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What Is Digital Real Estate? A Beginner’s Guide To Virtual Land
Welcome to 2022, the year where it costs more to buy a digital mansion than a real one.
Even if splashing the cash on a plot of land in the metaverse isn’t your type of thing, you must be wondering what on earth digital real estate is. And spoiler alert: it’s not on earth at all.
That’s right. The clue’s in the name. Digital real estate — or virtual real estate as it’s often called — exists solely online. It’s a type of real estate that exists in a digital world, accessible through virtual reality or augmented reality headsets.
You may have heard that virtual property has more than quintupled in value over the past several months and suddenly found that your house isn’t quite as appealing any more.
Don’t pack your bags just yet. Buying virtual land in a digital world has its benefits, but you can’t actually live and sleep in virtual reality.
At least, not yet.
And hopefully not ever.
What is virtual real estate?
Digital real estate is technically anything that can earn you money online, such as websites, domain names and URLs. In the dawn of web 3.0, however, the term has garnered a more specific use case regarding metaverse real estate.
You can buy virtual land in a virtual world that you can only visit through a virtual reality headset. This ‘real estate’ is similar in name to physical real estate — for example, you can own billboards, buildings and even gas stations. However, as these types of property exist solely in virtual worlds, they’re a far cry from the real estate you’re familiar with.
For starters, like with the majority of cryptocurrencies, the price of digital real estate is highly volatile. Mark Stapp, professor and director of real estate theory and practice at the Arizona State University, has warned against virtual real estate investing, saying, “It is most likely going to be a bubble. You’re buying something that isn’t tied to reality.”
While there’s no denying the truth of his words, the fact that Meta and other future brands are investing millions into metaverse tech, proclaiming it to be the next iteration of social media, is a fairly promising sign that the metaverse and digital real estate will be around for years to come.
However, that’s not to say that the virtual land for sale today will necessarily be here tomorrow. Sandbox and Decentraland are hot right now, but like all cryptos, digital real estate companies will come and go. It’s impossible to call what will happen to the market in the future.
If you’re completely lost, check out our guide to the metaverse here.
Digital real estate investing
Just as yield farming and DeFi protocols did in 2020, the metaverse and its virtual world properties exploded in popularity and price in 2021. This was largely due to Facebook’s rebranding to Meta, but it had been on the cards for a while. For example, Decentraland’s MANA token rocketed from $0.08 in January 2021 to $1.49 by May, a full 5 months before the announcement of Meta.
The increased popularity of a blockchain-based metaverse was also a side effect of the forced quarantines worldwide. People spent more time online and companies saw an opportunity. If we could socialize in virtual worlds with ownable digital assets, then we wouldn’t need to leave.
It really has been a crazy few years.
How do you own metaverse land?
The way all this futuristic tech works is through the use of non-fungible tokens, a.k.a NFTs.
NFTs are a special type of blockchain-based technology that prove digital ownership. When you purchase a plot of land, you will be able to verify that you own it on the blockchain. If you sell it, the transaction will be recorded and the new owner will be able to verify that they own it instead.
Technically, we should call it a virtual real estate NFT, but that just sounds way less cool.
Can I live next to Snoop Dogg?
And yes, this is as bizarre as it sounds.
People are paying big bucks to move in to a new virtual crib next to their favorite celebrity. Snoop Dogg (also known as Snoop Doggy Dogg, Snoop Lion, or good ol’ fashioned Snoop) recently purchased a huge plot of land in the Sandbox metaverse. He’s building his own crypto empire, known as Snoopverse.
This is not a joke.
In fact, Sandbox has a full page dedicated to Snoop Dogg and the NFT collections he’s launched, including 10,000 next-gen metaverse avatars, known as Doggies that were “designed and crafted with tha Doggfather himself.”
As funny as all this might sound, people are paying up to $450,000 to be Snoop Dogg’s neighbor. And that’s not a typo.
So if you can afford to spend more than the average American home on a digital home that you can’t actually live in, then you’re welcome to do so. Snoop Dogg and his army of Doggies will welcome you with open paws.
The digital land rush
Just like the rush for gold, people are fomoing into virtual real estate. Even the Bored Ape Yacht Club (BAYC), one of the most prestigious NFT collections and communities, just announced plans to sell virtual land. Yuga Labs, the company behind BAYC, is expecting to rake in almost half a billion dollars in revenue from selling virtual land this year.
In most digital worlds, Metaverse land is most expensive in the most crowded areas. This includes the ‘start area’ where most people enter the metaverse.
This bustling area is also where major events are held, including music concerts. Today’s pop sensations are already earning from the metaverse: Rihanna, Taylor Swift, Shawn Mendes, Justin Bieber, Eminem, Nas, Cardi B and more have all been getting familiar with creative ways they can interact with fans through NFTs and the metaverse.
