If you’ve ever thought about buying real estate in the metaverse, there really is no better time than now. As stock and crypto markets fall, acquisition costs are much lower than they have been in months. There are also more stocks to choose from, as well as opportunities for long-term gains.
Even if markets hadn’t plummeted, I’d still give you the same metaverse real estate advice: Buying with a plan in mind and a long-term holding strategy is key. And it looks like you’re getting a slightly better price too (and who doesn’t love discounts?).
So what am I looking for in the best investments in the Metaverse world? I’ll share some of my secret sauce.
1. A metaverse property must be secured by an NFT
Many digital platforms allow you to purchase virtual items, but in most cases you never actually own those items. Platform owners can set the rules (check your end user license agreement) which may include whether you can resell these items and decide how this item may change as the platform evolves.
When you’re talking about virtual real estate, that’s an even bigger problem than something like a virtual tiara for your avatar. If the owners of the platform can determine what they can and cannot do with their virtual property, does it even belong to you?
Look for platforms set up to sell NFT-enabled digital items, including and especially real estate. These NFTs serve as proof of ownership, and the rights attached to them are defined by the permissions of the NFT, not the whims of the platform owners. After all, you want to be able to resell, rent or build anything on your virtual land, right?
If your platform offers real estate through a third-party marketplace that sells NFTs, such as OpenSea or NonFungible.com, or you otherwise need to store the purchase in a crypto wallet, you’ve found virtual real estate secured by an NFT. If you can only shop on the platform and your purchase information is only stored in your account on that server, then you haven’t done so.
2. Only shop in worlds where you have a say
When you buy virtual land you have several options. You can choose a world where the company that built the world is also responsible for rules and regulations, or you can choose a world with a decentralized autonomous organization (DAO). Metaverse platforms with DAO, like decentralized, The sandboxand Otherside, owned by The Bored Ape Yacht Clubgives you the right to vote as the owner or holder of crypto, giving you a say in how your world works.
For example, if there’s a particularly offensive username, you can vote to ban it and even create a rule to prevent it from coming up again in the future. Would you like to change the way something works in the world, such as B. Allow users to rent out their land on the platform without having to sign a contract elsewhere? You could suggest a change to the platform and then the community would vote on it.
However, not all DAOs are created equal. So before you commit, make sure you understand what you can do with your voting rights and the real control you have as a resident of a given platform. Some people might not want to get involved in platform politics, but it’s important to have a choice when something goes wrong and you need to fix it.
3. Beware of worlds with too many or too few properties
Although there is no definitive data on this yet, consider the law of supply and demand. If you buy a virtual lot on a platform with only 100,000 lots to create, and that platform is popular with users and investors, those lots should end up being worth more. You can check the world documentation or the base brief to learn more about the number of countries affected.
We can look at Superworld, which offers 64 billion tickets. During the three-month period ended May 9, 2022, the highest average daily selling price was $382.32 on April 3. a low-volume selling day when someone got a great deal.
It could also be argued to be wary of a platform with too few lots. I generally trust worlds with between 75,000 and 200,000 lots because they seem the most likely to appreciate in value, hold that value, and offer plenty of reasons to keep people coming back.
Community is what ultimately creates value in the metaverse
When it comes to investing in the Metaverse, it’s important to understand what really creates value there: the community. People can spend their time online in many ways, so they must want to choose your Metaverse platform—and they must have a compelling reason to stay.
Even if you’re not interested in running your own Metaverse business or building an experience, you can find good renters who want to do those things but aren’t ready to invest in their own land just yet. Not only do you earn passive rental income, but you also help create an extra sense of community for a growing world.
This grip makes a platform durable. Just look at what Second Life accomplished in a world before the metaverse was even a serious concept: Linden Labs, Second Life’s parent company, had a GDP of $500 million by the end of 2021. This is a world much smaller than modern Metaverse platforms, lacks the backbone of blockchain technology (hence no NFTs) and has been around since 2003, so is technologically disadvantaged in many ways. Still, Second Life is the best model we have for showing what a Metaverse platform might look like two decades from now, and it tells us what to look for in long-term investment decisions.
city predicts that the total addressable market for the modern metaverse will be between $8 trillion and $13 trillion by 2030. But if your world doesn’t retain its users like Second Life, you may be missing out on this opportunity.