Is metaverse real estate a scam or a good investment? Find out whether you should invest in virtual real estate or not through understanding what it takes for virtual real estate to be successful, how it profits, and how the money circulates.
A lot of hype has been building up in the previous months regarding the “metaverse”, and projects are coming up related to NFTs and their use case in the metaverse. Aside from NFTs, another form of NFT, virtual real estate, has also started to become extremely popular.
Although these projects can be extremely lucrative for those behind them, the question is, are they profitable for the investors?
What is Metaverse Real Estate?
Metaverse real estate is real estate that exists only in the virtual world. This means that they don’t have a paired physical land but rather a secured space in a virtual space. Think of it this way: virtual real estate is a digital puzzle; when you buy a metaverse real estate, you are buying a piece of the puzzle.
The real question is, what can you do with your virtual piece of land? The answer varies from platform to platform. One example of this is Axie Infinity which allows landowners to offer a training ground for their characters and more.
Decentraland is also another example of metaverse real estate, which allows landowners to build different things on their plots of virtual land. The things that can be built on these digital plots of land include casinos, race tracks, or basically a cool place where the land owner and their friends can hang out virtually.
There is one thing you should know. When investing in the metaverse, the trick is actually not to invest in the project but invest in the cryptocurrency behind it. However, finding access to these metaverse cryptos can be tricky, which is why websites like Immediate Edge created a channel with a comprehensive explanation of the process of investing in the metaverse.
Is Metaverse Real Estate Profitable?
Unlike physical land, the metaverse follows a similar but still a different set of rules. They have in common that their prices depend on the demand for the plot of land.
Let’s say there’s a physical house in a good neighbourhood that has access to good schools, malls, and more. The house will be deemed in demand if multiple buyers are interested in buying the property. This is the same with virtual real estate, except aside from just the demand fluctuating, the value of the property fluctuates as well depending on the price of the currency used.
Let’s say a plot of land costs one ETH; if the price of ETH drops by 50%, this means the price of the property will also drop by 50% since it can be bought in ETH and not dollars or euros. This poses a problem for metaverse real estate investors looking at their virtual plots of land as long-term assets.
Where Is the Metaverse?
Another thing that investors have to watch out for is the platform or project they are investing in. Unlike physical real estate on Earth, metaverse real estate can be on different platforms. The real trick is to find the right platform to invest in.
Let’s say you buy a plot of land in project A, but people would rather use project B as their metaverse in the future. This means that your land in project A might lose a lot of value.
Although metaverse real estate seems like a brilliant idea, it’s still hard to tell which platform will ultimately be the go-to place for virtual real estate in the future. The rewards, however, could be quite positive, and if you’re willing to take the risk, it is recommended that you consult a financial consultant to make sure your virtual real estate does not destroy your chances of buying physical real estate or hamper your finances altogether.