It seems everywhere I go these days, people are talking about Crypto, Bitcoin, Ethereum, NFT’s and the Metaverse. With the rise of all of these, it was inevitable to wonder if now is the time to get in on the action. I’d even started looking at things like this ipvanish review with a view to upgrading my internet security before I do go ahead and invest, which seems like the sensible thing to do, since I won’t want anyone but me getting hold of my investments. I recently read a story in TIME about a group of investors from Miami who used a virtual real estate broker to help them buy 23 parcels of land in The Sandbox, a user generated, blockchain based virtual world. Considering how blockchain web 3.0 has grown, it makes sense that this would generate some excitement. The lots started around $3000, with neighboring “properties” selling for $130,000. The land they bought using Ethereum, is really nothing more than pixels, something you might see in a video game. It borders a compound of the Bored Ape Yacht Club and a plot owned by Adidas. (If you don’t follow NFT’s the Bored Ape Yacht Club is a collection of 10,000 plus computer generated ape avatars which sold for $24.3 million, or around $200 and ape.) The value of the parcels the Miami investors bought has already gone up 10x, making their holdings potentially worth many millions of dollars. In New York real estate terms, they bought in the Soho or lower east side, believing they bought a hip location, or at least one that has the potential to be.
I have had a steadfast rule of not investing in things I don’t understand. However, I love to read and educate myself, so several months ago, I began doing just that. I bought every book I could find on the rise of Cryptocurrencies, NFT, and the Metaverse. I might have done thorough research on crypto trading platforms to find the best bitcoin wallet, which I may use in the future if I decide to invest in Cryptocurrency. NFT could be another fascinating domain. Even though these Non-Fungible Tokens share the same programming as cryptocurrencies, they differ substantially from crypto coins and physical money. They can only have one digital owner at a time and these tokens usually have an earning process. You might have also come across ads that state “play to earn crypto games” and similar phrases. It’s generally the case that rewards offered by some of the games come in the form of NFTs. I was drawn to the unlimited possibilities in each but particularly to the Metaverse. As a pioneering woman, I love being on the cusp of new and radical change. And there’s no doubt we are standing on the precipice of that right now. There’s real estate plenty, ranging from a few dollars to thousands or more. Investors are giving real money for the opportunity to buy virtual lots, where they can do anything from flipping the land to building on it.
Thankfully, I wasn’t around for the great American land rush, but if I had been, I would have been excited by the potential and real estate opportunities, just as I am about the Metaverse and real estate-albeit virtual real estate. The parallels between the two opportunities are clear; the first to the newly staked out properties are the ones who will make the most money.
Ok, I get that the property in the metaverse isn’t real. And to be certain, it’s hardly densely populated–yet. It’s the ultimate platform of AR, alternative reality. A place where you can “live” any way you choose, as anyone you create, in a land you develop or take residence in. You can socialize, attend special events like a concert or an art show and hang out with friends. Although the platform looks like a game, and it can be played like one, you can do anything you want in the metaverse. If you don’t understand the metaverse, the simplest explanation is that it’s a collection of multi-user platforms that allow users to interact in real time. It might have local economies, which allow for buying, selling and trading of in platform objects or by mining crypto coins. For now, the most popular platforms are what is referred to as “sandbox worlds,” meaning you can build anything you can imagine within the limited constraints of the program you’re working in. One of the constraints around real estate is there are a limited number of lots, which, in theory creates some value to the virtual property. It’s a lot like buying a domain name in the early days of the world wide web
So what does it cost to own virtual real estate? A lot on The Sandbox sold on December 8, 2021 for $13,140.81. Six months earlier, that same lot was purchased on March 30th for $38.70. Any way you look at it, that well over a 300 percent return on the original investment in less than six months. There are more extreme examples of virtual real estate sold in December on varying platforms ranging from $57,171.00 to $758,250.00. Some of the platforms currently involved in virtual real estate include The Sandbox (valued at $5 billion, a $3 billion dollar jump from its 2021 valuation,) Decentraland, CryptoVoxels, Earth2, Nifty Island, Superworld, Wilder World and Somnium Space. Each platform offers something different. Snoop Dog bought property in The Sandbox and Paris Hilton has an island in Roblox, which is really more of a game platform valued at $42 billion.) I am quite familiar with Roblox because my granddaughter loves to play on their platform. Some reports predict virtual gaming worlds with be worth $400 billion by 2025, with the broader metaverse industry headed well over $1 trillion.
As someone who has lived in the world of real estate for most of my career, this sure sounds like a good opportunity. But, is it? After doing some research, I learned that many of the early buyers of virtual real estate are also investors in the platforms, making their enthusiasm for the platform and investments self-serving. Ok, there’s really nothing wrong with that, although it should be transparent and caution any investor to do their own due diligence before committing.
Venturing into the metaverse as an investor in real estate can be tricky and highly speculative. Like any high risk investment, the upside could be huge and the downside is total loss. To make the commitment, I think you must believe the platform will exist long enough to get your investment back, let alone turn a profit. While I am convinced the metaverse is here to stay, it’s really a guessing game for now, one that can be a lot of fun or a lot of stress. So before you invest, do your homework and be willing to lose the money you spend in the metaverse. The upshot, if it works, it could offer phenomenal returns. The metaverse will never replace the stability of a roof over your head. But it could create endless potential with limitless options for people to grow and expand their portfolio.
*I have no position in any of the platforms mentioned. This blog should not be considered a solicitation or recommendation for any investment.