Real estate is often considered a good investment, but what about? virtual property?
Non-fungible tokens (NFTs) representing virtual land has become a hot topic since the advent of the metaverse — and there’s gold in those digital mounds, with some plots of virtual land selling for millions of dollars.
Virtual land forms the backbone of crypto-powered metaverse platforms like Decentraland and The Sandbox, and with older major tech players like Meta drawing up plans for their own metaverses, it becomes a key point of differentiation between centralized and decentralized metaverse offerings.
As these competing visions of the future jockey of the metaverse for position, it is first worth defining what the metaverse even is, and how virtual land will play a critical role in its development.
What is Virtual Country?
All virtual land exists in a digital environment, also known as a metaverse. A metaverse is usually a video game or digital life simulation in which you can interact with other players using a character that represents yourself.
Virtual land is thus the digital terrain – the geography and physical space – within which players can roam in the metaverse.
Virtual land can be as simple as a pixelated 2D environment, as abstract as a white or black 3D box space, or a rich 3D virtual environment populated with oceans, mountains, and just about anything else you can imagine.
How does virtual land work?
First, virtual lands don’t need crypto – many video games have been offering virtual lands for decades. Depending on the design of a specific metaverse, virtual land can have an “open” or “closed” feel. Many metaverses show loading screens when players switch between environments, such as in the first two “The Sims” games or VR Chat, while other metaverses such as “World of Warcraft” offer a more seamless open-world experience.
But some believe that cryptocurrencies and NFT technology could hold the key to a truly interoperable and open metaverse.
In web3Virtual properties or spaces are usually sold as NFTs, meaning that the title deed exists on a blockchain like Ethereum and essentially acts as a deed giving the holder access and control over that land.
For example, within Yuga Labs’ emerging metaverse Otherside, Otherdeed NFTs are acts that grant owners a piece of ownership in the virtual world.
Did you know?
Yuga Labs saw $561 million in volume traded for its Otherside NFT coin within 24 hours.
In April 2022, Otherdeed’s mints slowed down the Ethereum blockchain to a crawl; in a desperate rush to claim their virtual land, some users reported paying thousands of dollars in Ethereum gas fees in hopes that their Otherdeed NFT would grant them precious resources – or an extremely rare creature called Koda.
Buy a virtual land?
While the virtual land purchase process can vary widely depending on the game and the company behind each metaverse, virtual land parcels sold as NFTs can be minted on the developer’s website (primary sale) or purchased on a secondary NFT marketplace such as OpenSea.
What’s so special about virtual land?
It is worth noting that virtual land as a concept has been around for a while. Released more than 20 years ago, “The Sims” was a huge success for its life simulation environments, where players could create characters, buy virtual land, build houses and effectively experience a digital “life”. Since then, three successful sequels have emerged with increasingly complex and open virtual worlds, but they are all single-player games.
For those looking for an online multiplayer experience with virtual land, Second Life, Habbo Hotel and IMVU have been around for a while. All games offer some sort of alternate digital reality in which players can escape to another world as a custom character of their choice.
To date, however, virtual land has been created and sold within closed platforms, with all value accruing to the platform itself rather than to the users. In most cases, there are no secondary virtual land marketplaces. With the advent of NFTs and decentralized metaverse platforms, it is now possible for users to have real ownership of virtual land, including the right to resell it and even migrate between different metaverses.
But why would you want virtual land in a metaverse at all? First, the pandemic showed people that virtual meeting rooms like Zoom can quickly get old, and virtual reality (VR) or augmented reality (AR) environments can shake things up for those with “Zoom fatigue.”
And as the internet increasingly becomes an essential part of modern human life, digital property has also become more important. Assets such as virtual land can be used as digital status symbols, meeting places for friends around the world, or creative hubs. The possibilities are endless.
That said, some believe the technology isn’t quite there yet.
Which tokens are associated with virtual land?
While some Web2 metaverse experiences like Roblox don’t use cryptocurrency, a growing number of decentralized Web3 metaverse platforms do. The Sandbox uses the SAND token, Decentraland has MANA, the Otherside metaverse uses Apecoin (APE), and the virtual chat platform IMVU offers VCOIN, just to name a few.
Typically, metaverse tokens are associated with virtual countries and their economies: ERC-20 tokens, meaning they are cryptocurrencies that exist on the Ethereum network.
The future of virtual land
In 2022, the virtual land market is largely speculative. Otherside has not yet been released, Meta has yet to realize its vision of the metaverse and The Sandbox and Decentraland have seen their token prices drop significantly.
While millions have poured into this burgeoning space, it remains to be seen whether the majority of Web3 enthusiasts will actually do so. to use the virtual land they buy – or just stick with it in the hope that its value will increase over time.
Some argue that the metaverse and its virtual lands are essentially an overpriced get-rich-quick scheme. A “digital landlord” told Shame that in his eyes virtual land was little more than a ‘futuristic hype’. And in February, protocol asked his readers if all this virtual land speculation actually “ruined the promise” of the metaverse.
But others see potential. Angel investor and Co-founder Tony Sheng of Cozy Finance sees taxing unused land owned by speculators as a possible solution to the speculation epidemic sweeping the virtual land economy.
Sheng argues that metaverse creators should not design for speculators, as this will not lead to long-term ‘value gain’ and an outdated economy. However, turning virtual land into “productive assets” that are actually used can increase its value over time.
The future of virtual land will also depend on corporate policies on crypto and NFTs, which remain controversial in the video game industry. The creators of NFT Worlds – who built an NFT metaverse on Minecraft with a polygon integration – got a hard wake-up call when Minecraft announced in July that it would not allow NFTs on its game servers.
Regardless, there is still widespread interest in the future of virtual land, with companies ranging from JP Morgan to Gucci making their own corner of the metavers.
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