Spending millions on a piece of land that doesn’t exist may sound like a crazy idea – but the hype surrounding the virtual world of the future, the metaverse, is attracting more and more investors. Recently, New York-based Republic Realm announced the purchase of a piece of land for $ 4.3 million in the virtual world.
The not exactly cheap property only exists in “The Sandbox”, a virtual world in which users can come together to meet, play games or take part in cultural events. In November, the Canadian crypto company Tokens.com announced a similar purchase of land for $ 2.4 million in another virtual world, Decentraland. Just days earlier, the island state of Barbados even announced that it would be opening a “Metaverse Embassy” in Decentraland.
Internet sites such as Decentraland and The Sandbox see themselves as prototypes of the Metaverse, an Internet of the future, in which virtual experiences such as chatting with friends using virtual reality technology should feel like interactions in the real world. Metaverse was a buzzword in Silicon Valley for a long time, but when the Facebook group was renamed Meta in October this year, the concept became known to a wider audience.
According to the crypto website “Dapp”, land was recently sold on the four largest Metaverse sites for a total of more than 100 million dollars in just one week. Technology consultant Cathy Hackl is not surprised that the virtual real estate market is booming.
“We’re trying to translate the way we understand physical goods into the virtual world,” she tells AFP. And although it will take a while before these pages function as a real metaverse, digital land already functions as an investment, just like “real” land. “You can build on it, you can rent it out and you can sell it again,” explains Hackl.
The website Tokens.com, for example, invested in a prime property in the fashion district of Decentraland. Tokens.com managing director Andrew Kiguel hopes that some of the most luxurious brands will open their online shops there.
“If I hadn’t done the research myself and understood that it was valuable property, it would sound completely crazy,” he says. He and Kiguel emphasized 20 years of professional experience in the real estate market that the property in Decentraland makes as much business sense as it does in the real world: It is located in a trendy area with a lot of foot traffic.
The possession of digital goods is proven via so-called non-fungible tokens, or NFTs. These are based on blockchain technology. According to Kiguel, the hype about digital ownership will prevail in the next few years. The technology required for this ensures transparency and trust. “I can see who previously owned the token, what was paid for it, and how it was transferred from one person to the next,” he says.
However, the investment is not without risk – especially because the cryptocurrencies with which NFT are paid are subject to sharp fluctuations. And another factor influences the profitability of investments: Only if the metaverse is accepted by users is it worth buying expensive land in the virtual world.
The data available so far indicate that the traffic on Metaverse sites such as Decentraland is far behind that on popular social media sites such as Facebook or Instagram. “I know it sounds absolutely crazy,” says Kiguel. “But there is a vision behind it.”