The virtual real estate market is likely much smaller than you think. Despite recent news headlines announcing blockbuster sales, only a tiny minority of technologists are buying land in the metaverse, according to the professional social network Blind.
Fewer than one in seven (13 percent) are buying virtual real estate in the metaverse, a user-initiated poll of 3,219 verified professionals on Blind found.
A majority of poll respondents (57 percent) said they were not purchasing land in the metaverse. The novelty of the new trend appears to be driving most of the hesitation and skepticism.
A verified Pearson professional on Blind pointed out nothing could stop anyone from creating more digital property. The technologist said:
“What a dumb investment. The whole reason that land/real estate is a good investment is because there is a finite amount. What’s the point of virtual land?”
Perhaps unsurprisingly, 30 percent of technologists did not know how to buy land in the metaverse, owing to how new the concept is.
What is virtual real estate?
Virtual real estate is generally a non-fungible token (NFT), a one-of-a-kind digital asset verifiable or tradable on the blockchain. While NFTs are best known as digital art and collectibles, the technology can also represent anything digital. Enter: Virtual real estate.
Generally, virtual real estate is a set of coordinates or unique location in a “district” within a specific metaverse, commonly an online platform, like a game.
How do you buy virtual real estate?
Metaverse platforms generally have a unique token or cryptocurrency. Prospective digital-land buyers must use this specific asset to make the purchase. An account and wallet on a cryptocurrency exchange are often required. Some NFT marketplaces also act as peer-to-peer marketplace for virtual real estate.
After the purchase, the virtual real estate will appear in your cryptocurrency wallet as an NFT, which helps confirm you are the owner. The transaction will also be recorded on the metaverse platform’s unique blockchain.
How valuable is virtual real estate?
Like physical real estate, location matters with virtual real estate.
“There are limited resources, and there will be limited ‘winning’ jurisdictions in the Metaverse that people will coalesce around,” a verified Unity professional explained on Blind. “Buying that virtual property from now is a bet on that jurisdiction being one of the key, most-used ones. They ARE limited, and NFTs ensure that they are unique.”
Be warned: Virtual real estate can lose value. If the metaverse platform is abandoned, the value of its real estate will drop and can even reach close to zero.
Additionally, the supply of virtual real estate could be infinite. Nothing is stopping metaverse platforms from creating more digital land, although some platforms have said they will not make more to keep the assets scarce.
“There will be future attempts to make metaland scarce either artificially or through network effects, but you can always create more,” noted a verified engineer at Speedway on Blind.
Indeed, new metaverses can be created at any time, each with its own plots of digital real estate.
The bottom line
Even among early adopters of technology, virtual real estate appears to be a niche trend, according to Blind. The number of virtual landowners is far from the “land boom” that metaverse proponents say. It remains unclear which metaverse platform or virtual real estate may be valuable in the long term, and as a result, it may pay to take a wait-and-see approach.