If you follow Web3 news, then you’ve probably heard about virtual land in the metaverse selling for thousands or even millions of dollars. And though the million-dollar price tag for a plot of pixels isn’t the norm, it is true that land parcels in the most popular metaverses fetch high prices and continue to be purchased by investors despite the crypto bear market.
Here at Rarity Sniper, we write daily about celebrities, influencers, brands, companies, institutions, and other entities purchasing virtual land to host events, sell digital assets and non-fungible tokens (NFTs), and build their presence in what’s become an increasingly popular space — the metaverse. While the real estate market has always been a big deal for investors, the introduction of virtual and augmented reality-based worlds, blockchain technology, and NFTs, is starting to reshape what the real estate industry means to a whole new generation of digital adventurers and investors.
In other words, buying virtual land in the metaverse, perhaps one of the most exciting and — well, we admit it — strange opportunities to arrive in years, has become a real investment opportunity.
That said, buying virtual land doesn’t come without risks. The metaverse is still a collection of ideas, concepts, and new technologies evolving in real-time and it will be years before anyone knows exactly what it will become, how big it will grow, and who will be the major players to emerge in the space.
Luckily at Rarity Sniper, we’re not paid to predict the future. Our aim in this article is to review what the metaverse is, the benefits of owning virtual land, who is investing in the metaverse, and how you can invest in virtual land if you decide to do so. We’ll also take a closer look at some of the risks involved with buying land in the metaverse.
What is the Metaverse?
When Facebook changed its name to Meta in October 2021, the race to the metaverse began in earnest. But it was long before this when technologists, visionaries, and authors were dreaming up and writing about virtual and augmented reality-based worlds.
Most notably, in 1992, author Neal Stephenson coined the term Metaverse in his science-fiction novel Snow Crash. Since then, visions of virtual worlds have been portrayed in several films, series, and books, and brought to life in real video games like Fortnite, World of Warcraft, and Second Life.
Today, the metaverse refers to any persistent, immersive virtual world that was built for augmented and virtual reality. In the metaverse, users can have immersive experiences and do everything they do in real life via their virtual avatars: shop, see a show, chat with friends in 3D virtual and augmented reality spaces, buy, trade, and sell digital assets as NFTs, play tennis, teleport to the Milky Way — you name it.
The three most popular decentralized Web3 metaverse platforms that employ nascent technologies like blockchain, NFTs, and cryptocurrency are Decentraland, The Sandbox, and Axie Infinity. These virtual worlds run on the Ethereum blockchain, and enable users to own digital assets in the form of NFTs and buy and sell goods and services.
One of the most valuable assets to own in these metaverses is — you guessed it — virtual real estate and land plots.
What is Virtual Land?
Non-fungible tokens, blockchain technology, and smart contracts enabled the creation, verification, and storage of unique virtual assets. These digital assets can be any number of things, from virtual clothing and footwear to avatar profile pictures and generative art NFT collections. They can also be virtual plots of land.
When it comes to virtual land, NFT land parcels have two important qualities:
- Scarcity. There are a limited number of land parcels created in each metaverse. This means that virtual land, like real land, is scarce. Scarcity is the fundamental reason that land can go up in value in popular metaverses. If the user base of a metaverse grows but the number of land parcels stays the same, demand for land prices will rise.
- Uniqueness. No two NFTs are the same, so each piece of virtual land has unique qualities, traits, and characteristics. One piece of land might be near a natural resource, like a river, and another piece in the middle of an urban area. Naturally, some land is rarer than others and/or more useful, also simulating real land.
Because virtual land is created in the form of NFTs, it can be bought, sold, and traded. And each transaction of a piece of land is recorded immutably on the blockchain, serving much like an improved 21st-century digital deed.
The Utility of Digital Land
Proponents of the metaverse believe it will revolutionize nearly every aspect of our lives, from how we work, socialize, exercise, and do business, to how children are educated. Time will tell if these predictions are correct, but one thing’s certain — virtual land has several use cases for savvy investors.
