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Digital land grab: financial speculation in the metaverse

By Guardian Nigeria
15 January 2022   |   1:45 am
The Metaverse is an online virtual world incorporating augmented reality, virtual reality, 3D avatars, video, and other means of communication.

The Metaverse is an online virtual world incorporating augmented reality, virtual reality, 3D avatars, video, and other means of communication. Users are buying real estate space in the metaverse and can “live” within a virtual universe. Digital avatars can connect through work, travel, or entertainment using VR headsets.

As the world becomes more virtual with each passing day, we are faced with a new challenge about buying digital land. Early December witnessed a massive land grab for virtual real estate. Interest in digital real estate caught everyone’s attention with the recent record $4.3 million purchase of a plot of land in Sandbox. Minecraft, Roblox, Decentraland, and Sandbox are popular platforms offering digital real estate. Since digital real estate does not have any regulations as it exists in a virtual world, it can be registered using NFTs.

NFTs or non-fungible tokens have become popular today. These are digital collectibles or unique digital tokens to properties, stored on a blockchain ledger. Digital real estate is touted to become a hot commodity shortly soon. Most people use some type of cryptocurrency for transacting in the digital world. Many metaverse games issue their own crypto currency for transacting. During the first week of December, ~25% of NFT purchases for digital land in the metaverse were done through, totaling over $300 million. SAND, MANA tokens surged in November as crypto traders grew optimistic about the Metaverse. Crypto trading has become a hot opportunity poised to gain from these virtual worlds which are experiencing strong interest from both crypto traders as well as Wall Street. Both crypto traders, as well as Wall Street analysts, are speculating on the metaverse’s potential commercial value. Many investors are buying the metaverse concept seeing an opportunity like the Bitcoin investment.

Most metaverse cryptocurrencies are built on the Ethereum blockchain e.g., SAND and MANA which are also the largest metaverse cryptocurrencies. Digital land is selling for millions as people scramble to grab virtual real estate in the metaverse which is expected to become a multitrillion-dollar opportunity in the near future. Of course, it is highly risky and speculative. NFTs can be purchased using a cryptocurrency held in a digital wallet. Hence, cryptocurrencies are becoming indispensable for trading and it is important to learn about crypto trading in a comprehensive way. Websites like easyMarkets offer a good platform for regular crypto trading. The metaverse offers huge opportunities for the cryptonauts out there – offering financial services, exchange, as well as data storage. However, with such massive investments in the virtual world, investors will have to wait for their real investment returns which will be based entirely upon land appreciation, the economy of metaverse games, and their popularity.

The metaverse refers to internet platforms that have built interactive worlds incorporating virtual entertainment and businesses. As of now, investing in metaverse land is considered highly speculative. It is possible that your investment in digital real estate becomes worthless or be valued at absurd levels. There are only a limited number of land plots in Sandbox and Decentraland, the two biggest metaverse platforms, and both the companies have indicated that they will not create more, further creating a scarcity.

As of now, virtual real estate profits continue to boom, both in crypto and fiat currency. Millions of people and institutional buyers are already spending hours a day in virtual social spaces and investing huge amounts to buy a plot of land in the digital world. In June, research firm IDC found global shipments of virtual reality headsets surged more than 52% year over year in the first quarter of 2021. Superfast broadband speeds, virtual reality headsets, and persistent online worlds act as strong growth drivers for the metaverse.