Virtual Real Estate Metaverse…

The world of virtual reality has grown these last five years exponentially. The gap between the physical and virtual worlds is reducing with advancements in augmented reality, virtual reality, the IoT, and blockchain technologies. Companies are building their metaverses. These are unique virtual worlds that are complete ecosystems where people can meet, tour, transact, and even invest.

One of the industries preparing for change with the emergence of metaverses is the real estate sector. Individuals and even corporate investors are buying chunks of virtual real estate. What does this mean for our future?

Why Virtual Real Estate

The emergence of virtual real estate as a form of investment stems from the coming together of several things. First, the gaming industry realized that people could become invested in a game so much that they are willing to spend extra on in-game purchases and collectibles. This is comparable to how people collect sports memorabilia. Second, this investment and importance of these collectibles meant that other monetization opportunities existed in the digital world. What if people were given a chance to own a famous place even if it existed only in a digital world?

Another thing that has supported the virtual real estate sector is the emergence of Non-Fungible tokens to authenticate ownership. NFTs make it possible to buy and trade virtual real estate without the need for a third-party intermediary because they are built on blockchain. The spending and transparency have helped virtual real estate to thrive. The growth of crypto markets has also contributed massively to money flowing into virtual real estate. The stories of currencies such as Bitcoin and Ethereum appreciation in value over the past decade have made people believe that digital assets are a good investment.

Finally, the improvement in the quality of VR and AR technology has made interacting in the virtual world seem very realistic. Today, people can opt to visit a place and instead take a virtual tour of a digital representation of the home. It has made gaming much more immersive, but it has also contributed to the creation of ecosystems that have the potential to balloon into economies by themselves. This has attracted ‘smart money’ with big-name asset management funds and technology companies such as Facebook getting into the space.

Features of the Metaverse

The internet as we use it is vastly different from what it was two decades ago. No one could have predicted how the mobile phone would revolutionize human connectivity. Similarly, there is no way to tell how the metaverse will look like in a decade. However, some unique features give clues to where the world is heading.

First, the companies attempting to build a metaverse are trying to build something that does not shut down. This is called persistence and is made possible by creating something that people can continuously interact with. In addition, everything will be synchronized for all people. This is meant to make it similar to real-life, whereby live events are broadcast simultaneously to all parts of the world. This means that if two people visit a place or attend an event in the metaverse simultaneously, they have similar experiences.

The builders of a metaverse are alive to the innate human need for socialization. This is what has fueled the success of the biggest social media companies in the world today. They enable us to see what friends are up to, make life updates, take and share photos, like, comment, and react to other people’s content. The metaverse will most likely take this to a level higher and allow people to do things together, even if they are in different locations. For example, people can go on virtual dates to virtual sites, attend virtual concerts, and even shop together.

Speculation exists on interoperability across different metaverses. Interoperability would mean that certain digital assets can be used on other platforms. For example, a car purchased in one country can be driven or shipped elsewhere in the real world. Furthermore, it can be sold and used as the new owner desires. Such capabilities would make the value of digital assets rise significantly.

Companies Building Metaverses

The job to build a metaverse will be a significant one, but many big companies are already heavily invested. One of the ways to raise revenue for such an undertaking has been the sale of virtual real estate. One of the most popular virtual real estate projects is Decentraland. This project is a city where investors can purchase plots of land and develop virtual commercial real estate on them. The sales are made possible through NFTs and fungible records stores on a blockchain.

The owners of the digital have control over anything to be developed on the property they own. So far, the content designed has included art galleries, casinos, and games. In addition, the content is produced by 3D digital artists, which again creates a way to monetize their skills. All intellectual property in the Decentraland metaverse is protected by recording and tracking ownership on the Ethereum blockchain.

Metaverses will create opportunities for digital content creators to monetize their skills. As a result, the demand for digital content such as digital fashion, skins, art, and music will be high. These things are required to make the immersion into the metaverse feel as though it is a real world.

Users of these digital fashions designs can then come and pick those with a file format that is compatible in different use scenarios, including gaming. In addition, the Intellectual Property rights of the creators are protected through NFT technology.

It will be interesting to see which companies will have the lead in creating a metaverse that attracts the most users. It is still not clear whether there will be a few big corporations with a lot of control over the new internet in the same way certain companies do now. Amazon, for instance, controls a significant portion of the retail e-commerce market. On the other hand, Google’s parent company is dominant in digital advertising through YouTube and its search engine.

Facebook is equally dominant in the digital advertising space because of the billions of users on its social media platforms. Can a single company control the virtual real estate space? It’s unclear. They would have built a platform that attracts an ample user space in the same way the most popular websites in the world currently do. Decentraland is a ‘decentralized’ ecosystem where 90,000 plots were up for sale to willing investors. This number cannot be increased, and decision-making is the prerogative of a community of project members. The project is therefore not under the control of a single corporation.

But what happens if a single corporation manages to build a successful metaverse with hundreds of millions of users? They would have virtually limitless ways to monetize their ecosystem. They would be able to develop and lease commercial space to brands who want visibility. It is already happening in Decentraland, where fashion brands have held a fashion show with digital fashion items on sale as NFTs. Artists have had virtual concerts in Decentaland while art galleries have been developed.

Conclusion

It is challenging to predict where the world is headed in terms of technology. Everything is moving fast. However, the internet experience will become more immersive. The digital and physical worlds will interact more. The metaverse will create many opportunities for digital artists and creators who will build content to attract people into the metaverse.

Virtual real estate will grow as an asset class, and people will find it limitless to monetize it in the years to come. The race is on to build the new internet. We will wait to see whether decentralized metaverses such as Decentraland become the most popular or corporate projects such as Facebook’s horizon become mainstream. If the latter happens, we will be staring at a few more decades of a few dozen companies controlling most digital advertising revenue.

Image provided by Kelvin Han — Unsplash

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Paul Chambiras

Paul Chambiras

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I am a freelance writer on all things Business, DIY, Sport, Technology, IT and Management.