As the metaverse expands, the conversation around digital “land ownership” is becoming more prevalent. Major brands are already cementing their place in the metaverse, but what does this mean for individuals looking to stake their claim in the digital world?
Will this digital land rush be more of a boom or a bubble in the months, even years to come?
The Metaverse is Growing
Celebrities like Justin Bieber, Ariana Grande, the Weeknd, and Travis Scott have held live, digital concert performances in the immersive, online experience known as the metaverse. Fans worldwide were able to access the performance, enjoying Bieber’s digital avatar performing hit songs from his album Justice.
But fans weren’t the only ones interested in the digital spectacle — investors were also watching closely to see for themselves what the future of the metaverse may hold for their portfolios.
Investors are purchasing digital real estate — online concert venues, shopping malls, and other types of “property” — in the metaverse. One of those investors is Mark Zuckerberg, who changed the name of Facebook to Meta, explicitly affirming and capitalizing on the growing popularity and market surrounding the new “digital frontier.”
Thanks to the interest garnered by Zuckerberg and other well-known celebrities, the metaverse’s global market, according to Grayscale (a cryptocurrency investor), is expected to soon reach a value of $1 trillion.
So what is the Metaverse?
The metaverse consists of digital realms imitating cities that exist within a virtual, three-dimensional setting similar to what you experience in popular video games, such as Fortnite, Animal Crossing, and Roblox. The digital experience includes virtual reality, video streaming, gaming, digital avatars, and artificial intelligence.
But here’s the question for real estate agents:
Will digital real estate be the next big boom? Or just another bubble?
With the growing popularity and normalization of blockchain technology and cryptocurrency, the transition into the metaverse may be smoother than anticipated.
Blockchain, Crypto, and NFTs
Cryptocurrency is the means of finance in the metaverse. Powered by blockchain technology, crypto is “a digitally distributed ledger that eliminates the need for a third party, like a bank.” These digital currencies can be used to purchase or sell art, music, and even homes as non-fungible tokens (NFTs) that serve as proof of ownership.
NFTs are digital “blockchain-based collectibles” that represent “real-world items” that themselves can be sold, traded, and purchased.
Commercial Real Estate in the Metaverse
Over the past few months, commercial real estate transactions in the metaverse have grown in volume. In October of last year, blockchain technology company Tokens.com acquired 50% of the first-ever virtual real estate company, Metaverse Group, for a whopping $1.7 million.
Although technically a Toronto-based company, the Group’s virtual headquarters resides in the virtual world Decentraland in what is known as Crypto Valley, the digital equivalent of Silicon Valley. They also have a real estate investment trust with a plan to further populate their portfolio with digital properties in Decentraland and other realms, including Somnium Space, Sandbox, and Upland.
And it might be counterintuitive, but space is limited! Decentraland only offers a max of 90,000 “parcels” of digital land.
Micheal Gord, a Co-Founder of the Metaverse Group, is optimistic about the Metaverse as a whole:
“As more people participate, it’s where you’re going with friends, where you’re having experiences like conferences and concerts.”
For instance, users can enjoy activities including gambling, shopping, fashion, and arts in the various districts of Decentraland.
“It’s inevitable that the metaverse will be the No. 1 social network in the world,” Gord explained.
Regarding digital real estate, he sees long-term value in investing in digital real estate in realms like Decentraland:
“Imagine if you came to New York when it was farmland, and you had the option to get a block of SoHo,” Gord said. “If someone wants to buy a block of real estate in SoHo today, it’s priceless, it’s not on the market.
“That same experience is going to happen in the metaverse.”
Millions in real estate transactions are happening already, as large as $2.5 million as seen in Tokens.com’s deal for land in Decentraland’s fashion district. The company plans to develop its digital plot into a virtual hub specializing in commerce for luxury fashion brands.
Ushering in the Omniverse
The potential real-world impact that the metaverse will have is precisely why investors are taking digital real estate, cryptocurrency, and NFT collectibles so seriously. As the metaverse continues to be normalized in our everyday reality, the divide between the real world and the metaverse continues to dissolve, merging the two into one, single reality referred to as the omniverse.
“It’s already happening, and it’s just a question of degree,” said Justin Banon, Co-Founder and Chief Executive of Boson Protocol, a decentralized platform that allows for the sale of real-world products as NFTs in the metaverse.
“But I think in five years, my daughter will not allow me to pick her up from school if I’m not wearing a pair of sneakers that don’t also have an NFT.”