Is the Metaverse the New Frontier for Real Estate Investment?
In this article:
- What is the metaverse?
- Why is it gaining popularity?
- Why are some people considering investing in the metaverse?
- How do you find properties in the metaverse?
- How do you pay for properties in the metaverse?
- What are some alternatives to virtual land purchases in this new space?
- Are there property rights in the metaverse?
Introduction
In the past year, there’s been a surge of interest in the metaverse, a virtual world that’s created by computer code. It’s a built by humans and powered by blockchain technology. It’s a bit like the Matrix, but instead of being a simulated reality, the metaverse is a parallel universe where people can interact with each other and with artificial intelligence.
Many people are excited about the potential of the metaverse, and some are even buying property in order to rent it out to others for passive income. No doubt this new frontier will come with many new opportunities.
The metaverse is still in its early stages of development, but it’s already attracting a lot of attention from investors who are looking to buy property in the virtual world. That’s because there are a lot of potential uses for metaverse properties, such as developing virtual real estate, creating digital art or other stores, or even hosting online virtual events.
If you’re thinking about investing in metaverse properties, there are a few things you need to know. In this blog post, we’ll give you an overview of the metaverse and explain why some people think it’s an attractive investment opportunity.
What is the Metaverse?
The metaverse is a term used to describe virtual worlds where people can interact and exist in a digital space. It’s a decentralized network of virtual worlds that are powered by blockchain technology. Think of it as a parallel universe where people can interact with each other and with artificial intelligence in a completely immersive environment. People can start businesses and get jobs in the metaverse, as well as buy, rent, and sell properties, among other social and business activities.
This new space is created by computer-generated graphics and allows users to communicate with each other in real-time. The metaverse is similar to the physical world, but it also offers users additional benefits that make it an attractive option for buying property.
The metaverse is becoming increasingly popular, with more and more people spending time in virtual reality (VR) spaces. In 2019, the global VR market was valued at $26.89 billion and is expected to reach $92.31 billion by 2025. As the VR market continues to grow, so too will the metaverse.
One of the key features of the metaverse is that it allows users to create their own avatars, which are digital representations of themselves. These avatars can be used to interact with others in the metaverse, buy and sell goods and services, or even just explore the virtual world.
The metaverse is still in its early stages of development, but it’s already attracting a lot of attention from investors who are looking to buy property in the virtual world. That’s because there are a lot of potential uses for metaverse properties, such as developing virtual real estate, creating digital art in the form of NFTs, or even hosting online events.
The popularity of the metaverse is due to its many benefits, including:
Convenience:
The metaverse is a convenient place to buy property because it can be accessed from anywhere in the world at any time. There are no geographical boundaries in the metaverse, which means that buyers can view properties from all over the world without having to travel, and there’s no need for long commutes in traffic to reach it! It’s also a plus for people who may have physical limitations that make it harder for them to get out and about easily.
If you sell a product or service to anyone in the world, you may need to have a “storefront” in a metaverse in the near future to expand your sales. This may prove to be an innovative and engaging new way to connect with customers and build your brand worldwide. Many big companies are already getting onboard.
Variety:
The metaverse offers a wide variety of properties for sale, from small apartments to large estates and commercial properties. Buyers can find almost anything they can imagine, and if they can’t find it, they can build it!
Affordability:
Property in the metaverse can be inexpensive or very expensive compared to properties in the physical world. Some virtual properties have been purchased for millions of dollars!
Currently there are no taxes or property specific fees associated with buying property in the metaverse other than fees from the use of particular blockchains, fees to convert one currency to another, or fees added by third-party marketplaces. Also, there’s typically just a one time fee for the purchase of metaverse assets, so you don’t have to renew it regularly like you would other digital property such as domain names. But prices are all over the place. It’s still a game of speculation since it’s such a new technology.
For a virtual property that’s considered very desirable, for example next door to one owned by a famous person, or one that grants access to exclusive virtual social venues, it can be quite pricey.
One way to think about the pricing is like the price of art – if it’s rare and everyone considers it valuable or in fashion, even if it’s just a splotch of paint on canvas, it will sell for a lot. However, the price can go down just as fast if the particular virtual world falls out of favor or isn’t being well maintained by the developers. As always, buyer beware!
Not too familiar with blockchain technology? Read more about it here:
Why are some people considering investing in the metaverse?
There are many reasons why investing in the metaverse could be a wise decision, but it’s not for everyone. First and foremost, there’s a lot of potential for growth in the virtual world market. A recent report by Goldman Sachs estimated that the market for virtual worlds could be worth $80 billion by 2025.
It’s not entirely unlike buying internet domains in the 90’s. Personally, I purchased quite a few early on when great ones were still easy to get, then held them until they became desirable enough to sell. Many brought in a few hundred bucks, but one of them brought in a significant chunk of change. (As a side note, you can now purchase blockchain domains that are a one time fee, rather than an annual renewal. These may see the same upside – who knows!)
