Robert has reported for a variety of international publications including the Associated Press, The Guardian, Vice, and Decrypt. Current areas of interest include the political economy of technology, cryptocurrencies, and privacy. Robert has a Bachelor of Science from UCL, and a Master's degree from the University of Oxford's Internet Institute.
At first blush, virtual land might appear a bit confusing. Why limit land in a virtual world when you can just generate more with a click of a button? Isn’t virtual land infinite, insomuch that you can create an infinite number of houses in The Sims and start an unlimited number of doomed theme parks in Roller Coaster Tycoon?
The answer is equal parts yes and no. Cryptocurrencies are all about creating networks of digital scarcity, then enforcing that scarcity using blockchains and distributed ledger technology. That’s why virtual real estate is undergoing a renaissance, having been left largely untouched by gamers since Second Life.Buy and Sell Bitcoin, Ethereum, and over a dozen other cryptocurrencies with Wealthsimple. Sign up and Trade here.
Virtual land for sale
The exact definitions of virtual land varies by game but the premise popularized by games like The Sandbox and Decentraland goes like this: There is one virtual map, and the developers have allowed for a maximum of, say, 10,000 bits of virtual land. On these plots you can build whatever you like using in-game building tools.
You could build a house for your virtual avatar to chill out in, a party mansion to host virtual ragers, a castle whose architecture is so sublime that you will cancel your next holiday to France, or, less excitingly, a shopping mall where brands coalesce to sell you things, or other commercial districts where brands meet to get you interested in their products. View The Sandbox’s map from up above and it becomes clear that some brands, like Binance and the South China Morning Most, are using the map as advertising space.
In short, virtual land brings the capitalism we know and love to the gaming world we love even more. That means that virtual land can be considered an investment. All of the land on The Sandbox and Decentraland has long since sold out, and the only way to buy it is on secondary marketplaces.
All of these virtual lands are denominated as NFTs, which some people think are critical infrastructure to virtual worlds. NFTs, or non-fungible tokens, are cryptocurrencies that are unique and cannot be reproduced. They’re also non-custodial by design, meaning that you can trade the NFT on a secondary marketplace whenever you like and, so long as the platform that mints the NFT is permissionless, with whomever you please. You buy virtual land with fungible tokens, like Ethereum and The Sandbox’s SAND—these digital land tokens, confusingly called LAND tokens, are the backbone of virtual real estate investing within its game.
In a few years’ time, it’ll be interesting to see how rules from conventional real estate translate into the virtual worlds. Will there be rowdy, underprivileged neighborhoods that are cheaper than others? Will noisy neighbors drag down the price of your plot, and will you pay for the privilege of “living” near the rich and famous? Will some neighborhoods become gentrified, pushing those living virtual paycheck to virtual paycheck to the brink of the map? Or, alternatively, will people drop the idea of scarce virtual worlds entirely and indulge themselves once again in the unbounded nature of virtual reality?
Welcome to the metaverse
Virtual land NFTs of this kind forms something called the metaverse, an evolving term that refers to persistently online shared spaces.
Sci-fi readers attribute the source of the term to the 1990s novel Snow Crash; there, it referred to a virtual world, indistinguishable from reality, owned by large tech companies. In the 2020s the term has become somewhat fuzzy, not in the least since crypto projects appear at odds with the Facebook-centric design proposed by Mark Zuckerberg in late 2021 (who thereafter renamed Facebook to Meta).
Despite the lack of clarity around the meaning of the metaverse, a framework proposed by venture capitalist Matthew Ball has gained prominence. In a January 2020 essay, Ball proposed that the metaverse can be measured according to seven qualities.
The metaverse will, he predicted…
Persistent (The metaverse is always there, not just when you boot up your VR headset.)
Be synchronous and live (The metaverse is real-time, unlike email or TV.)
Be without any cap to concurrent users, while also providing each user with an individual sense of “presence” (The metaverse would be able to support everyone in the world, not just, say, 12 players, like a Call of Duty game.)
Be a fully functioning economy (Ball puts it best: “individuals and businesses will be able to create, own, invest, sell, and be rewarded for an incredibly wide range of ‘work’ that produces ‘value’ that is recognized by others.”)
Be an experience that spans both the digital and physical worlds, private and public networks/experiences, and open and closed platforms
Offer unprecedented interoperability (Ball gives the example of using a CounterStrike gun skin to decorate a Fortnite weapon. The idea is that neither the metaverse nor the assets contained therein would not be constrained to a single platform.)
Be populated by “content” and “experiences” created and operated by an incredibly wide range of contributors (Crucially, a mix of independent individuals and businesses.)
When it comes to cryptocurrencies, two points stick out.
The first is point number 4: “Be a fully functioning economy.” Whether cryptocurrencies can support a fully functioning economy is still a matter of contention. No cryptocurrency has been widely adopted as a payments currency outside of the crypto ecosystem, and cryptocurrencies are famously volatile. That said, within crypto, currencies like Ethereum are used to denominate the price of Ethereum NFTs, and have supported an industry that grew to $40 billion by November 2021.Buy and Sell Bitcoin, Ethereum, and over a dozen other cryptocurrencies with Wealthsimple. Sign up and Trade here.
