NFTs, Metaverses and the Virtual Real-estate by@dankhomenko

NFTs, Metaverses and the Virtual Real-estate

Dan Khomenko HackerNoon profile picture

Dan Khomenko

CEO of and An entrepreneur and founder of a successful IT engineering company.

On 16th March, a piece of real-estate on the Somnium Space platform was purchased for $500,000!

On 11th April, another plot of land on the Decentraland platform was sold for $572,000!

Impressive, right?

You might be wondering:

Why would anyone buy non-existent land?

In this article, I will explain where this trend originates and what drives investors to make such investments.

What are Metaverses?

Metaverses are the future of the online world.

Metaverse is a shared virtual space based on the digital reproduction of our universe and is infused with a huge number of possibilities as well as the fulfillment of fantasies.

The feeling of ‘presence’ in real-time is made possible in this space - social interaction (parties, conversations, walks with friends, virtual festivals, concerts, fashion exhibitions, sporting events, galleries, and more). All of the above contribute to developing a new economy – the NFT economy, which could grow into a real-world economy. 

To put it simply, a metaverse is known to everybody, i.e., Minecraft but on the blockchain. It’s the perfect ecosystem of the future. In regular games, it is up to developers to develop and bring in new elements. The user takes part in its development by creating games and events, building real-estate, adding their NFT objects, and paying in cryptocurrency. Some virtual worlds have their own cryptocurrencies; for instance, there is MANA on the Decentraland platform.

Moreover, in a metaverse, unlike regular games, there is no script. The main purpose is to create social and economic interactions between users. Blockchain technology, which replaces physical and legal laws in the real world, ensures legitimacy and allows you to own your avatar, clothing, a virtual shop, or a piece of land in which such interactions occur. The key concept here is ‘ownership’, not just usage, as in ordinary multiplayer platforms.

The economic dimension is now being actively integrated into such worlds. For example, a user can create an architectural object, then tokenize it and put it up for sale in various marketplaces. Later, this object will be bought by another user, after which it will be placed in their virtual space, and if so desired, NFT objects can be added to it.

Do you remember Bepple's “Every day: the first 5,000 days”? This NFT was purchased for 69 thousand U.S. dollars by Metakovan (Vignesh Sundaresan, a Singaporean investor). People might wonder why someone would buy an object of art that does not exist physically for such a sum? This is where metaverses come in.

Metakovan's ambitious plans include his intention to display his NFT in a virtual space. At the moment, the investor is working with engineers to design special gallery complexes so that everyone can visit the gallery simply by opening a web browser or using VR technologies. Just like Metakovan, you too can purchase a picture in the form of the NFT and hang it in your virtual house.  

Blockchain and NFT are the technologies that were lacking in Minecraft аs well as Roblox and Second Life. Technologies that are key to making metaverses are ironically realistic-looking. That is to say, they are a clear economic model that offers a sense of belonging for each user - a real property.

The Metaverse Projects  

Decentraland is the most developed metaverse and is based on smart contracts (LAND Contract, Estates Contract, Wearables, a Content Server) and assets. Its own cryptocurrency, called MANA, allows Decentraland to be an autonomous platform that subsidizes various operations and initiatives throughout the metaverse.

By the way, Coinbase reported that during 2020, MANA Decentraland soared by 3500%+. A key feature of the platform is its focus on users' views since it is the community that votes for: policy updates, NFT-implemented contracts that will be globally active, land auctions, etc. On the grounds of this metaverse, users have already created many interesting objects, from castles to space bases. By the way, by the end of March 2021, the overall volume of Decentraland sales topped 50 million U.S. dollars.  

Cryptovoxels is a virtual world on the Ethereum blockchain. Players can buy land on which they can build shops and art galleries. Editing tools, avatars, and text chat have already been installed. This metaverse is oriented toward art, where everyone can visit a number of different exhibitions.  

'We create an open, social, virtual world; a world that has its own economy and its own currency.'

This is the official motto of Somnium Space, a crowd-funding social world of virtual reality and virtual investments where people can buy land and dispose of it, building whatever they like: schools, cinemas, restaurants - the opportunities are unlimited. 

Why Buy Virtual Real-estate?

So, we have come to the main question, which doesn't let many people sleep calmly at night. Really, why? Let's delve into this topic. As I have mentioned earlier, at the moment, Decentraland, Cryptovoxels, and Somnium Space are the leading platforms.

Virtual real-estate prices in these metaverses continue to grow, and the value of some plots of land exceeds half a million U.S. dollars. Currently, each of these platforms has a few thousand landowners already. The rush to buy virtual real-estate can be compared to fighting for domain names when the Internet was just born.

According to data, the general capitalization of the NFT market in 2021 was $8 billion U.S. dollars, which exceeds the indices of 2019 by 56 times. At the beginning of 2021, the demand for NFT increased, and crypto-asset sales soared.

More and more people are coming into the sphere, creating a competitive environment. For this reason, land plots in the central areas of virtual worlds will be in even greater demand and therefore need to be acquired as soon as possible. Virtual spaces are mainly real-estate that capture people's interest, shape the demand, and focus the attention of users. This attention can be monetized in different ways. 

Statistics show that virtual real-estate is booming now. Consider the metaverse Decentraland: in January, the virtual world had 111 buyers; in February, this figure increased to 184; and in March, there were already 334 buyers on the platform, with monthly land sales exceeding $4 million, having started at $246,000 two months earlier. 

Returning to the above-mentioned increasing demand and society’s focus on virtual land, I will give the example of an investor, Whale Shark, who collects NFTs. Starting in 2018, this investor bought the real-estate property in sandpits, with the total amount of purchases worth 400 ETH.

Since then, the price of each land plot has risen from $60,000 to $400,000. Good investment, isn't it? By the way, some investors have no plans to return to real investments, keeping most of their savings in crypto assets (for example, the Australia-based investor Matin Saudagar, presenter of the NFT blog). 

The virtual world and NFT take society to the next level. Before long, humanity will be spending most of its time visiting galleries and events, participating in races, and building houses in virtual reality.

Digital art, based on smart contracts, will contribute to these spaces' formation, development, and appearance. Land within metaverses will draw more attention from the general public, fuelling a passion for a new way of investing, i.e., buying virtual real estate. This trend is already gaining momentum!

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