Is it a good idea to buy real estate in the Metaverse?
Investors began to wonder if it was a good idea to get a piece of the action with the growing interest in cryptocurrencies, non fungible tokens (NFTs), as well as the metaverse. Virtual property is an untapped new type of property that has not existed before. It could be like getting in on a land rush in America except that metaverse realty is not actually populated. The first to stake out properties are those who will make the most.
But, metaverse real property isn’t tangible in any way. Even the NFTs used to prove ownership are virtual. Can it hold long-term value? It is a big leap of faith to invest in virtual real estate, regardless of which platform you choose or the concept of the metaverse.
What is the Metaverse?
You probably have some knowledge of the metaverse if you are reading this article. But, just in case, here is an easy explanation: The metaverse is a collection of multi-user platforms that allows users to interact in real-time. They often have local economies that allow for the purchase, sale, trading, and mining of crypto coins.
One of the most popular metaverse platforms is “sandbox universes”. These worlds allow users to create anything they want within the limitations of the program. This is what makes virtual real estate valuable. There are a few lots available for those who want to be serious sandboxing. Even though you don’t have to be a lot owner, most platforms allow access.
Although the platform appears like a game and it can certainly be played as such, you can do whatever you wish in a virtual environment. Logging in is easy and you can socialize or participate in special events like concerts with your friends.
How much does virtual real estate cost?
Virtual real estate prices are determined by the same factors that determine the actual value of real estate. These include location, lot size and existing structures.
These are not unusual lots. Extreme examples include LAND #48766 which was The Sandbox’s top-selling lot in the past week and EST #1965, which Decentraland’s top-selling lot for $758,250.00.
The metaverse: Pass or buy?
It’s a different matter to venture into the metaverse to invest in real estate. However, there’s also a good chance that any given platform will become a ghost town at any time, or for no reason at all.
The metaverse is a highly speculative place to invest in real estate. It is essential to believe that the platform will continue to exist in the future. Although it is possible, the metaverse concept is so shaky that members still struggle to identify themselves.
While some of these platforms are likely to survive, it’s hard to predict which ones will succeed or fail. Decentraland was one of the first to be established. It will continue to be a major player due to its high-value buy-ins. However, it is a very expensive investment to acquire lots. However, the newer spaces like The Sandbox, which are hot right now, will be difficult to predict if they will stay hot or if it is hype driving prices instead of actual long-term interest from users.
People don’t require virtual real estate to live every day, unlike real-world real estate. It doesn’t provide a roof or place to grow crops, or even a place for them to start a business. It’s not something they need in the same way that we do. Although individual metaverse platforms have limited the number of plots they can offer, there is still plenty of potential for new platforms to emerge, giving people endless options.
It is the difference between buying property when Earth is your only option and purchasing real estate when you have the ability to live on any other planet in the galaxy.
Three Problems with Buying Land in The Metaverse
The metaverse is the most exciting thing that has happened to investors in the last year. It offers plenty of opportunity for those who are lucky enough to get in on it. There are many opportunities for real estate investors, no matter your type, whether you’re a short-term rental investor, buy-and-hold or commercial property investor.
The virtual world could be a great place to live for many people. The metaverse is not a safe place to invest in, and it isn’t without its problems. Despite all the positive aspects of the metaverse there are still some problems with virtual estate. You should be aware before you dive in.
Metaverse properties remain a niche interest with a small market
This is perhaps the most important thing you should remember when dealing with metaverse property. Although it is a niche market, there are passionate fans. You need to recognize that your market may be small, just like mega-mansion builders. This is fine. However, your investment strategy must reflect that fact.
Your investment will be lost if a metaverse platform goes under
While no one likes to think about an investment going sour, there is always risk.
A metaverse property is not like real-world reality, in which you can always rely on the fact you still have the piece of land that you can touch and stand upon, but it can be lost completely if the platform goes under.
While members may be able to vote when the platform is shut down, if the money is not available, the person responsible for paying the bills can pull the plug. Second Life is a metaverse platform that has been around since 2003.
The metaverse is not good for the real world.
Although the metaverse is an electricity-and-computer-intense simulation, it’s easy for people to forget that it exists. While metaverse platforms are working to become more green with smarter, tighter programming, the cryptocurrencies they power aren’t doing so as hard.
Bitcoin mining uses approximately 91 terawatt hours of electricity. This is more than Finland’s entire population of 5.5 million and approximately 0.5% worldwide. This means that there is a lot of pollution due to the creation of electricity and more carbon in our atmosphere.
You can make a difference by purchasing carbon offsets for your metaverse investments or using your real-world voice and voting power to advocate for more environmentally friendly ways of generating electricity. This will reduce the negative impact of the metaverse upon the physical world. Every bit counts.
The metaverse is a risky investment, make sure you choose wisely.
It can be difficult to predict which metaverse platforms will become big hitters and which ones will fail, especially when these platforms are just starting to exist. While you might make a good amount if your platform is popular, you could also lose a lot of cash if it’s not.
You can still make a lot of money on established platforms. Don’t let their popularity scare you away. You won’t get a thousand-percent return on your investment in places such as Decentraland and you can still earn steady returns much like what would be earned in the real property market.