the NFT economy, which can develop into a real world economy in the near future.

Metaverses: why buy virtual real estate

Speaking in a very simple language, the well-known Minecraft can be called the metaverse, but on the blockchain. This is an excellent ecosystem of the future: in ordinary games, the development and introduction of new elements falls on the developers, while in the metaverses, users take part in this by creating games, events, building real estate objects, adding their NFT objects and paying for purchases with cryptocurrency.

Some virtual worlds have their own cryptocurrencies, for example, MANA on the Decentraland platform. Moreover, in metaverses, unlike conventional games, there is no script: the main idea is to provide social and economic interactions between users. Blockchain, replacing the physical and legal laws in the real world, provides legitimacy and makes it possible to own your avatar, clothes, virtual store or land for such interactions.

Metaverses: why buy virtual real estate

The key concept here is to own, and not just use, as on conventional multiplayer platforms. The economic component is now being actively integrated into such worlds: for example, a user can create some kind of architectural object, then tokenize it and put it up for sale on various marketplaces. Subsequently, this object will be bought by another user, after which he will place it in his virtual space and, if desired, will be able to add his NFT objects there.

“Beeple's Every Day: The First 5,000 Days” NFT was acquired by Metacovan (Vinesh Sundaresan, a Singaporean investor) for $69,000. Many people wonder why to buy for such a sum an object of art that does not physically exist? This is where the metaverse comes in. Metakovan's ambitious plans include his intention to exhibit NFTs in the virtual space. At the moment, the investor is working together with engineers to design special gallery complexes so that everyone can visit the gallery by opening a web browser or using VR technologies. Just like Metakovan, you can purchase a painting as an NFT and hang it in your virtual home.

Metaverses: why buy virtual real estate

Blockchain and NFT are the very technologies that the mentioned Minecraft, as well as Roblox, Second Life, lacked. Technology, which is a key factor in making the metaverses, funnily enough, reality: namely, an understandable economic model and a sense of ownership of each user, real ownership.

Main projects

  • Decentraland is the most developed metaverse based on smart contracts (LAND Contract, Estates Contract, Wearables, Content Server) and assets. MANA's own cryptocurrency allows Decentraland to be a standalone platform, as well as to subsidize various operations and initiatives throughout the metaverse. By the way, Coinbase reported that Decentraland’s MANA soared by 3500%+ in 2020.

    The key feature of the platform is the emphasis on user opinion: it is the community that will vote for policy updates, NFT contracts being implemented that will be allowed in the world, land auctions, etc. On the lands of this metaverse, users have already created many interesting objects from castles to space bases. By the way, at the end of March 2021, the total sales of Decentraland exceeded $50 million.
    https://decentraland.org/
  • “We are creating an open, social, virtual world. A world that will have its own economy and its own currency.” - the official slogan of Somnium Space, a crowdfunding social world of virtual reality and virtual investments, where people can buy land and dispose of it, build anything they want: schools, cinemas, restaurants - the possibilities are endless.
    https://somniumspace.com/
  • The Sandbox Metaverse is made up of LANDS, that are parts of the world, owned by players to create and monetize experiences. There will only ever be 166,464 LANDS available, which can be used to host games, build multiplayer experiences, create housing, or offer social experiences to the community
    https://www.sandbox.game/en/

Why buy virtual real estate?
As I mentioned earlier, at the moment the Decentraland, Cryptovoxels, Somnium Space platforms are leading, in these metaverses, prices for virtual real estate continue to rise and the cost of some plots exceeds half a million dollars. There are now several thousand unique landowners on each of these platforms. The hype in the acquisition of virtual real estate can be compared to the struggle for domain names when the Internet was in its infancy.

The total NFT market capitalization in 2021 was $8 billion, 56 times higher than in 2019. At the beginning of 2021, the demand for NFTs increased, sales of crypto assets skyrocketed. More and more people are entering this area, creating high competition: for this reason, land plots in the central regions of virtual worlds will be in even greater demand, which means that you need to have time to acquire them as soon as possible. Virtual spaces are basically real estate, which attracts the interest of people, generates demand, and focuses the attention of users. This attention can be monetized in many different ways.

Metaverses: why buy virtual real estate

Statistics show that the virtual real estate boom is now beginning. Consider the Decentraland metaverse: in January there were 111 buyers in the virtual world, in February this figure increased to 184 people, and in March there were 334 buyers on the platform and monthly land sales exceeded $ 4 million, starting from the amount of $ 246 thousand in two months previously.

Returning to the mentioned increasing demand and public focus on virtual lands, I will give the example of an investor Whale Shark, who collects NFTs. Since 2018, he has purchased properties in sandboxes several times, the total amount of purchases was approximately 400 ETH. Since then, the price of each of the plots has risen from $60,000 to $400,000. Good investment, right? By the way, some investors no longer plan to return to real investments, keeping most of their savings in crypto assets (for example, Matin Soudagar, an Australian investor who blogs about NFTs).

Metaverses: why buy virtual real estate

Virtual worlds and NFTs are taking society to the next level. Humanity will soon be spending most of its time visiting galleries and events, racing and building houses in virtual reality. Digital art, which is based on smart contracts that secure property rights in the blockchain, will contribute to the formation and development of the appearance of these spaces. The lands in the metaverses will attract more and more attention from the public, the craze for a new way of investing.