Real estate has always been a trusted investment tool for most of us. People have achieved double, triple, or even more profits on their invested principal in real estate. But till now real estate only referred to physical properties-houses, land, apartments, etc. present somewhere in the real world. With technology intervening into almost all spheres of our lives for betterment (mostly), real estate is no exception. In 2022, one has the option to invest in digital real estate, which are virtual lands or spaces present in the Virtual and Augmented Realities. Let us explore this concept further.
As former President Franklin D. Roosevelt righteously stated, “Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.”
Table of Contents
What is Digital Real Estate
Generally speaking, digital real estate refers to any asset available digitally or on the internet like a website, domain, software application, and other digital products. With the advent of the concept of Metaverse and the introduction of its first examples like Decentraland and Sandbox, the scope of digital assets has gone beyond the assets discussed above.
Digital real estate, now also refers to real estate properties available digitally or in virtual space on Metaverse platforms (like Decentraland and Sandbox) and third-party platforms like OpenSea and Nonfungible.com
A Metaverse is a 3 dimensional virtual and online space in which we participate as our Avatars using a VR Headset and can simulate almost all real-world activities like buying and selling, playing games, participating in concerts, socializing, and more one can think of (checkout this Justin Beiber’s Metaverse concert).What is Metaverse
Why to buy Digital Real Estate
Why should you invest in digital real estate?
Let us explore the primary reasons.
- Advent of Metaverse: Metaverse is blossoming day by day, with tech giants (like Meta, Microsoft, Apple, Amazon, VMWare, and more) taking serious interests and pouring in huge investments into the concept. Metaverse will change the way we use and see the internet of today.
Metaverse will have 3D virtual spaces developed for meetings, concerts, holidays, family gatherings, games, e-commerce, and more. It will have a virtual replica of almost all real-life activities we perform daily. All these 3D virtual spaces like meeting rooms, auditoriums, concert halls, hotels (and more) created on Metaverse will be bought, sold, and rented as digital real estate. It is a new-age real estate investment in which giants from Silicon Valley and Hollywood are pouring in their early investments.
Some early versions of Metaverse are few virtual games like Decentraland and Sandbox. People are investing and buying digital assets in them. These digital assets include apart from digital real estate-names, game collectibles, clothing for your digital avatars.
Now let us scan some early investors in digital real estate to understand it better.
Snoop Dogg is currently developing “Snoopverse” on the Sandbox, a virtual reality platform geared towards gaming and entertainment.
This was followed by a fan named P-Ape purchasing a digital plot of land within the Snoopverse for $450,000.
Tokens.com, a crypto investment firm purchased purchased a digital land on Decentraland for a whopping $2.43 million. Another plot on Sandbox got sold for $4.3 million.
There are other investments that can be listed here.
We see that though it is still the early days, digital real estate is already been sold and bought in millions of dollars. With more savvy Metaverse platforms/applications
Flexibility of creating a multitude of structures: Once you own a digital piece of land or a virtual space, you normally get the opportunity to develop it to the structure you want. Example you may develop a virtual office space or a concert place, a stadium for hosting digital games, a mall for shopping digital stuff and more you can think of.
For instance Snoop Dogg is making Snoopverse-a gaming and entertainment space. You can even think of creating a concert hall or auditorium and attract digital Avatars of famous celebrities to perform there. In return you may charge a ticket fee to the people who participate in the concert. Justin Bieber had a similar concert recently.
Where to buy Digital Real Estate
How to buy Digital Real Estate
Step 1: Get a wallet
You will need a cryptocurrency wallet. One cannot buy digital real estate using fiat currency like US Dollar.
A cryptocurrency wallet is either a computer/mobile application (MetaMask, MyEtherWallet) or a pen-drive-like hardware (Trezor, Ledger Nano) that can store your cryptocurrency, connect to a Metaverse platform and make payments for buying your digital asset’s purchase. If you sell or charge rent for your digital real estate, it will also get credited to your cryptocurrency wallet. if you want you can further convert your cryptocurrency holdings to fiat currency using one of cryptocurrency exchanges.
Some popular Exchanges in India are WazirX, CoinDCX, CoinSwitchKuber
Some of the popular and trustworthy wallets are
Desktop and Mobile wallets:
Tip: When setting up your wallet, please save your password and seed phrase securely in a piece of paper and keep it in a locker or some safe place. In cryptos please remember that you and only you own all your funds.Keep your Private Key and Seed Phrase safe
Step 2: Choose a Buying Platform
One can buy digital real estate either directly from a Metaverse platform like Decentraland, Sandbox, Axie Infinity or opt for a third-party platform like OpenSea. You can simply navigate to the “Marketplace” sections of these Metaverses to select and buy the digital space of your choice.
If you are a first time user then a third party platform like OpenSea and Non-Fungible.com are recommended. These third party platforms share the prices of the digital real estates in the fiat currencies apart from depicting the prices in cryptocurrency. They also prevent you from jumping on multiple platforms for a piece of digital real estate.
Contrary Metaverse platforms like Decentraland and Sandbox give you a better sense of the digital property. You will get to know the various attributes and also the neighbors.
Step 3: Get cryptocurrency in a Digital wallet
Depending on which platform you choose, you will need the cryptocurrency of that very platform to buy digital real estate there. For example, if you choose Sandbox (where Snoop Dogg purchased Snoopverse), you will need its cryptocurrency SAND. For Decentraland you will need MANA.
Step 4: Negotiate and buy your first digital real estate
Mostly the platforms will allow you to quote your rate for buying digital real estate. Or it is a non-negotiable rate. Depending on the deal you can select and buy the digital real estate of your choice.
Tips on buying a digital real estate
Adoption: Research on how much adoption and traction the Metaverse platform and the virtual places in the vicinity of your selected digital real estate has achieved. Higher the adoption and traction, higher will be the worth of digital real estate.
How much the asset is developed: Check for how much is the real estate developed. You should check for its already
Popularity: Few virtual spaces are very popular or bound to be popular. For example, we saw how a neighborhood of Snoopverse saw a staggering USD 450,000 million valuation.
Amount of visitors: Check for how many visitors are expected to land in the digital real estate of your choice.
To sum it up, we cannot deny that at the time of writing this article, digital real estate is highly speculative. We are bidding on something which is at its very nascent and unchartered phase.
Although going by the investments being put in and the interest of big players like Facebook, Microsoft, it seems inevitable that Metaverse will be a hit, which will be followed by amplifying prices for digital assets including virtual spaces. To me, it appears that 5-10 years from now, Metaverse and digital assets will be the new age investments providing a multitude of returns, just like cryptocurrencies are providing these days. Hence it’s vital to keep a close eye on the developments and potent investment opportunities in the space.