The second is #6: “Offer unprecedented interoperability.” While Zuckerberg’s vision for the metaverse is yet to truly take shape, his social media platform became famous as a “walled garden”—an ecosystem that keeps users inside a small suite of tech products and makes it difficult to leave. Apple, Google, and Microsoft are all considered to have created “walled gardens.” (The term was coined in the 90s by comes from John Malone, the founder of Tele-Communication Inc, in the 90s). While Zuckerberg says that interoperability is also key, The Sandbox and Decentraland let you import NFTs from other games. For now, they are unrivaled champions of the concept until Zuckerberg proves that Meta’s vision will be free from the comparative lack of interoperability that has defined his company’s ecosystem. You can import NFTs from other platforms and import items in your virtual worlds.
What does the virtual land economy look like?
Just a handful of games offer virtual real estate, but they’re selling for eye-watering sums. Someone paid $450,000 to live near Snoop Dogg in The Sandbox—one of the most expensive virtual land sales to date. Art Galleries, like Sotheby’s, have launched virtual worlds in which you can showcase your NFT art. Apps like Spatial let you create your own.
The average price of a virtual land NFT in The Sandbox sells for about $11,000, and in Decentraland virtual land prices average at about $8,000, according to a dashboard on Dune Analytics. Digital land in Somnium space, another game, averages at $9,192. Other games that sell virtual land include Treeverse, SuperWorld, Ember Sword, Axie Infinity, and DeNations.
Some of the games, like Decentraland, are played in your browser. Others, like Axie Infinity, must be downloaded onto your computer. Games like Somnium Space support virtual reality headsets.
How to buy virtual land
You can’t buy virtual crypto land with regular currencies, like the US or Canadian dollars. You can only buy them with cryptocurrency. Different games will denominate their land parcels in different cryptocurrencies. The Sandbox sells in-game items and land for SAND tokens, the native currency of the game. Decentraland, on the other hand, sells land in MANA, the native token of that game.
Purchasing virtual land requires you to visit a cryptocurrency exchange, then sign up and purchase those tokens. Since metaverse tokens are still small, you probably have to buy them for USDT, a so-called stablecoin pegged to the US dollar, or for larger currencies like Bitcoin and Ethereum.
To sign up, you’ll have to pass a know-your-customer (KYC) check, which requires you to verify your identity by uploading a piece of identification, such as a driver’s license or a passport photo. Once you’re in, you’ll have to wire money to the exchange or buy the tokens outright with a credit card. Wiring money, then buying the tokens separately, usually helps you save on fees.
Although you can buy both MANA and SAND on Wealthsimple Crypto, Wealthsimple only lets you olbrokerage service is a closed loop that doesn’t let you withdraw MANA to funds to your own cryptocurrency wallet. This means that you can’t use SAND or MANA bought on Wealthsimple to buy virtual property—you can only use it to gain exposure to the price of the metaverse token.ns.
You can check the largest markets for these tokens on sites like Coin Gecko and CoinMarketCap. Make sure to research an exchange before wiring money—several cryptocurrency exchanges, such as Binance, have been prohibited from operating in Ontario— and stick to major, reputable exchanges. You’ll also have to buy some ETH to pay for transaction fees when you are buying digital real estate.
Once you’ve bought your crypto, you’ll have to withdraw it to an external wallet. A popular choice is called MetaMask; it’s developed by Consensys, a software development studio run by Joe Lubin, one of the co-founders of Ethereum.
Once your crypto is in your Web3 wallet, you can connect it to the games by visiting their websites. Then head to the marketplaces, find a parcel of land that strikes your fancy, and buy digital land. Then you’re ready to start building on your plot of virtual land—or hold the NFT and speculate on the price of land within that virtual economy.
Frequently Asked Questions
Virtual land is land within videogames. These days, virtual land refers to a burgeoning industry of crypto-powered virtual real estate—think Second Life meets Ethereum. Some of the buzziest pieces of virtual real estate are based on the Ethereum blockchain. Popular games include The Sandbox, Decentraland, and Somnium Space.
It’s difficult to truly determine whether an investment in virtual land is “legit.” User counts are small but growing, and none of these metaverse games have truly gone mainstream. Mark Zuckerberg’s vision for Meta includes virtual land, and his billions of dollars may change the future of the metaverse real-estate industry.
Everyone’s risk tolerance is different, but an investment in virtual land generally depends on the following: 1. The location of your plot. Will demand for your virtual real estate grow or shrink? Will your neighborhood attract the rich and famous or degenerates and virtual waifs? 2. The success of the game. Will the game that houses your virtual real estate grow, or will developers abandon it and let it crumble to whatever the virtual equivalent of dust is? 3. The success of the blockchain that powers the game. Most popular metaverse games are powered by Ethereum. If there is, say, a huge hack on Ethereum, or people transition to other blockchains, then the game might crater—and with it, the fate of your virtual land.
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