Zara Larsson, a Swedish singer, has pocketed almost €1 million since joining Sandbox less than a year ago. She labelled the metaverse as “freaking insane,” referring to the fact that “streaming services [like Spotify and Youtube] don’t pay the most.”
The metaverse is meant to be decentralized (we’re looking at you, Meta), which enables far higher income for content creators. This is just one of the many advantages of decentralization.
Zara Larsson is not the only Swedish artist to dive into the metaverse either. ABBA are all set to go on (virtual) tour, performing from their virtual stage as ABBAtars.
You really can’t make this stuff up.
Digital real estate marketing
The entry point of the metaverse is a prime target for big brands too. Advertisers have decided that it’s a genius idea to buy digital real estate signs and billboards to make sure that their brands are visible from the get-go.
However, if you were savvy enough to get in early, you could have bought a billboard yourself and rented it out to the brands for passive income. You could’ve been Nike’s virtual landlord. While still possible, it’s getting increasingly expensive.
The good news is: there’s no upkeep or maintenance for these billboards. You can polish your pixels but it won’t make much of a difference.
While Sandbox and Decentraland have all the attention right now, there are plenty of other metaverses. If you’re wondering where else you can buy metaverse land, there’s also PolkaCity which has got people earning thousands of dollars per week just from owning an NFT gas station.
Wilder World is another metaverse project which enables you to buy kicks for your avatars, as well as cribs, wheels and land. It has a GTA-esque vibe compared to most of the cartoony avatars in other metaverses.
As mentioned earlier, the market is highly volatile and none of this is financial advice. Your best bet is to do your own thorough research and come to your own conclusion.
One way to beat the crowds to the best plots of land is to get into projects when they first launch. This isn’t a guaranteed route to success, however, as most metaverse projects will inevitably fail.
Digital Real Estate on Elastos
There are two metaverse projects on Elastos as things stand: Elacity and the Elaverse.
Elacity already has its map drawn up with plots of land due to be available for purchase and ownership in the future.
The Elaverse team have confirmed that digital assets will be available such as spaceships and space suits.
Both projects are still in their early days, but they’re worth checking out.
Why invest in digital real estate?
As digital real estate is just code, it enables you to build, renovate or redesign your plots of land. Snoop Dogg is recreating his California mansion as part of Snoopverse. You can build the home of your digital dreams too.
But more likely, you want to make money. As most investors will tell you, ROI is their core motive.
With proof of ownership in the metaverse, you can do some pretty nifty things to earn some extra cash.
Earning from a digital real estate NFT
After purchasing a plot of land in the metaverse, investors can build whatever they want. Imagine getting a website; there are endless possibilities for what you can create and how you can make money.
You could create a performance venue that hosts music events and gathers money from ticket sales, or you could create a billboard and rent it out to brands as discussed earlier. You could even flip land that you predict will be popular in the future.
Grayscale, a crypto asset manager, recently estimated that the metaverse may grow into a $1 trillion business in the near future. It’s under $25 billion at the time of writing. Facebook (Meta), a single company, peaked at over $1 trillion last September.
How to invest in digital real estate: for beginners
Step 1: Get a digital wallet
You’ll need cryptocurrency to buy land or metaverse real estate. Decentraland, the most popular metaverse, uses MANA to buy and sell virtual real estate. Sandbox, the second largest by market cap, uses SAND.
Metamask is usually the first wallet for crypto beginners, but Elastos Essentials is an even better option. You can access the dApps of over 10 different chains directly from your wallet. Don’t know what a dApp is? Read our beginner’s guide.
Ensure you write down your seed phrase and keep it safe. Remember, this is crypto. You own your own money and you are responsible for it. We have a post on data security that outlines why this is essential.
Step 2: Choose your platform
Once you’ve researched and chosen your platform to buy land on, buy some cryptocurrency on an exchange and swap it for the native token of your chosen platform.
You can buy your digital real estate directly on their native platform, or you can use a third party like OpenSea. On these platforms, you can see how much money it translates to in dollars which may be easier for newcomers to gauge the price of something.
Step 3: Purchase your land
Unlike real estate in the real world, simply click on the piece of land you want and select buy.
Depending on the platform, you may be able to negotiate on the price and make bids, but otherwise, it’s a fairly straightforward process.
Don’t forget to keep your head in the physical world
While this can be exciting, or bewildering depending on which way you look at it, remember that digital real estate is a new type of investment and its future is uncertain. Prices have ballooned and plummeted all within the last six months, so it’s impossible to tell what the future holds.
Invest wisely and do your own thorough research before parting with your money.
This article was written by Matt Leppington