- Investors are pursuing virtual land to diversify their portfolios and hope for high returns.
- The metaverse can be called a virtual imitation of the real world around us.
Although it has been researched and under development for quite a few years, the word metaverse came into public light only after a big move by Facebook, where they stated their intention to rebrand themselves as Meta. Since then, several companies and tech giants have invested in various domains to realize the dream of the metaverse.
The metaverse can be called a virtual space that is shared by everyone and imitates the real world around us. This virtual world is accessed through Augmented Reality (AR) and Virtual Reality (VR) technology, which includes glasses, headgear, gloves, and other wearables. People roam around the land in their digital representations called avatars and engage in commerce, entertainment, work, and other activities.
Lately, the concept of investing in the metaverse by buying virtual land has gained immense popularity, especially after the inclusion of celebrities on the list, including Paris Hilton, Snoop Dogg, Shawn Mendes, Lady Gaga, and several others. Virtual real estate has become the next big thing and investors are looking into it.
Virtual Real Estate
Platforms such as Decentraland and Sandbox provide opportunities for investors to buy their piece of virtual land in the infinite world created within these platforms. People may wonder that the physical land has value and can be touched, danced, and constructed upon; however, the virtual land is just a few GB of storage on a server, What good could it be?
With the attention blockchain-based applications have gained, especially after the launch of Ethereum, which came up with the concepts of decentralized finance (DeFi) and smart contracts, people have started to shift gears. Instead of relying on centralized authorities, people are moving over to DeFi apps, which have proven to be cheap and efficient.
Also, the cryptocurrency market has seen immense growth in its value in the past few years, with people ultimately realizing the potential they hold and moving over to them. The economic model followed in the metaverse would be token-based, with cryptocurrencies being the mode of exchange for goods and services and serving the same purpose fiat currencies do now.
Moreover, the non-fungible token (NFT) had an amazing season in 2021, with people becoming obsessed with it. The wave started mainly by the Bored Ape Yacht Club (BAYC) NFT collection, which engulfed several celebrities and artists, has now become a tide. Many NFT platforms and marketplaces have opened up that allow users to list, mint, and trade NFTs. NFTs are unique digital assets that provide proof of ownership to their owner and can be text, song, video, artwork, or even digital land.
The virtual land people buy in the metaverse will be in the form of NFT, which can be kept as an investment, rented, or even traded. Although investors are rushing over to virtual land, the competition is still low, and people can enter the market easily. Owing to being digital and listed over the blockchain network, virtual lands have high liquidity and are considered a good investment to diversify your portfolio.
As seen in the physical world, the initial price of land is cheap, but after the population settles and the area becomes developed, the price rises. A similar case is also true in the metaverse. Most platforms have a central zone where most avatars land, and buying areas around them can be highly rewarding. However, investors must also consider the risks involved. The high market volatility and lack of a past performance record because of its infancy can sow seeds of doubt in some investors.