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2022/01/12

Why People Are Investing In Digital Land

By Rupesh Ghimire

The idea of owning property and real estate was born when our nomadic ancestors had chosen to move into an agricultural society. Real estate has become the largest asset class in the world in only 6,000 years, while technological advances have improved our lives in many ways at the same time. However, since Sumerians had recorded property deeds on clay tablets, the process of buying the real estate remains largely unchanged. There has recently been a wave of technologies associated with blockchain designed to simplify the purchase process, especially by avoiding issues such as title insurance and legal documentation. The oldest form of investment finally comes to the same technological transformation we saw in other sectors such as transport and communications. These are not the only changes driven by fast computers and global internet access. People are living much of their lives on a screen and virtual worlds have emerged that only exist on computers. These are places where people can "congregate" with avatars and have virtually interactive social experiences. The metaverses are called these online communities. Metaverses are organized in many ways like "real world" cities—cities, neighborhoods, and residential and business developments. They're virtually only happening. Market experts have recently found that these virtual neighborhoods can be sold for real-world dollars as plots (aka fiat currency). Therefore, digital immobilization investment has become very real. But now we have to ask with real money on stakes whether the cents are derived from nonsense? Briefly, no. Digital immobilizers can collect dollars from cents from these virtual countries if done properly.

Digital Real Estate is the Next New Thing

Just to take a quick look at the seriousness of this:

  • Decentraland (a metaverse) had an ICO and sold over $24 million of MANA in less than 35 seconds (Decentraland currency that permits users to buy and sell virtual land within this metaverse).
  • Genesis City, the virtual land that investors can buy for obscene amounts of money, is roughly Washington DC. According to Bloomberg, even a simple 1,100 square foot parcel can cost $200,000.
  • Prices are aggressively increasing. That hasn't prevented people from forking a real blow of cash. A LAND plot in Decentraland was around $2,000 back in January. But just two months later, for the same amount of virtual land, prices shot up to $175,000.

How You Can Invest in Digital Real Estate

A lot of people ask, what is digital property?  It's a white space for what you want to build. It's a real investment. Dollars are exchanged for real estate when transferring real estate, and the transaction comprises banks, financial firms, lawyers, and companies that own titles. In a similar way virtual immobilization, often in the form of non-Fungible tokens, is exchanged for virtual money (NFTs). Tokens that are not fungible are distinct and limited in volumes. The blockchain, a digital booklet duplicated and distributed throughout a database, enables these transactions. You get a password, rather than keys, to develop your virtual land with your imagination. Just as the number of dollar bills (which contributes to its value) is limited, these virtual currencies are limited in volume. In addition to these changes in the number of virtual currencies, the blockchain technology on which these cryptocurrencies are based has also evolved. The number of virtual terrain parcels in these metaverses is limited, as is the number of token sizes (which are monitored by the entire blockchain).

Linden Lab has been offering similar products for years now. For a unique representation, people would use USD to purchase Linden Bucks which in turn is used to buy goods in their virtual world. In order to achieve a unique representation of their products. (This platform was actually sold last July, Second Life.) This seems to be the foundation of the current business model, with some minor changes, in new virtual worlds like Decentraland, The Sandbox, Cryptovoxels, Somnium Space, and Axie Infinity.

How Businesses Are Capitalizing  Digital Real Estate

It is quite fair to be skeptical about investing in digital real estate. One logical question to be asked is, "Who could benefit from investment in digital real estate?" People are social entities and people have an inborn desire for interaction. Digital immobilizations enable people to socialize and engage safely, and the metaverse, especially for large and even medium-sized enterprises, also has commercial merit. This virtual land enables these companies to market their products to new audiences in new spaces which also serves a vital CRM function. This means that digital economies form the metaverse because you can truly involve visitors in this environment and turn them into powerful brand ambassadors in the real world. The digital artist, who can showcase their work safely in virtual museums and galleries where visitors are likely to become buyers, could make that area especially useful. As digital real estate is more widely adopted, the lines between physical and virtual are more and more dizzying.

How individuals can profit from investing in digital land

Nothing is guaranteed, as with all investments, but investing in digital Immobilien has proved to be a viable source of wealth for individual investors. Metaverses, each with its own cryptocurrencies, exist. But they basically work the same thing. Therefore, let's make an example using Decentraland. The in-game denomination of Decentraland is called MANA. 1.00 Etherium or ETH, the famous cryptocurrency, will collect approximately six thousand MANA. With this letter. This sounds straightforward, but there are plenty and many volatility sources in this model:

  • It is really volatile to convert from USD to ETH.
  • The ETH transformation into MANA introduces an additional volatility layer. Importantly, in MANA, it is not always exactly double the number of MANA purchased with 1 ETH when buying 2 ETH or their equivalent.
  • Property prices can dramatically shift depending on the surrounding properties.
  • Depending on the trends on the market, the properties themselves can change value.

Conclusion

It is highly speculative to invest in digital real estate. But the institutional investors are piling up in the crypto market as of late. In its Q4 2020 report, Grayscale has described as "institutions are here," one of the leading managers of crypto investment products. The report showed that 93 percent of the total capital inflows accounted for about $3 billion in the fourth quarter. The real world is becoming increasingly chaotic. In the midst of chaos, your next big investment could be digital land. To most people, it's still a foreign concept, but it's worth considering investors. Digital lands may be exponentially appreciated in the near future. You should keep your mind open to investment in this innovative way if you want to own land without leaving the comfort of your home. Think this way: we're in the future already. Most of our lives are carried out via a screen. Now virtual worlds are places we don't have to distance ourselves from society. People can cluster through avatars and experience social interactivity.