Jul 13 2022
What Is Digital Real Estate? Here’s the Full Story
Categories: Cryptocurrency, Computing, Technology.
How much of your life do you conduct through a screen? And how much has that screen time increased over the past ten years? Answer to both: a lot!! And if we consider people’s lives 30 years ago, we’ve gone from living mostly analog lives to living semi-digital ones pretty darn quickly. But what if this is just the tip of the iceberg?
Web 3.0beginning to bubble, humanity is set to dive even deeper and start conducting even more of its affairs in cyberspace. Digital worlds that only exist on computers have appeared. And as both the oldest form of investment and the world’s largest asset class, it was only a matter of time before the real estate industry found a way to get a piece of this action. Action in the form of digital real estate. But what is digital real estate?
Digital real estate is…
In its broadest definition, the term digital real estate has been used to describe any of the familiar internet spaces. These include:
Web and mobile applications
But times are changing and the term is increasingly meaning something else. So for this blog, we’ll be using digital real estate to describe a new incarnation of the asset class. One that’s exclusively present in a Web 3.0 context. And one that’s facilitated by the Metaverse – more on that later.
Digital real estate is any form of digital land within the Metaverse. Just like real world land it can be bought, sold, leased, and visited by whoever the owner permits. And unlike real land, developers can develop upon it anything a computer and the human mind can fathom. There are no planning regulations or laws of physics to abide by.
Anyone familiar with games like EverQuest or World of Warcraft might have noticed that those games served as something of a digital real estate precursor. Just like in the metaverses of today, there you could buy, sell, and make a profit on virtual land.
If the whole metaverse thing still isn’t quite clear yet, this may help.
A quick definition of the Metaverse
The Metaverse is a three-dimensional virtual world. It only exists online and is accessed by users with either
augmented realitytechnology. Yes, just like Ready Player One. Just like the real world, the Metaverse has cities, neighborhoods, and commercial districts. People can interact with these spaces as they would in real life, but with the help of a digital avatar.
Despite the name, there are, in fact, many metaverses. Much like there’s more than one social network. We’ll cover them in more detail later. But as you’re probably aware, Facebook is building a metaverse - albeit one that isn’t decentralized. So that could easily end up taking over and being the only metaverse available.
Let’s also note one other thing. The Metaverse is so embryonic, that much of what you’ve just read could be miles off the mark in ten years. The Metaverse now is kind of like the internet in the 80s. We only have a glimpse of what it’s yet to be.
Anyway, back to digital real estate
To best answer the question of ‘what is metaverse real estate?’ or more specifically ‘what is metaverse land?’ we need to broach the topic of NFTs.
Ah yes. Those things. Those digital doodles that somehow cost five figures. Whilst digital real estate isn't linked intrinsically with the art world, it has everything to do with the technological mechanism that is NFTs.
An NFT (non-fungible token), is a unique, irreplaceable digital asset that documents ownership. Unlike say, many a crypto token, it cannot be replaced by another token; one Bitcoin is just as valuable as another Bitcoin. Meanwhile, each NFT is individually valued.
Recorded on the blockchain, NFTs are the perfect mechanism for determining who owns what bit of the Metaverse. Or more specifically, who owns which ‘digital plot.’ Just like real life plots of land, digital plots are sections of digital land, unique in their size and location within their respective virtual world.
The different metaverse platforms are subdivided into plots of digital land. When a buyer purchases a plot, the new owner’s information is recorded as an NFT on the blockchain. Basically, this NFT acts like deeds issued during your typical real estate transaction.
About those metaverses
As mentioned earlier, there are a few different technicolor wonderlands that you can own a chunk of. Covering their respective characteristics in detail is a topic for another blog. But we thought it wise to quickly address the main ones.
One of the major players where users can import 3D models, code applications, games, and animations. There are 90,601 plots of land. Each plot around 50x50 feet. The market cap of Decentraland’s native cryptocurrency, MANA, has been above and well beyond the ten figure mark. Hence why it’s attracted plenty of investment from developers and big brands like Sotheby’s, Samsung, and Nike.
This was started as an NFT gaming metaverse for users to overcome challenges and craft their own world with the available materials. All the land is evenly divided into a grid. The Sandbox was given quite the P.R boost when Snoop Dogg created his own ‘
Snoop Verse.’This certainly helped pump the price of The Sandbox’s native currency SAND.
With daily active users that have reached into the millions, this is a gaming metaverse for players to compete and trade ‘Axies’ – creatures represented as NFTs.
Designed to exactly replicate the real world, users can build property represented by NFTs and earn money from them.
My Neighbour Alice
This multiplayer, Ethereum based game, lets users buy and sell parcels of land, breed NFT animals, socialize with other players, and find other NFT collectibles. Like many other platforms, this allows players to earn profits on the platform’s marketplace.
Virtual Reality is this metaverse’s focus. Somnium Space is designed to be a social platform where users can communicate, shop, and entertain themselves. Basically all the fun bits of real life. Similar to Reddit, each user has a karma score. This is influenced by how other users rate interactions with you and how much you engage within Somnium Space.
Oh and let’s not forget
Although not blockchain related, games like Fortnite and Minecraft have their own metaverses too. Where users can create, share, and interact with each other in a similar fashion to the examples above. You can argue they started it all!
Why would I want to purchase digital real estate?
Maybe because people might end up spending more time in the Metaverse than they will in the real world. Or maybe because digital mansions can cost more than real ones, digital real estate offers pretty much everything that regular real estate can.
A smart commercial real estate investor can buy land, turn it into an event space, rent it to a concert promoter, host a pop concert (
which has already happened), and the promoter/artist can even make money off selling their merch. This is no different from Madison Square Garden. The economic viability is looking so promising that you can even get
mortgages for digital real estate.
