If you’ve ever considered buying real estate in the Metaverse, there really is no better time than now. With stock and crypto markets falling, acquisition costs are much lower than they have been in months. There are also even more stocks to choose from, as well as opportunities for long-term gains.
Even if the markets hadn’t plummeted, I’d still give you the same metaverse real estate advice: Buying with a plan in mind and a long-term holding strategy is key. And as it stands, you also get a slightly better price (and who doesn’t love discounts?).
So what am I looking for in the best investments in the metaverse world? I’m going to share some of my secret sauce.
1. A metaverse property must be secured by an NFT
Many digital platforms allow you to buy virtual items, but in most cases you never own these items. Platform owners can set the rules (check your end-user license agreement), including whether you can resell these items, and they can decide how this item may change as the platform evolves.
When you talk about virtual real estate, that’s an even bigger problem than something like a virtual tiara for your avatar. When the platform owners can dictate what you can and cannot do with your virtual real estate, does it even belong to you?
Look for platforms set up to sell NFT-supported digital assets, including and especially real estate. These NFTs act as proof of ownership and the associated rights are determined by the NFT’s permissions, not the whims of the platform owners. After all, you want to be able to sell, rent or build whatever you want on your virtual land, right?
If your platform offers real estate through a third-party marketplace that sells NFTs, such as OpenSea or NonFungible.com, or if you are otherwise required to store the purchase in a crypto wallet, you have found virtual real estate that is secured by an NFT. If you can only buy on the platform and your purchase information is only stored in your account on that server, you haven’t.
2. Only buy in worlds where you have a say
When shopping for virtual land you have several choices. You can choose a world where the company that built the world is also in charge of rules and regulations, or you can choose a world with a decentralized autonomous organization (DAO). Metaverse platforms with DAO, such as decentralized† the sandpitand Other, owned by Bored Ape Yacht Clubgives you the right to vote as an owner or holder of crypto, and thus your vote in how your world works.
For example, if there is a particularly offensive username, you can vote to ban it and even create a rule that prevents it from happening again in the future. Want to change the way something in the world works, like giving users the ability to rent their land on the platform without having to sign a contract elsewhere? You could propose a change to the platform and then the community would vote on it.
However, not all DAOs are created equal. So make sure you understand what you can do with your voting rights and what real control you can exercise as a resident of a particular platform before committing. Some people may not want to get involved in platform politics, but it’s important to have a choice, if something goes wrong and you need to fix it.
3. Beware of worlds with too many or too few lots
Although there are no definitive data on this yet, keep in mind the law of supply and demand. If you buy a virtual lot on a platform with only 100,000 lots to be created and that platform is popular with users and investors, those lots should eventually be worth more. You can consult the world documentation or the basic description to learn more about the number of countries that have been attacked.
We can look at Superworld, which offers 64 billion lots. During the three-month period ending May 9, 2022, the highest average daily retail price was $382.32 on April 3. a small sales day where someone struck a great deal.
There can also be an argument to be wary of a platform with too few lots. I generally trust worlds with between 75,000 and 200,000 lots because they seem to be the most likely to increase in value, hold that value and provide enough reasons for people to keep coming back.
Community is what ultimately creates value in the metaverse
When it comes to investing in the metaverse, it’s important to understand what really creates value there: the community. People can spend their time online in many ways, so they must want to choose your metaverse platform – and they must have a compelling reason to stay.
Even if you’re not interested in running your own metaverse business or building an experience, you can find good renters who want to do these things, but aren’t ready to invest in their own country yet. Not only will you earn passive rental income, but you will also help create an extra sense of community for a growing world.
This grip ensures that a platform lasts a long time. Just look at what Second Life has done in a world before the metaverse was even a serious concept: Linden Labs, the parent company of Second Life, brought in $500 million in GDP at the end of 2021. That’s a world that’s much smaller than the modern metaverse platforms, lacks the backbone of blockchain technology (hence no NFTs), and has been around since 2003, so it’s technologically disadvantaged in many other ways. Still, Second Life is the best model we have for what a metaverse platform might look like two decades from now, and it tells us what matters most when making long-term investment decisions.
City predicts that the total addressable market for the modern metaverse will be between $8 trillion and $13 trillion by 2030. But unless your world keeps its users like Second Life, you may be missing out on this opportunity.