Throughout history, real estate has been one of the best options for investment. What made the real state even more valuable than securities and commodities was the element of non-duplicability. The advent of the metaverse brought forward the concept of decentralized and virtual real estate. Though a non-tangible asset, the global investor rush is pushing the virtual land business into becoming a far more profitable venture than its conventional counterpart.
The metaverse has currently grabbed the spotlight as one of the best potential investments in the market. The idea behind it may sound baffling, but traders are seeing growth opportunities in metaverse real estate, particularly those familiar with simulation/VR or strategy games. And, institutional investors have also joined in on the race, often bidding multi-million dollars for a virtual land plot.
In simple terms, the metaverse is a digital environment that allows seamless switching between physical and virtual realms. Users can potentially do every real-life activity in the digital environment(wander, roam, shop, trade, and more), make custom modifications to their digital ‘avatar’, and save their preferences.
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Similar to the physical world, metaverse real estate is expensive. Its valuation can be determined by factors such as location, supply-demand, number of viewers(population), and more. Like the real world, metaverse estate valuations are proportional to rising demand.
As mentioned before, virtual estate valuations can reach millions of dollars in valuation. But, there are economical and affordable options as well- prospective buyers can purchase anything from plain land plots to entire vacation islands within the entire metaverse. Famous metaverses like Sandbox or Decentraland are expensive and remain in high demand.
Examples of popular metaverse virtual estate projects include Sandbox, Acie Infinity, Enjin, and Decentraland. All these projects feature an underlying Ethereum blockchain architecture and utilize crypto tokens for transactions within their environment. Gaming companies like Atari and Roblox are developing metaverse projects. The global blockchain development company HashCash Consultants recently announced its collaboration with a US company specializing in metaverse development.
If we consider popular examples, the Decentraland project has 90601 plots, while Sandbox has 166464 land units. The ROI in decentralized virtual estates is much higher than actual real estates- capable of reaching up to 10x valuations within a short time.
Metaverse projects are built using blockchain technology which stands out with features such as immutability, transparency, traceability, and real-time access. The technology features distributed ledger-sharing mechanisms which keep track of each transaction in real-time, preventing the possibility of fraud commonly associated with real estate, including forced cancellation, non-authorized selling, false promises, or possession delay.
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Crypto assets are preferred for purchasing lands in the metaverse to avoid large transaction fees associated with fiat denominations. Prospective buyers can also utilize loans and lending through DeFi(decentralized finance) options by placing collateral(usually NFTs). Unlike conventional banking systems, DeFi does not feature KYC obligations, rendering each person in possession of collateral to be eligible for crypto loans. Pre-programmed smart contracts automate the entire transaction process. In addition, DeFi protocols also feature lending options utilizing economical blockchain security.
Both crypto enthusiasts and large-scale corporations are jumping on the metaverse wagon, seeking ways to capitalize on the infinite possibilities shortly. TechResearcho predicts that 25% of People will Use Metaverse by 2026. And several reports project the global metaverse economy will reach over a trillion USD in the near future. Considering the high returns, investments in the metaverse real estate have huge potential, if channeled properly.
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