Listed below are some of the benefits of buying a piece of land in the metaverse:
- Rent. Just like with real-world land, you can rent your land or building to individuals or commercial players. You can also build offices, malls, or a gallery or event space that can be monetized.
- Land appreciation. Becoming a landlord in the metaverse means you could earn income while your virtual land appreciates in value. Decentraland has appreciated significantly since 2017. For example, one parcel of land that sold for $111 on Dec 17, 2017, sold for nearly $14,000 on Dec 16, 2021. That’s a significant profit from virtual real estate.
- Low input costs. The cost of services like a virtual structure designer is nothing like it is for actual builders and materials in the real world. Also, there are no zoning laws about what you can and can’t build, who can occupy a building, or for how long. Everything in the metaverse is built from pixels and electrons, making the costs much cheaper.
- Events. You can host events in the metaverse and charge for admission. For example, Snoop Dogg has hosted parties inside The Sandbox that were ticketed through his exclusive NFTs.
- A virtual home. Having digital real estate in the metaverse is a bit like having a webpage before the days of social media. You can show off digital assets, have friends over, and use your virtual home to buy or sell goods and services. It can be a way to express your personality online.
Before you purchase land in the metaverse, do your research and remember that because of the popularity of some metaverses, virtual land isn’t cheap. Land in Decentraland has sold for as much as $2.4 million, and for $4.3 million in The Sandbox, although the floor price is much lower.
And while popular metaverses are more expensive, buying cheap land in less popular metaverses could be risky, as they are more likely to fail.
Checking the floor price of land on a secondary marketplace like OpenSea can give you a better idea about virtual land pricing. Regardless, even if you don’t get a plot next to Snoop Dogg’s mansion (“The Dogfather” has several pieces of land in popular metaverses), virtual land can have utilities that can translate into real-world dollars.
Popular Metaverse Platforms
There are several metaverses competing for dominance in Web3, but for the sake of this article, will focus on some of the top decentralized metaverses. Note: When we talk about Web3 decentralized metaverses, we are referring primarily to their use of blockchain technology, NFTs, cryptocurrency, and their ethos of decentralization.
The three most popular decentralized metaverses are:
- Axie Infinity. This blockchain-based play-to-earn (P2E) video game from Sky Mavis studio rewards players in Ethereum-based cryptocurrency AXS and SLP. The game is centered around a mythical kingdom called Lunacia, which is divided into plots known as Terra that can be purchased via Axie Infinity’s marketplaces. It’s worth noting that Axie Infinity is the highest-grossing NFT collection of all time.
- Decentraland. A 3D virtual world consisting of 90,601 parcels of land in the form of ERC-20 tokens, users can purchase land using the platform’s native $MANA token, which runs on the Ethereum blockchain. All content in Decentraland is user-generated. Decentraland, which was founded in February 2020 has secured partnerships with several brands, including Dolce & Gabbana, Samsung, Adidas, Miller Lite, Perry Ellis, and many more.
- The Sandbox. This pixelated virtual metaverse consists of 166,000 plots of land and lets users play, build, own and monetize their land parcels. All content is user-generated. Partnerships: 2012. Users can create their own NFTs and video games. Once you own a LAND NFT in The Sandbox, you can build experiences on it and populate it with games and assets. The native currency of The Sandbox is $SAND.
Of course, decentralized metaverses aren’t the only players in the game. Meta, previously known as Facebook, is a powerful Web2 company with ambitious plans for virtual experiences. And metaverses are also sprouting up in niche areas as well. OneRare, for example, launched a food metaverse and Lego is collaborating with Epic Games to create a metaverse for kids.
One way to determine where to buy digital land is to seek out metaverse projects that revolve around themes you are interested in.
Understanding Virtual Property Prices
Before purchasing virtual land, you should review what makes it valuable other than its scarcity and uniqueness. Unsurprisingly, many of the same qualities that affect real-world real estate prices and physical property also apply to land in the metaverse.
