Virtual property prices are going through the roof
2 Min Read
Hard currency is being paid by investors for software real estate.
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Crypto Valley
“Ridiculous and cool,” that is the architectural brief for a new office tower under construction in the Crypto Valley, a business district of Decentraland, a virtual platform built on the Ethereum blockchain.
It will be a hybrid of a nightclub in Ibiza or a resort in Las Vegas called Bellagio. A rotating company logo will be displayed above the tower as nearby clouds fire out company-branded thunderbolts.
The tower’s purpose, to provide office space for firms and event space at crypto conferences, is a bit dull.
Gamers have traded pixelated property and other digital assets for years. Now the activity has been turbocharged by the growth of unique digital artifacts known as non-fungible tokens (NFTs) and by the hype around the metaverse – an emerging virtual market that could, depending on whom you ask, ultimately generate revenues of between $1trn and $30trn.
Real money is being exchanged and some sales involve real-world replicas. Users of Legacy, an NFT-powered recreation of London, have spent $54 million on plots of land in the game (which is still in development with no launch date).
According to SuperWorld, a virtual planet where people can buy digital replicas of any location on Earth, the average user spends around $3,000 on property purchases.
The Taj Mahal and the Eiffel Tower are selling for the cryptocurrency equivalent of around $200,000 and $400,000, respectively. Their current owners paid under $400 each.
What are possible risks, limitations?
Popular metaverse platforms such as the Sandbox and Decentraland are sluggish and clumsy. The average user may not want to spend the money on graphics cards, virtual reality headsets, and superfast broadband that are required to make cyberspace feel more real.
Volatility is the second risk. A common feature of virtual-property transactions is the exchange of a cryptocurrency unique to a specific metaverse. Sandbox employs digital tokens known as SAND, whereas Decentraland employs MANA.
Even in comparison to established cryptocurrencies like bitcoin or ether, these tokens can be extremely volatile. They may crash to zero if a specific metaverse explodes.
