Unless you’ve been living under a rock the past year, you’ve likely heard of something called the “Metaverse.” Oh great, another buzzword, like “Crypto” or “Blockchain,” has infiltrated the lexicon of the young, tech-savvy entrepreneurs, thus furthering the divide of the generations.
Is it a construct? Is it a real place with real land? IS IT THE MATRIX?! Throw in some “NFT’s” and a pinch of the Oracle Zuckerburg for good measure, and you may find yourself scratching your head in utter confusion trying to decide whether to take the red pill or the blue pill.
Fear not my fellow Gen X real estate investors! In this blog, we’ll break down the basics of what the metaverse is, what it’s for, and why investing in metaverse real estate might be a good idea.
What is the Metaverse?
The term “metaverse” was coined by author Neal Stephenson in his 1992 sci-fi novel Snow Crash. He mentions a digital universe – the metaverse – that exists parallel to our own.
Generally speaking, the technological theme of “metaverse” can include virtual reality – defined by persistent virtual worlds that continue to exist even when you’re not playing, as well as augmented reality, which brings the digital and physical worlds together.
The metaverse is considered a next evolution of the internet. Furthermore, it can be explained as an alternative digital reality that combines virtual reality, augmented reality, and extended reality where people and businesses can work, play, and digitally live.
As a result, more and more investors are exploring investment opportunities in this fast-growing new space. Buying virtual land in leading digital worlds is one of these opportunities. But let’s not get ahead of ourselves.
What Underlies the Metaverse?
Metaverse can operate properly with the help of:
- Software: 3D engines are used to create virtual world projects. The most famous platforms are Unreal Engine and Unity.
- Hardware: These are the user’s guides to the metaverse. VR glasses, AR and XR gadgets, and everything that will help to interact with the platform. However, virtual and augmented reality glasses are optional. The key thing is to combine the two universes, so it can even be a sound reality with no visualization.
- Data centers: These are cloud storage facilities for metaverse data, where the server and network equipment are placed, and the connection to the Internet is made. The major providers are well-known corporations, like Amazon, Google, and Microsoft.
- Blockchain: It attaches each user’s data and money to their digital account and allows them to use purchased products throughout the metaverse.
How Do You Get to the Metaverse?
Now that we’ve defined what the metaverse is, the next question is how do you get there? There are basically two means of accessing the metaverse. The first is through the use of virtual reality goggles or a headset, like Meta’s Oculus Quest 2 or Sony Playstation VR. These allow you to fully experience the metaverse as an immersive environment.
Image Source: Dencentraland
The second way is by visiting a platform like Decentraland, using your pc or laptop. Decentraland is a blockchain-based virtual reality platform that enables users to purchase land, play games, host events, and interact with each other in multiple ways.
It’s the largest virtual universe in the NFT space that has its own tokens – MANA and LAND. Each piece of LAND on Decentraland measures 16 meters by 16 meters and is represented as an NFT. The number of pieces of land on Decentraland is capped at 90,000 which helps create scarcity. Anyone can buy, rent or sell land on Decentraland either via OpenSea – an NFT marketplace – or through Decentraland’s official Marketplace.
What Can You Do in the Metaverse?
Despite still being in an experimental stage with only a few platforms available for general use, the unified virtual world of the metaverse promises limitless opportunities for work, gameplay, social interactions, and revenue generation.
Inside the metaverse, users can:
- Purchase and monetize real estate
- Create scenes, games, and other VR experiences
- Express yourself through customizable avatars
- Meet and collaborate with remote colleagues
- Socialize and make new friends
- Shop for real and virtual products
- Attend concerts, trade shows, and learning events
- Invest in digital artwork through NFTs
- Play virtual reality games
Similar to Decentraland, The Sandbox is yet another popular metaverse platform where users can participate in play-to-earn games, purchase land, collect and trade cryptocurrency.
Why Invest in Metaverse Real Estate?
Real estate is one of the world’s most popular asset classes, and now it also exists in the digital realm. Virtual land is intangible land that exists in virtual worlds. Just like physical land, it’s also sold as plots and can be purchased using the specific land’s currency. Virtual land in the budding metaverse has been selling for hundreds of thousands of dollars.
In June of 2021, a piece of land sold for more than USD 900,000 in Decentraland. And that’s just one example. In light of the growing interest in the metaverse, the potential ROI (return on investment) on virtual land looks promising for crypto-savvy speculators.
Investors are able to put their virtual pieces of land into use and earn an income from them. If you own a virtual land, you can host exclusive events or parties and charge those who want to attend.
For example, American rapper Snoop Dogg hosted an exclusive party on The Sandbox’s non-fungible token (NFT) platform to reconstruct his real-life mansion. Attendees needed to have an NFT, which acted as a pass and gave them access to the event.
Investors can generate regular income from their virtual lands. For example, you could build a virtual house using NFTs on your virtual land and rent it out for a monthly income. Or set up an NFT art gallery and rent the space to up-and-coming crypto artists to showcase their work in the metaverse.
Technology continues to evolve and transform the real estate industry. As we discussed in our previous blog, you can use cryptocurrency and blockchain technology in real-world real estate transactions. Being able to participate and invest in real estate in the virtual realm offers limitless possibilities.
The metaverse is still in its nascent stages and whether it is a fad remains to be seen. Nevertheless, it’s something worth exploring as it has already demonstrated great ROI potential for the brave trail-blazers who’ve purchased metaverse real estate. In our next blog, we’ll cover how to buy real estate in the metaverse. Stay tuned!