The metaverse is looking more and more like a luxury good: for now it’s a semi-deserted land where watchdogs, the hyper-tech elite and investors shop.
Two billion dollars. The Metaverse is semi-deserted, but two billion dollars worth of land has been purchased within a year. How is it possible? The answer is quite simple, Metaverse is for the few people who have a lot of money. According to lender Morgan Stanley, Metaverse will represent more than 10% of the luxury market by 2030.
Inside are super-winners who throw parties in luxurious toy villas, futuristic investors, the elite of the hyper-tech sector and pioneers who dream of leading the market to the promised land. For now, however, the metaverse is limited to being a rogue-colonized wasteland. Researchers from DappRadar, a portal that analyzes data related to the Metaverse, claim that last year $1.93 billion was spent on cryptocurrencies for the purchase of virtual land. However, the value of Decentraland and The Sandbox has been declining for months.
Shopping in the Metaverse
Virtual property prices have increased by 500% since the Facebook-Meta transition (October 2021). Homes in the virtual world cost just as much (if not more) than homes in the real world. For example, an anonymous user paid $450,000 to buy property near Snoop Dogg. While Republic Realm, which develops the virtual land, spent $4.3 million on land in The Sandbox. Investment firm Tokens bought a tower (yes, like in the Middle Ages) in the Decentraland Fashion District for $2.5 million.
Paris Hilton decided to treat herself to a private island on Roblox, she christened it “Paris World” and it is a replica of her residence in Beverly Hills where she plays her historical parties on a loop and organizes trips on her virtual yacht. Even Victoria’s Secret model Sara Sampaio is following suit. She also bought a virtual island worth $71,000.
Why are the prices so high?
The units of measurement are not in square meters but in parcels, parcels or parcels. Lands are small squares or rectangles on a large map, identified by specific coordinates. As of February 2022, 268,654 lots were available on the four main platforms (Decentraland, Sandbox, Somnium and Cryprovoxel), of which 62% were in Sandbox. These 96-by-96-foot parcels cost $12,700. In Decentralend, on the other hand, a 16X16 field is worth $14,400.
It may be metaverse, but the dynamics are the same as in the real world. Land is not unlimited and, as always, scarcity creates value. Not only that, the price also varies by location, yes in ether there are central and peripheral, for example in Decentraland, places near places like Dragon City and Vegas City are more expensive, many buy instead betting that an area of assigned becomes busy. The value of land is also determined by the perceived importance of the platform on which it is located.
According to Yat Siu, co-founder of Animoca Brands, owner of Sandbox, “what makes virtual land valuable is the fact that the most influential people in the space are building it.”
How Decentraland works
Why buy land in Metaverse
Metaverse Group, a real estate agency of the virtual world, said that “buying a house in Metaverse is like arriving in New York when it is the whole village and you have the opportunity to buy a piece of Soho. the same thought, and opened the office first virtual, “Metaverse will penetrate all sectors, creating profit opportunities for more than a trillion a year. Bubble or no bubble, there are those who believe in it, invest and buy, now there are 12 agencies in the market real estate only for Metaverse.
It was bought mainly for three reasons. The first is a showcase function, so buy a lot to display/exhibit, display purchased items or even your artwork. Those who want to build commercial enterprises, shops, galleries. It is no coincidence that the biggest investments come from the world of fashion (Gucci, Balenciaga, Tommy Hilfiger, Dolce & Gabbana). Amsterdam-based digital-only fashion house The Fabricator produces avatar-only clothing, designing custom collections and apparel for users of Decentraland, The Sandbox, and other crypto metaverses. And there are those who rent to the highest bidder and those who hope to sell their land at the right time.
The problem of decentralization
It is not necessarily profitable, but there is a problem, it is decentralized. There is not just one metaverse, there are many, and it is possible that one or more may suddenly lose value. Therefore, the risk is to end up with land bought at crazy prices that is no longer worth anything. For example due to a sudden devaluation. Everyone wants to sell, no one wants to buy. Using the Metaverse Group metaphor (buying in the Metaverse is like getting a house in Soho before anyone else), the problem is that yes, it’s a bit like buying an apartment in Soho, but in a universe where others can be created. endless versions of Soho.