Ask most NFT investors what opportunities they look out for, and you’ll be told digital art and collectibles. And while any good investor should always be looking out for the next Beeple or CryptoPunks, it’s also worth branching out into the world of digital real estate and virtual land.
In the real-world, real estate and land has been a valuable and worthwhile investment since time immemorial, increasing in value over time. Looking to emulate this and capitalize on this juncture between the booming NFT market and real estate investment opportunities are virtual worlds like Decentraland.
With sales now reaching the $1 million mark, virtual land NFT markets are something that should be on every investor’s radar.
In Decentraland, a vast digital space is divided up into parcels of virtual land. NFT technology is then used to facilitate the ownership, buying, and selling of these land parcels.
Created in 2016 by Argentinian developers Esteban Ordano and Ariel Meilich, Decentraland has become a virtual reality platform that users can inhabit and participate in the economy of. With an active community, the Decentraland platform enables people to interact with one another, display NFT art and collectibles, and make money by creating in-game assets like games, animations, and casinos.
While an online virtual space to interact and play is nothing new, Decentraland’s main draw is that the land – known as Genesis City – is entirely owned and managed by token holders. Except for roads and dedicated plazas, these spaces (known as LAND) are 16×16 meters freely bought, sold, and developed upon by users of the platform.
There are a total of 90,000 parcels of LAND in Decentraland, making them scarce assets.
Ownership is handled by the Ethereum blockchain, preventing disputes and guaranteeing secure transactions. LAND parcels are therefore stored as ERC-721 tokens on the network, considered the gold standard for security, with the ERC-20 token, MANA, used to pay for goods and services within the world.
Virtual land is becoming a highly lucrative market.
In June 2021, for example, a plot of LAND sold for $913,228,20, making it the biggest sale yet on the Decentraland platform. At nearly $1 million, the virtual land is already worth many times more than some real-world plots.
The buyer was the real estate investment company Republic Realm, whose involvement in the space is likely to bring yet further traditional investors looking to get involved as early as possible.
Not only was the sale the most lucrative in terms of dollars, but it was also the largest plot of LAND sale too.
Republic Realm is not the first to bet big on digital real estate either. Blockchain company Boson Protocol also recently invested $704,000 into LAND in order to build a virtual mall, connecting real-world shopping brands to the platform. Founder of Boson Protocol, Justin Banon, describes their goal:
“We have incredibly ambitious plans for the land…It’s going to be a mall that’s going to connect one end into Decentraland and other ends into various real-world retail, creating a connection between the metaverse and the real-world.”
With NFT technology enabling the ownership of digital land, Decentraland and other future platforms are likely to see continued interest by eCommerce and real estate companies.
While Decentraland is the de-facto platform for virtual land NFT investment, other platforms include The Sandbox, a competitor that recently saw a sale of land for $650,000. The buyer, Wang Chun of F2Pool, acquiring the land to build a virtual headquarters for Dogecoin.
Traditional institutions like Sotheby’s are also getting in on the action. Opening a virtual version of their London auction house, Sotheby’s uses their plot to display NFT art ahead of sales, attracting thousands of virtual visitors.
As our lives become increasingly digital, the prospect of owning a parcel of digital land no longer seems outlandish. Thanks to non-fungible tokens, investors can gain a sense of ownership over intangible assets like LAND.
The promise of virtual land NFT platforms like Decentraland is that as the space evolves, these early projects will become increasingly valuable. Just as the early CryptoPunks were given away for free and sold for only a few hundred dollars, those same tokens are now worth up to $11 million. Despite sales like Realm Republic’s and Boson Protocol’s fetching hundreds of thousands of dollars, there are still many opportunities still available out there.
With 90,000 plots of LAND, Decentraland, especially, is a market NFT investors should watch closely. While the platform is maturing by the day, the opportunities are still there, with many plots undervalued with intrinsic scarcity. In January 2021, for example, a plot of LAND was sold for around $2000. Just two months later, that same plot sold for $175,000.
As these virtual spaces evolve, some of the less desirable and less frequented parts of their world will also become more valuable. While LAND adjoining streets and busy plazas are the most valuable in Decentraland, plots further out will likely find themselves a lot more desirable in the future.
Owning LAND is also considered a good investment for those looking for repeat returns. Developing a parcel of land into something you can rent out for events, housing, or branded content is one possibility, generating some investors good income. Others have developed opportunities like casinos and games on their land, providing fun and excitement for users and a good ROI for investors.
The best way to get involved in the emerging digital real estate market is to invest in Decentraland. With a thriving economy and plenty of opportunities for growth, investing in LAND is still considered an excellent addition to a portfolio.
To get started, simply follow these steps:
- Visit the Decentraland Marketplace, choosing “Land” from the categories option and sorting the listings as you wish. In order to complete trades, you will also need to register and log in to a Decentraland account.
- Research via the Atlas View by clicking on any that catches your eye. This will display the plot’s price in MANA, the owner’s name, the plot’s location, and availability.
- Connect a Digital Wallet, such as MetaMask, to continue with a purchase after doing your research and paying due diligence.
- Proceed with Purchase, choosing your gas fees option and confirming the transaction.
- Confirm the Purchase by checking your digital wallet contains the NFT.
Alternatively, LAND plots can be bought and sold on NFT platforms like OpenSea. The method is the same, requiring the registering of an account and the linking of a digital wallet. Other platforms, however, allow purchases to be made with ETH rather than MANA.
Both methods are recommended, with opportunities on both the first-party and third-party markets appearing regularly.
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