In the “real” world, real estate has historically been a viable investment. Usually individuals and companies buy land and real estate either for development or for sale at a higher price in the future.
As the world becomes more digital, it seems that the trend towards giving a significant value to land and real estate has spread to the virtual landscape. At the intersection of new technologies such as virtual reality and blockchain, developers, investors and hobbyists are creating a dynamic virtual real estate market.
While VR provides the tools to visualize these digital worlds, blockchain technology serves as the basis for generating revenue from virtual property. As a result of the coronavirus pandemic, which has resulted in a central shift towards more digital forms of human communication, interactive virtual worlds can provide a safe space for many social structures to survive.
Second Life and the Fake Dollar
Virtual real estate is not a new phenomenon. Simulators like SimCity have been around for decades. In 2003, a 3D virtual environment called Second Life began generating income from virtual real estate, when users scrambled to purchase digital land using the platform’s native currency, the Linden dollar. Second Life launched before Bitcoin (BTC); However, within the framework of the project, users have bought, sold and rented real estate, as well as conducting business on virtual land.
The platform quickly fell into disrepair with the rise of interactive and immersive virtual real estate projects. However, at the height of his popularity, Anshe Chang, the “Second Resident”, became a millionaire selling digital real estate.
Virtual land as a commodity
With the advent of blockchain technology, virtual reality platforms such as Somnium Space and Decentraland allow users to purchase and invest in virtual lands. Recently, Keith – a cellar with non-mushroom icons – became the second largest owner of virtual land on The Sandbox.
Binance Launchpad launched its first Sandbox exchange offer in August, when nearly $ 3 million was raised at a token sale event. Binance is also an investor in the venture, having purchased over 4,000 Land Tokens earlier in September.
Joseph Madding, a marketing and PR consultant at The Sandbox, commented on the growing popularity of virtual real estate, noting that investors are becoming more open to the idea of digital land as a viable investment, telling Cointelegraph:
“Virtual real estate is definitely getting more and more popular. Over the past 10 weeks, we have seen more than 1000% of users interact with Telegram chat, Discord, Twitter and other social media platforms, and we have expanded our leadership in society to meet the growing demand. When it comes to virtual land as a commodity, We saw that our country, which originally sold for around $ 370, resold more than $ 2000 for what we wanted to sell as small properties. This is amazing and shows the great public interest in NFTs. ”
In fact, the pursuit of virtual assets is the latest in the fast-selling digital real estate trend. In March, VR world Somnium Space sold 110 ethers from virtual Earth in the first week of its then-scheduled 10-week run.
When Decentraland launched the platform in February, users bought millions of dollars from the digital space. In 2019, a portion of Genesis Plaza in Decentraland sold a 331 metaverse property for roughly $ 80K and became the second most expensive NFT in 2019.
The landscape expands with digital real estate
While it is common to see projects aiming to encode real goods, the new virtual real estate space is creating an independent digital economy. Using blockchain technology as a baseline, these platforms can make money in the digital land by allowing users to trade assets in the metaverse.
In addition to early adopters buying virtual land in the hope that the assets will be valued over time, some people and organizations have developed these assets. The process works in the same way as real estate development, with the creation of, among other things, commercial and residential complexes, industrial areas and parks.
The piece of cover that drives the desire to own virtual land appears to be based on optimistic designs about the viability of VR technology. The total value of the virtual and augmented reality market is estimated to be $ 20.9 billion by 2025, according to a study published in August, and companies in China and India are expected to lead this significant growth over the next five years.