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Buying land next to a celebrity is no longer a dream now. Thanks to the metaverse, the next iteration of the Internet, now you can be a proud neighbour of pop star Daler Mehndi or famous US rapper Snoop Dogg or even influencer Paris Hilton as all these celebs now own land in the metaverse. In the last couple of years there has been a rush to buy virtual land.
Even the big corporations have jumped on to this band- wagon. Global businesses like PwC, JP Morgan, HSBC, Sam- sung, Gucci, Adidas, and Louis Vuitton are gobbling up space in the virtual world fast. Back home, Pooja Entertainment, the Mumbai-based company has become the first Bollywood production house to buy land in metaverse. Named Poojaverse, the movie-theater-like experiences for users with Cryptovoxels was bought as a nonfungible token (NFT) for 1.87 Ether, which was worth $5,613.84 at the time of purchase.
In the metaverse, real estate is a virtual ecosystem, where technologies such as virtual reality, augmented reality, seamlessly come together to create a real-world user experience. There are land parcels available and users can own them based on blockchain ledgers. Sandbox and Decentraland are two major decentralized metaverse plat forms for buying virtual land.
The boom in virtual land is expected to continue further. According to a report by Technavio, the market share of virtual real estate is expected to see an increase by USD 5.37 billion from 2021 to 2026, which is a CAGR of 61.74%. The report pegs it on the back of growing popularity of mixed reality and cryptocurrency.
“In the 90s companies used to book their domains. They didn’t know what they would do with it, but they still booked it. Similarly, we believe that a few years down the line every- body will have their 3D presence on the Internet, for which they will be requiring virtual lands. Without which it’s impossible to have the 3D presence. We are anticipating more and more people will come to metaverse in coming years,” Alok Joshi, co-founder, Lepasa Metaverse, an upcoming decentralised metaverse platform in India.
Various use cases
A virtual land can be used for a variety of purposes. Individual users can use it for socializing, holding events, concerts, 3D objects, games or use it as a marketplace to sell NFT creations.
Companies, on the other hand, are buying virtual land to provide their customers an elevated digital experience of their products and services. For example- JP Morgan bank has opened its lounge in Decen- traland to make it easier for its customers to know more about its blockchain service, Onyx. PWC Hong Kong purchased their land in Sandbox to gain expertise about the technology so that they can advise their global clients in a better way about this new trend. Some investors are even using virtual land as an investment. Or just to create an event and experience. Renting and leasing out the land are also the options.
“There has been increased traction in the metaverse in the past few years with the younger generation taking up AR/VR games, building their own NFT collections, etc., all sup- ported by faster network speeds maturing and more affordable gadgets. This has prompted many brands to enter the meta- verse. These virtual real estate parcels would just be a landing zone for building experiences. Brands are now monetising these virtual land purchases by direct strategies such as creating virtual showrooms for custom-ers to try on products before purchase, virtual service desks to ease customer pain points and consumer services,” says Ashoostosh Chand, Partner, Digital and Emerging Technologies, PwC India.
Types of metaverse platforms
Two types of metaverse platforms exist:- blockchain and non-blockchain. The blockchain ones are further categorised into centralised and non-centralised.The centralised blockchain integrates blockchain into its mechanism but decision making remains with the entity.
On the other hand, in the decentralized blockchain metaverse the decision-making power does not lie with a central organization, but with the users. Each user who owns a token of the metaverse carries out a decisional role in the administration of the virtual world in which he evolves. The smart contracts build the rules in a given metaverse in this system. This type of metaverse is known to be the most successful form of the metaverse.
One can buy land on Decentraland through the digital currency MANA. While Sandbox, the largest virtual world for real estate purchases, accepts SAND as token currency. Land is bought in each metaverse’s primary marketplaces or secondary marketplaces like OpenSea or Rarible. “We own a large amount of land across platforms, but have the most in The Sandbox as they have partnerships with many different NFT projects which help in bringing projects to life,” adds Sam Huber, CEO, Landvault, a London-based metaverse builder.
Going about it
First, select a metaverse platform and sign in to it. Second, set up a crypto wallet as payments for virtual land are made through cryptos. Then link your wallet to the metaverse. After this choose a plot available for sale. The lands are available in various sizes. Once you make an offer and pay, you can check out. The virtual land will get transferred to your digital wallet and you become the official owner of the property. You can also purchase land either on an NFT marketplace like OpenSea and search for land NFTs of a specific metaverse.
Real and virtual land: The similarities
Virtual land has similarities to having a land in the real world. Says Huber, “In real-world, land typically holds higher values when it is near other high-trafficked areas or near attractions that people tend to visit often. We see the exact same thing with virtual land. Everyone wants to be right next door to Snoop Dogg or Atari instead of out in the middle of nowhere on a tiny 1×1 island.”
Also in the real world, there is an element of land scarcity in individual cities. It’s not too different in the metaverse. “Consider the metaverse as a digital universe—or a digital world. Platforms such as Sandbox or Decentraland all represent a different city, with a different layout, population and set of rules. It’s true that new platforms can be created at any time and issue new land.. However, merely creating more land doesn’t instantly make it valuable. Without liquidity (i.e., a market for it), reputation and utility, the land is essentially worthless—just like creating a new city in the middle of the desert. Therefore, it isn’t the total supply of land that matters; it’s the audience that en- gages with it. The audience naturally aggregates around experiences they value more, which will be scarce—creating clusters similar to neighbor- hoods,” adds Huber.
Should you invest?
In recent times, the prices for virtual land are down. In particular, metaverse projects built on the Ethereum block- chain, including the Sandbox and Decentraland, have witnessed substantial declines in their valuations and other key metrics, according to data from WeMeta. For instance, the average floor price of land on Decentraland was $6,604 on January 3, 2022. But as of December 20, 2022 it has dropped to an average floor price of $1,606.78. During the same period, the Sandbox’s average floor price dropped from $,8650 to around $1225.12. “Decrease in overall value of digital assets and uncertain economic conditions in US could be the reason behind the fall, but once price of virutal currency stabilizes, land prices will also go up. For investors this is a good option to buy in this bear market. Virtual land is going to be a new asset class in the coming years,” says Joshi.
Things to watch out for
Choosing right metaverse platform is essential. ” The platform should be a decentralized one. Then one must read about the fundamentals about it. At the moment, things are not clear from the regulatory point of view, so it could be a little risky, but going forward, we expect the government is going to look at it in a better manner and come up with flexible regulations,” adds Joshi. Parcel size and the popularity of the metaverse platform, are other factors.
Buying land away from action will be cheaper but it poses a problem at the time of selling. Verifying people in the meta- verse is another challenge. One has to verify users through an avatar’s voice, facial expressions, and features. Scammers or bots trying to damage someone’s reputation can pretend to be an avatar to accomplish the end objective. The metaverse’s dependency on VR and AR devices can leak personal data because they are equipped with camera capabilities and unique identifiers. However, a metaverse standards forum has come up to safeguard the virtual world. It consists of various tech giants like Meta, Microsoft, NVIDIA, Huawei and Qualcomm.