For the rest of this blog, we’ll go beyond the ‘what is digital real estate?’ question, and break down the reasons why you both would and wouldn’t want to purchase it.
It’s an investment
People are already making stupid money. Yes, the market has cooled lately. But Between September 2021 and January 2022 NFT land plots rose an estimated 400%-500%. There certainly have been some
record breakingsales. With the market in such a fresh and wild place right now, and the potential of the Metaverse yet to be fully realized, for the smart investor, this is an absolute gold rush.
It’s also a low maintenance investment and an easy way to diversify your portfolio. Unlike regular real estate, you don’t exactly need to re-roof it every several years or conduct health and safety checks; digital real estate doesn’t naturally decay.
You can even add your own value to your investment. Take the time to design and build something valuable on your piece of land and abracadabra, you’re a digital property developer.
It’s where the eyeballs are… And more eyeballs will be
Imagine being the genius that snapped up sections of Times Square back when it was going for pennies by comparison to today? A) that would be quite the gain on your investment. But B) you’d also have made a killing in the meantime due to the insane footfall and advertising revenue on offer.
The potential size of metaverse ad revenue by 2024, according to Bloomberg
The Metaverse is potentially a pre blossoming New York City. And the following brands are a few that clearly think so too.
Samsung launched a metaverse version of its flagship New York City store.
Sotheby’s created a digital replica of its New Bond Street headquarters as a virtual gallery in Decentraland.
Balenciaga created a range of digital outfits exclusively for players of the game Fortnite.
Ultimately, we’re social creatures and anywhere we choose to interact with each other will be a prime target for brands to spend the big bucks and join that conversation.
It’s an untapped economy
That whole ‘online shopping’ thing got quite big, didn’t it? Before the internet, it was just mail-order catalogs and shopping malls. Today brands of all shapes and sizes can find their market wherever that may be in the world.
The Metaverse will be the next phase of this revolution. The missing link between buying things online and the joyful experience of in-person shopping. The Metaverse could let people browse fashion, art, motor vehicles, etc., and attract the type of audience that might have previously preferred to only shop in real life.
You can do things in the Metaverse you just can’t do in real life
Here’s a corny but true line: in the Metaverse your only limit will be your imagination. Errgh. O.K. got that out the way. But seriously, with the limitations of real life gone, brands, artists, and other organizations can give people more of what they want in a way never previously imagined.
Sports teams can host virtual games and events, popstars can hold concerts for fans across multiple time zones. And, as mentioned, Snoop Dogg is slowly building his own world/community/cult in his own virtual back garden.
“I'm always on the lookout for new ways of connecting with fans and what we've created in The Sandbox is the future of virtual hangouts, NFT drops, and exclusive concerts,”
It’s a sales environment that both the consumer and the business can control
Following on from the previous point, imagine this. You run a gym in the Metaverse. Maybe your research has revealed that different colors, depending on a user’s heart rate, can be more or less conducive to users enjoying exercise than other colors. This means, as a smart fitness brand, you could figure out a way to tailor workout experiences to individuals in real time, based on heart rate and other biometrics.
Another futuristic example might be logging a shopper’s buying history and then guiding them around a virtual store with giant arrows and popups, funneling them as efficiently as possible to what they’re most likely to want.
Meanwhile, consumers can design their ultimate experience. Busy dads that just want to go in and out in five minutes could narrow down what they’re browsing. Or if you want to make a day of it, an A.I personal shopping assistant could be of service.
Basically, digital real estate allows businesses to market and sell their products in previously unfathomable ways whilst collecting a whole new kind of data for their CRM.
The potential drawbacks of digital real estate
Right now digital real estate is mostly speculation and there isn’t much knowledge out there to guide you. This isn’t like buying proven assets that have been around for years like gold or Coca-Cola stock. Pretty much anyone getting into digital real estate today has had to dig deep on the research front, trust their instincts, and cross their fingers.
It can be hard to buy
With so many metaverses to choose from and research, all digital real estate doesn’t appear to be created equal. When combined with the volatility the temptation to just log into a traditional investment management platform and buy whatever’s on their list of favorites seems much easier.
There aren’t really any taxes or regulations
Currently, the Metaverse is the wild west. There’s nothing to protect you from snake oil salesmen. Nothing regulates prices or keeps consumer behavior in order. This could certainly have its benefits in the short term. But when the regulations and taxes come in, that could turn your digital real estate dream upside down and present problems that you never had the chance to prepare for.
But this is where VerseProp comes in
Our mission is to offer a clear and safe path through the crazy jungle that is digital real estate. Working with some of the most knowledgeable and smart brands in the sector, we can give you the insight necessary for making informed digital real estate decisions. We can keep you informed of trends, offer analysis, and much more. Directly providing you with the kind of information that would be impossible to get if you were figuring it all out on your own.
You can also get a unified view of every type of opportunity across every metaverse worth investing in. With our platform, purchasing land is as easy as purchasing something on eBay.
Without getting too cliché, it’s fair to say that
this is only the beginning. The question of ‘what is digital real estate?’ or ‘what is virtual real estate?’ will be best answered over the next decade or two. The market will only grow in size. With completely unforeseen use cases emerging. And eventually, we’ll have a generation raised on the Metaverse, just like we now have a generation raised on social.
As Robert G. Allen said “don't wait to buy real estate. Buy real estate and wait.” VerseProp is here to help you set that ball rolling. If you haven’t already, click below to sign up to our newsletter where you’ll be first in line to hear about the most promising digital real estate on offer and learn more about the space as a whole. You’ll also be first in line to hear updates on our upcoming NFT mint.