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The internet is now an essential part of our everyday lives. As a result, real estate owners and operators have adapted. Services and inventions like internet-powered listings, online tenant forums, and smart locks have revolutionized real estate. And these days, the internet and real estate have intertwined even further with the rise of digital real estate. Investing in digital real estate could prove lucrative — but how does it work, and what are the risks?
This post defines digital real estate and its relationship to the metaverse. Then, we outline how to purchase land in the metaverse. Finally, we explain whether digital real estate investing may be right for you.
This post covers:
- What is digital real estate?
- Digital real estate and the metaverse
- Should you invest in digital real estate?
What is digital real estate?
Digital real estate is any type of virtual asset that lives on the internet. Buying digital real estate works much like buying property in the real world — when you buy digital real estate, your ultimate goal is to sell that asset at a higher price than when you bought it.
One common form of digital real estate is domain names. A domain name is the string of text that a user types into a browser to navigate to a specific website. Domain names that directly represent a business’s product can be worth a lot of money. This is especially true if that domain name is short and catchy.
For example: A travel and hotel-finding service named hotels.com has an incredible leg up on its competitors in terms of branding and visibility. As a matter of fact, that’s why the owners of hotels.com paid a whopping $11 million for the domain!
While many low-hanging opportunities might already be in use today, you can still research and anticipate trends. As a result, you may discover unused domain names that you can invest in and resell.
But domain names aren’t the only form of digital real estate. Recently, digital real estate has taken the form of virtual plots of land that you can buy in the metaverse.
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Digital real estate & the metaverse
URLs and domain names have been a primary form of digital real estate since the 90s. But the next generation of the internet will be defined by concepts like virtual reality and the metaverse. These have given digital real estate even more parallels to its real-life counterpart.
In the metaverse, users walk around and interact with each other using virtual avatars. And those avatars need places to connect, hang out, and play. That’s where digital real estate comes in. Thanks to the metaverse, digital real estate offers many of the trappings — and the moneymaking opportunities — that physical land offers.
You can buy a plot of land in the metaverse and develop it into a digital rental property, a commercial business, or anything you can imagine. For example, the Australian Open bought land in the metaverse and constructed virtual parks and arenas. This gave fans a virtual place to hang out, connect, and watch tennis games together.
Some things you can do with digital real estate include:
- Setting up digital billboards so companies can advertise on your property.
- Flipping your property to sell for a higher price.
- Hosting virtual events and parties.
How to buy land in the metaverse
First things first: The metaverse is in its very early stages. There isn’t just one metaverse like there’s one internet today. So, you’ll need to pick a single metaverse to invest in. Popular options include Decentraland or Sandbox.
Before you can invest, you’ll have to exchange money for an in-universe cryptocurrency. And to hold your money — and the virtual deed you’ll get after purchasing land — you must set up an online crypto wallet. Luckily, metaverses are getting more and more user-friendly, so you can usually set everything up on the same platform.
After you’ve purchased land, you receive an NFT, or non-fungible token. You may have heard of these before! In the context of the metaverse, an NFT is a way for you to prove that you own the land you’ve purchased.
Further, because of the way that NFTs are created and stored on a blockchain, nobody can edit or delete your proof that you own the land.
Should you invest in digital real estate?
You may be asking yourself: Is digital real estate worth it? Here’s a list of questions to ask that can help you determine if you should invest.
Ask yourself these questions before you invest in digital real estate:
- Am I investing money I can afford to lose?
- Do I want to diversify my existing portfolio?
- Do I want to get in on the ground floor?
Am I investing money I can afford to lose?
As with all investments, digital real estate is a risk. There’s always the chance that an unexpected outside factor will tank the value of your investment. This is true whether you’re investing in a domain name or in virtual property.
The industry that your domain name is targeting might take a sudden downturn. Or, the metaverse you’ve chosen to invest in might fold. But investing has never been a sure thing, and with these risks come the potential of high rewards.
Before you invest, make sure that all of your expenses are covered first.
Do I want to diversify my existing portfolio?
When you start digital real estate investing, you join the ranks of leading companies and investors — all looking to make their mark on the metaverse. According to consulting firm McKinsey, the metaverse could be worth $5 trillion by 2030. This prediction is buoyed by investments from giants like Microsoft, Disney, and Apple.
You may already be familiar with the benefits of physical real estate — maybe you even own property yourself. But putting all of your eggs into one basket carries its own risks. You may be interested in joining a distinguished group of investors who are diversifying into digital real estate.
Do I want to get in on the ground floor?
The internet is still relatively new, but this point is more applicable to digital real estate investing in the metaverse.
While the metaverse is taking the world by storm, we’re still in the early stages of its popularization. Metaverse proponents argue that the metaverse will become the foundation of how future generations experience the internet. So, in this context, your digital real estate deed becomes more than just a token in your virtual wallet.
Imagine buying land in the middle of Manhattan right before New York City’s skyscraper boom.
That’s where digital real estate advocates say we are right now. While real estate in the metaverse is in its early stages, this may be your chance to buy virtual land for cheap before those property values skyrocket.
- Virtual real estate investing means buying virtual assets that may appreciate over time. This includes domain names or land in the metaverse.
- Are you interested in buying a domain name? Increase your chances of turning a profit by picking a short, recognizable domain name in a popular industry.
- To buy metaverse land, you must pick the metaverse you’re interested in investing in, set up a wallet, and buy with cryptocurrency.
- If you’re investing in metaverse real estate, you can make money by hosting events, upgrading your property, and advertising.
- Investing in digital real estate may be right for you if you’re investing money you can afford to lose, want to diversify your existing portfolio, or want to take advantage of the early stages of the metaverse.