Another reason some people think metaverse property investing is appealing is that it offers a unique opportunity to get in on the ground floor of an emerging market. The early adopters in any new market have the potential to make a lot of money as the market grows.
And finally, some believe investing in the metaverse is a way way to diversify their investment portfolio.
How do you find properties in the metaverse?
It’s still early days, so it’s impossible to know which properties in which virtual worlds will have the most value in the future. Many current virtual worlds have a lot of technical issues, and some that are considered the place to be now may not be in another few years. Anyone can build their own virtual world and offer activities as well as sales of real estate within that platform, so there will no doubt be a wide variety of successful and unsuccessful projects.
The first step in buying property in the metaverse is to find a world that you’re interested in. There are many different metaverses to choose from, and each one has its own unique style and atmosphere.
Sandbox, Decentraland, Axie Infinity, My Neighbor Alice, and Enjin are some example virtual worlds. Many such platforms allow users to create content, explore and purchase, rent, or sell real estate and other goods and services. Virtual real estate is purchased using NFTs (non-fungible tokens). This digital record is stored on the virtual world’s blockchain, and serves to identify ownership of online properties.
Be wary of scammers and any overly enthusiastic people encouraging you to buy. If you’re not familiar with these types of transactions, or how to evaluate a potential metaverse property to buy, don’t rush into anything. It’s always best to consult with legitimate experts and take time to do your own research! Scams are rampant in this space, so be sure to protect yourself and also take extra care to protect your funds.
How to Pay for Properties in the Metaverse
Paying for property in the metaverse is similar to paying for property in the real world. However, there are some important differences to keep in mind.
First of all, most transactions in the metaverse are conducted using virtual currency. This means that you’ll need to convert your real-world currency into cryptocurrency before you can make a purchase. You can easily do this through an exchange service such as Coinbase, for example.
Secondly, it’s important to remember that prices in the metaverse can fluctuate rapidly, as can the blockchain transaction fees. This means that you’ll need to be careful when choosing a payment method. For example, if you’re paying with cryptocurrency, you may want to use a service that allows you to lock in a certain price ahead of time, or cap the amount you’re willing to spend.
You can purchase digital land directly within the virtual world you are interested in, or you can purchase it in a reseller market. These third-parties provide a marketplace to list and bid on virtual properties. Some examples are OpenSea (the largest secondary marketplace for virtual worlds) and Rariable. Often there are high fees in these third-party marketplaces, so do your research before selecting a platform to make your purchase.
Alternatives to Virtual Land Purchases
Each virtual world also has its own cryptocurrency associated with it, so if you’re not ready to interact in the virtual world but still want to get in the game, an easier way might be to purchase the cryptocurrency associated with that virtual world. This can be accomplished through a centralized online exchange such as Coinbase.com or Kraken.com for example, or by using a decentralized exchange if you’re more familiar with handling cryptocurrencies and already have a crypto wallet.
Investing in the associated cryptocurrency for a virtual world still comes with just as much risk as any other speculative investment, so do your research before you invest your hard earned money.
The following are a few virtual worlds with their accompanying cryptocurrencies listed in parentheses. Beware of look-alikes! Some knock-off cryptocurrencies have almost identical names to others. Check the market cap, developers, and additional details on a site like CoinMarketCap.com or CoinGecko.com first to be sure you are investing in the right project.
Sandbox (SAND)
Decentraland (MANA)
Axie Infinity (AXS)
My Neighbor Alice (ALICE)
Enjin (ENJ)
Property Rights in the Metaverse
Real Estate law does not apply in the metaverse. Since it’s a decentralized platform, there’s no central authority to contact if you have a dispute, so you’re on your own!
In some ways, property rights in the metaverse may be more secure than in the physical world, however, due to the way blockchain records work. When you purchase a property with an NFT, a permanent record is created. In the future, real property in the physical world may also be secured with NFTs or blockchain records.
Because NFTs are one of a kind digital certificates that prove you own something, they have the potential to become a reliable and safe method of proving ownership not just of virtual and real properties, but also of personal property as well.
Conclusion
The metaverse is still in its early stages of development, but it’s already attracting attention from investors who are looking to buy property in the virtual world. The best thing to do is stay informed!
There are many reasons why investing in metaverse properties could be a wise decision for some investors, such as the potential for growth in the virtual world market, and the opportunity to get in on the ground floor of an emerging market. But if you’re thinking about investing in metaverse property, do your own research and speak with a financial advisor first to learn more about this unique opportunity.
When investing in property of any kind, real or virtual, it’s always important to do your research so you’re not the victim of a scam. There are a lot of bad deals and scammers in the metaverse, just like in the physical world. So be sure to spend enough time learning about how things work in the metaverse so you know what you’re doing before you invest!
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