The Zoom allowed video conference participants to isolate themselves from their physical environments. People did not waste any time making their private digital worlds. Thanks to metaverse platforms, our digital worlds may feel the physical structure and geography of the real world. Purchasing land or investing in real estate has been a goal of many people due to the rising population and escalating prices in recent years. What if we tell you that it is now possible to buy virtual land and that even though they are not physical, the digital real estate market is more lucrative than the traditional real estate market? We are seeing increasing consumer brands exploring the possibilities presented by the metaverse real estate market.
Cryptos a fueling factor boom in virtual real estate in the metaverse
The metaverse, propelled by cryptocurrencies, is undoubtedly the most alluring destination for investors wishing to purchase metaverse real estate virtual land. The concept of virtual lands could take a lot of people by amazement, but those who are acquainted with games like Clash of Clans, The Sims, and Farmville might not find it to be such a huge thing. This year has seen a significant increase in the cost of land in the metaverse real estate, with some parcels going for multiple millions of dollars.
Enjin (ENJ), Axie Infinity (AXS), Decentraland (MANA), Sandbox (SAND), and other similar initiatives are examples of some of the most successful metaverse endeavors that have garnered investment in metaverse real estate. These projects employ cryptocurrencies to conduct transactions that may be used in the metaverse, and they are all based on the blockchain technology that Ethereum uses. Aside from those mentioned above, a plethora of initiatives is being led by game companies such as Atari and Roblox that are part of the metaverse.
Real-world real estate and metaverse virtual land
In the same way that real estate is an expensive option in the real world, it is also a costly option in the metaverse. Like in the real world, the prices of plots of land in the metaverse are determined by location, population, and the demand-to-supply ratio. When there is a growing market for a plot of land in a region’s metaverse, then the prices in that region automatically go up.
Certain plots in the metaverse may sell for more than $4 million each. The second option is that plots are available for purchase at reasonable costs. The fact that average people have the opportunity to own modest pieces of land or even an entire vacation island in the metaverse virtual land is the most appealing aspect of the virtual land world.
On the other hand, much as in the real world, everyone in well-known metaverses such as the Sandbox and Decentraland is competing to be a part of the most desirable regions.
Desire to purchase land in the metaverse
Users are provided with a digital alternative to a real-world site at which they may meet and engage in conversation with other individuals via the usage of metaverse real estate. Individuals can use their digital land to communicate, collaborate, and have fun with their friends around the globe. Makers may earn money off their works by charging for access or trading their non-fungible tokens (NFTs) for virtual or fiat currencies.
As time goes on, businesses may use virtual properties to organize virtual release dates, hold events, create one-of-a-kind client experiences, and promote services. These individual pieces of the digital property provide real estate investors the chance to make a lucrative investment in various digital assets. In the same ways, as they may in the physical world, real estate in the digital realm can be bought, sold, or rented out, and new structures can even be constructed there. Indeed, metaverse real estate has a wide range of possible uses.
People are interested in buying virtual land for several reasons, one of which is the return on investment, which is much larger than the return on investment for actual world plots. The return on investment (ROI) might be as high as one thousand percent in a much shorter time.
In addition, blockchain technology makes it difficult for fraudulent land transactions to occur. The blockchain is a distributed ledger, meaning every transaction is recorded. Real estate scams, such as forceful termination, are more likely to occur.
Borrowing in metaverse
The use of cryptocurrency is the sole method that can be used to purchase virtual land in the metaverse. This is because trading fiat currencies incur enormous transaction costs. Still, trading crypto assets is possible on a worldwide scale and does not need the participation of any third party or broker.
Imagine if you could borrow money to purchase your favorite piece of virtual land; this is something that can be made possible via decentralized finance (DeFi). Decentralized finance, often known as DeFi, refers to an organization that, in essence, acts as a middleman to enable the borrowing and lending of cryptocurrencies against collateral. In the context of the metaverse, the collateral might be either an NFT that you have already purchased or your crypto assets.
It would be inaccurate to compare DeFi to traditional financial institutions like banks since, unlike traditional financial institutions, anybody (including those with credit issues) may borrow cryptocurrency via DeFi’s automated loan process thanks to the usage of Smart contracts.
It is important to note that it is always simpler to have a mortgage held up against an NFT worth $30,000 that is owned by an individual investor rather than making a down payment of $20,000 USD on a real estate property.
Businesses are beginning to take advantage of the limitless opportunities presented by the metaverse, representing a potential market worth a trillion dollars. It could seem as if the asking prices for a lot of digital real estate have already reached historic highs.
Keep in mind that many plots still have not yet been acquired, and some are still being developed. There is no question that the potential of digital lands is enormous; nevertheless, this potential can only be realized if it is channeled correctly.
As technology catches up to the idea, more and more people are expected to spend more and more time in the metaverse, which is essentially a 3D version of the internet.