Listed below are some of the most important aspects of virtual land that affect pricing:
- Location. As with all real estate, location is crucial. For example, if the location of the land parcel is close to resources that are important for gameplay, transportation, or a city or commercial center, the land will likely be more valuable. And as mentioned earlier, if you’re lucky enough to buy a piece of land in the same neighborhood as a celebrity like Snoop Dogg, that can also affect the price.
- Size. Size does matter when it comes to virtual land in the metaverse. Larger pieces of land will cost more, but you can also build more and create a bigger experience, and potentially earn more income from your investment.
- Popularity. If the metaverse where you own land is popular or becomes popular, it will drive the price of land up. Of course, the opposite is true. If the metaverse is a fluke, your virtual land could be worth nothing.
Metaverse land has become so popular that companies like MetaSpace Real Estate Investment Trust (MREIT) have formed trading platforms with the goal of collecting premium digital real estate and building virtual structures and renting them for a profit. MREIT was the first metaverse real estate broker in the space, but there will likely be many that follow.
How to Buy Virtual Property in the Metaverse
Buying digital property from the top decentralized metaverses is done with crypto or digital currency, so you will need to have a digital wallet such as the Metamask wallet, Binance crypto wallet, or Coinbase wallet loaded with the appropriate currency to make a purchase. ETH, $SAND, and $MANA are the most common.
You can purchase virtual land from Axie Infinity, Decentraland, or The Sandbox directly from their website. Or you can buy digital land on a secondary NFT market like OpenSea or Rarible. To find out the average price of land, visit these sites and browse the listings.
Of course, buying virtual land isn’t the only method of investing in the metaverse. You can also purchase cryptocurrencies from the metaverse projects you believe in. For example, buying and holding $MANA, the native cryptocurrency for the Decentraland, would be another way to invest in the metaverse, and potentially less expensive.
Who’s Investing in the Metaverse?
At Rarity Sniper, we write daily about investments being made in the metaverse. This year, there have been several big investments from companies, brands, celebrities, sports leagues, and even entire countries in the metaverse.
Here are a few headlines about the metaverse from recent months:
- Playboy to Create “MateMansion” in The Sandbox
- Niantic & the NBA to Create AR Metaverse Game
- Language-App Duolingo Builds Presence in the Metaverse
- Catalonia to Build its Own Metaverse
- Meta to Open Metaverse Academies in France
- South Korea to Invest $186.8 Million in the Metaverse
- Turkey to Enter Metaverse with $19M Budget
- Sketchers Opens Metaverse Store in Decentraland
- Miller Lite Opens Metaverse Bar in Decentraland
And this is just the tip of the iceberg. Everyday investments are being made in the metaverse from major entities and institutions around the world, whether they are launching immersive virtual events or buying up parcels of digital land to set up shop, the enthusiasm for the metaverse is as high as ever.
Is Buying Virtual Land a Risky Investment?
If you’re considering buying virtual land parcels in the metaverse, it’s important to remember that we are still in the early days when risks run high. One risk of purchasing virtual land is that if you buy land in a metaverse that loses popularity, the value of your digital land could plummet or disappear altogether.
Right now, The Sandbox and Decentraland are two popular metaverses with strong infrastructure and celebrity and consumer support. But the price to buy in is high, and there’s no guarantee both metaverses survive.
Another risk is that the metaverse and much of crypto remain an unregulated market, and cryptocurrencies can be very volatile. Ultimately, each individual or business must decide what levels of risk they’re willing to take when they invest in the metaverse and virtual land.
As with any new technology, the future of the metaverse is uncertain. But many people believe that Web3 and the metaverse are the next iterations of the internet, and if they are correct, then owning a plot of virtual land in a popular metaverse could reap huge rewards for years to come.
Furthermore, it’s clear that many institutions, businesses, and entities around the world are betting on the metaverse’s success. Only time will tell how the metaverse and digital real estate play out, but if the big players are correct, it will likely be the investors who hold digital land and other assets who reap the most rewards.