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Investing in the Metaverse: NFT Real Estate

TLDR Summary: Non-fungible tokens, or NFTs, are a hot tech sector for blockchain investors. Similarly, there has been immense interest in the creation of the Metaverse. This blog will discuss the combination of the two – Metaverse NFT real estate – and how you can buy, sell and trade these digital properties.


Property sales in the Metaverse surpassed $500 million in 2021, setting a new record, and are expected to rise further, according to figures released by the realtor Raymond S. Beckford.

“It’s not just your core 9-to-5 crowd that’s buying in the Metaverse real estate market,” Beckford said. “We are also talking about people who invest their free time. One of our agents recently closed a sale with a guy who makes a full-time living playing golf in the metaverse.

Real estate is about location, location, location – not emotions. This is accepted as true for the physical world, and a similar principle applies to virtual real estate: think about the long-term value of the “location” (i.e. the platform, the rarity and neighborhood) before investing. (See below for more tips on Invest in the Metaverse.)

What is Metaverse NFT Real Estate?

NFTs are digital assets that cannot be replicated.

Metaverse NFTs represent the digital ownership of a property in a virtual world. (Think of them as acts on virtual lands.)

The Metaverse is (or will be) an immersive virtual reality network where users interact with each other and experience their personalized environments. According to Matthew Ball in his excellent book The Metaverseblockchain technology will be important for managing payment and ownership in the Metaverse.

NFTs, like a plot of land, are unique and cannot be replicated. Also, because they are programmable software, they can perform complex functions such as transferring ownership or automatically receiving payments when specified conditions are met.

Comparing the ownership of digital land with that of physical land highlights several differences:

  • There are no real estate agents involved in the buying and selling of NFT Metaverse.
  • No commission is involved in Metaverse NFTs (although there are transaction fees to consider).
  • No mortgage companies, title services or other expensive third parties are involved in the transactions.
  • Transactions are made with cryptocurrencies.

This means buyers and sellers can use their digital wallets to send and receive payments, using cryptocurrency. Moreover, it allows people who do not have access to traditional banking services to access digital real estate.

Additionally, each NFT can be used to track the ownership and provenance of an asset. This ensures authenticity and uniqueness, since no one can replicate the token.

A real estate NFT is a virtual deed that guarantees the uniqueness of your virtual land.

This uniqueness potentially makes NFT tokens extremely valuable, just like any unique item in the physical world. An NFT is like a virtual deed of ownership, which guarantees the uniqueness of any asset (and yes, you can use this type of token instead of traditional legal documents).

The main metaverse projects

Many exciting projects are working on building the metaverse, but we’ll cover the four most popular: Decentraland, The Sandbox, Somnium Space, and Voxels.


decentralizedDecentralized

Teleprinter:MANA
Market capitalization: $1.54 billion
Items in total: 97,600
Floor price: 2.65 ETH
Volume: 228,600 ETH

Decentraland is an immersive VR platform powered by the Ethereum blockchain where anyone can create, experience, and monetize content and apps. Users can create, experience and monetize content and apps by buying or renting land in a vast virtual world. It’s like Second Life meets Minecraft meets Ready Player One (with the added benefits of being decentralized).

The company raised $25.5 million in funding in four rounds. Their last round was a secondary market round that ended on November 18, 2021. It included Broslyn Capital and Digital Currency Group as investors. (Browse Decentraland properties on OpenSea.)


SandboxThe sandbox

Teleprinter: THE SAND
Market capitalization: $1.08 billion
Items in total: 142 100
Floor price: 1.90 ETH
Volume: 159,700 ETH
The Sandbox is a toolkit for creating social virtual reality experiences. It allows developers to create multiplayer games with cross-platform support for Oculus Rift and HTC Vive headsets and desktops via SteamVR. It also allows users to create their own social virtual reality experiences with tools like the Unity 3D game engine.

Additionally, the project has raised a total of $95 million in funding across four rounds, with the last round raising on December 9, 2021. Key investors include Adrian Cheng, Softbank, and Blue Pool Capital. (Browse Sandbox properties on OpenSea.)


somniumSpace Somnium

Teleprinter: CUBE
Market capitalization: $19.3 million
Items in total: 5,800
Floor price: 0.50 ETH
Volume: 27,000 ETH
Somnium Space is another open-world metaverse focused on socializing and building your avatar. You can dress however you like and interact with others through chat rooms and group activities while exploring a vast universe filled with planets, asteroids, spaceships, and more.

Somnium Space is a rocket for your dreams.

The startup has already raised $1 million in funding, with the last round taking place on May 8, 2019. (Browse Somnium space properties on OpenSea.)


VoxelsVoxels (formerly Cryptovoxels)

Teleprinter: N / A
Market capitalization: N / A
Items in total: 7,900
Floor price: ETH 0.90
Volume: 25,100 ETH
If you love Minecraft but want something more immersive than just playing with blocks in 2D space, Voxels might be for you. This metaverse brings all the creativity of Minecraft into an interactive environment that allows users to create their worlds using 3D models or import existing worlds from popular online repositories such as Sketchfab or MyMiniFactory.

The platform is consistently ranked just behind Decentraland and The Sandbox in terms of popularity and user base. According MetaCat, Voxels ranks fifth ($38 million) in total packages sold. (Browse Voxel Properties on OpenSea.)


Invest in the Metaverse

First, look for real estate NFTs with a good reason to increase in value. Look for NFTs with unique stories or goals, not just copies of other NFTs. Originality matters, as does being “first to market” with a successful formula or approach.

Second, know when NFTs were first published and by whom. Suppose a company like Disney publishes an NFT for real estate in a virtual Disneyland. Due to the enduring power of the Disney brand, it would likely be a good long-term bet.

Third, check if the NFT has a high perceived value. Is it rare? Is it hard to get? Do people want it? Think of NFTs as collectibles (see our NFT Investing Guide for more).

Fourth, search for NFTs on platforms with a strong ecosystem. Decentraland is one such platform: its crowd-funded event sold out in less than two minutes. The project raised $25 million worth of MANA tokens during the sale and continues to grow. And it’s not just for fun: big brands like Coca-Cola, Samsung, Nike and Atari are using the Decentraland platform to boost their presence in the Metaverse.

Finally, when you invest in the metaverse, watch out for volatility. NFTs are non-fungible tokens, so they are not interchangeable like stocks or bonds. They’re also not representative of real-world assets like gold or oil, so you can’t just buy and sell them for cash all the time. This means that selling an NFT can take some time. They are not very liquid assets.

Conclusion

Investing in the Metaverse is risky, but it offers the potential for high rewards. Our philosophy is to not let NFTs represent more than 1% of your overall investment portfolio and to be prepared to hold them for the long term (over 5 years).

It’s easy to let trends and popularity sway your decision-making, but thinking carefully about what you’re actually buying — like any collectible — will help you make a better NFT real estate investment.

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