The virtual real estate market is likely much smaller than you think.
Despite recent news headlines announcing blockbuster sales, only a tiny minority of tech early adopters are buying land in the metaverse, according to the professional social network Blind. Fewer than one in seven technologists (13 percent) are buying virtual real estate in the metaverse, a user-initiated poll of 3,219 technologists found.
Keep in mind that technologists are typically more aware of emerging tech, and are at the more adoptive end of the spectrum. So it would be a defensible position to assume that virtual real estate purchases among the broader population of mainstream consumers is even lower.
Meanwhile, nearly three out of five poll respondents (57 percent) said that they were not purchasing land in the metaverse. The novelty of the new trend appears to be driving most of the hesitation and skepticism.
A verified Pearson professional on Blind was particularly blunt: “What a dumb investment. The whole reason that land/real estate is a good investment is because there is a finite amount. What’s the point of virtual land?” The engineer then pointed out that nothing could stop anyone from creating more digital property.
The remaining 30 percent of technologists did not know how to buy land in the metaverse or were new to the concept entirely.
What is virtual real estate?
Virtual real estate is typically a non-fungible token (NFT), a one-of-a-kind digital asset that is verifiable or tradable on the blockchain. While NFTs are best known as digital art and collectible images, the technology can also represent anything digital. Enter: virtual real estate.
Generally, virtual real estate is a unique location, set of coordinates or section of a “district” within a specific metaverse, commonly a game or other online platform.
How do you buy virtual real estate?
Prospective digital-land buyers must typically use the token or cryptocurrency of the metaverse platform to make the purchase. A wallet or account on a cryptocurrency exchange is often required. Some NFT marketplaces act as secondary or peer-to-peer marketplaces and sell virtual real estate.
After the purchase, the virtual real estate will appear in your cryptocurrency wallet or account as an NFT. The transaction will also be recorded on the metaverse platform’s blockchain to confirm you are the owner.
How valuable is virtual real estate?
Like physical real estate, virtual real estate’s value relies heavily on location.
“There are limited resources, and there will be limited ‘winning’ jurisdictions in the Metaverse that people will coalesce around,” a verified Unity professional explained on Blind. “Buying that virtual property from now is a bet on that jurisdiction being one of the key, most-used ones. They are limited, and NFTs ensure that they are unique.”
After all, virtual real estate can lose value if the metaverse platform becomes less popular or abandoned altogether.
Some metaverse platforms have also said that they will not create more plots of land to keep the assets scarce. However, the supply of virtual real estate might be infinite.
“There will be future attempts to make metaland scarce either artificially or through network effects, but you can always create more,” a verified engineer at Speedway said on Blind.
Indeed, new metaverses and platforms can be launched at any time, each with their own plots of land.
The bottom line
The so-called “land boom” in virtual real estate may be overstated. Technologists, who are typically early adopters of new trends, remain skeptical, according to Blind. The number of landowners in the metaverse remains small, with only 13 percent saying that they have purchased any (with adoption rates among the broader population likely lower, as noted).
It may pay to take a wait-and-see approach to virtual real estate, as it is unclear which metaverse platform or real estate may be valuable in the long term.
Rick Chen is the director, head of public relations at the anonymous professional social network Blind. He has been featured as a spokesperson and industry expert in national media and industry trade publications, including CNBC, Forbes, Reuters and more. Follow him on Twitter at @seriouslyrick.