Last Updated on February 1, 2023
One of the more interesting developments that have come out of the recent NFT craze is the emergence of the virtual real estate industry. Since the beginning of 2021, the price of virtual property has skyrocketed, with some of the world’s most popular brands and companies buying up virtual space in anticipation of the mass adoption of the metaverse.
According to Wall Street Journal, a piece of virtual land in The Sandbox metaverse was sold for $4.3 million, which is the record as of the tail end of 2021. To add more fuel to the fire, crypto powerhouse Grayscale recently speculated that the metaverse could present a staggering $1 trillion opportunity in terms of global annual revenue. With this in mind, it seems that Pandora’s box has been opened and the NFT real estate industry looks destined for big things.
What is Virtual Land?
NFT real estate, otherwise known as virtual land (or digital land), is any piece of land that exists online (typically in the metaverse). This can be a strange concept to wrap your head around if you are new to the industry, especially when you consider some of the prices for which these virtual spaces are being sold. However, there are some significant benefits to investors and benefits, which we will touch upon later.
Before we get to that stage, you must first understand how NFTs work since this is the technology that underpins the entire industry. In a nutshell, an NFT (Non-Fungible Token) is a digital asset hosted on the blockchain that can be bought and sold online. These tokens are 100% unique and immutable, which means that each is completely one of a kind (made evident by their unique identifiers held within the metadata of the smart contract).
When you couple these unique features with the ability to identify and verify individual owners (thanks to the transparent nature of the blockchain), the buying and selling of virtual property becomes a genuine possibility.
The Advantages of NFT Real Estate
Although no one can physically “be in” these virtual spaces, their potential scope and reach are enormous. As a result, property in the metaverse is available to a truly global audience, which can’t be said for property in the physical world. Therefore, the capabilities of these virtual spaces are almost limitless, and people are starting to take notice.
As an investor, if you get in at the right place and the right time (as in a metaverse that becomes widely adopted), you will likely see your investment rise in value quite dramatically, as has been the case already over the past couple of years in Decentraland and The Sandbox, for example.
Furthermore, virtual land is a game-changer for advertisers and large corporations as it gives them a platform to market their goods and services in a novel way, particularly in light of the fact that the demographics located within these platforms are notoriously difficult to penetrate for marketers, and the metaverse may offer a way to solve this problem.
Additionally, the millennials and younger generations (which make up most metaverse userbase) have all grown up with online shopping and eCommerce as the norm. Therefore, it’s not too much of a stretch to imagine a scenario where the purchase of digital goods in the metaverse will become commonplace. This further drives the demand for virtual land.
Aside from the investment standpoint, one of the obvious draws to NFT real estate is that the various metaverses are not bound by the same laws of physics. This means that designers can be far more creative when creating these virtual spaces, many of which would be simply impossible in the real world.
How to Buy Your Own NFT Real Estate
If you want to buy virtual land, you have a few different routes that you could take. First things first, you need to choose the metaverse you want your virtual property to be situated in. While there are many different options, some of the most popular and reputable virtual worlds include Decentraland, The Sandbox, Crypto Voxels, and Upland.
From there, you can either purchase the property directly on their platform, or you can sometimes complete the sale on an NFT marketplace, such as OpenSea. For example, if you want to purchase a plot of virtual land on Decentraland, the process would look something like this:
- Buy some MANA – this is the cryptocurrency used in Decentraland
- Visit the Decentraland Marketplace
- Browse the available land and select the option you wish to purchase
- Do some research about the plot of land. Check out the current availability, the owners’ names, and any current bids.
- Connect your wallet to the Decentraland Marketplace
- Click “BUY” and confirm your purchase
- Enjoy your new piece of virtual real estate
Is Owning Virtual Real Estate For You?
Truth be told, only you know the answer to that question. Ideally, you need to ask yourself why you would want to buy a piece of virtual land, just as you would when making a significant purchase in the real world. From an investment standpoint, the metaverse and NFT real estate industry seems to be trending in one direction since it offers an exciting new way to build businesses, communities, and interact with others. This opens up a whole new world for advertisers and marketers, which has the potential to make the metaverse and the virtual real estate held within it extremely valuable.
With that said, NFT real estate and the metaverse is a relatively new market, and investors should do their due diligence and proper research before investing. Furthermore, there is no guarantee that the blockchain you purchase your land on will be adapted in the future, so if you end up choosing the wrong platform and a new, bigger, and better metaverse is created, you could be left holding a worthless plot of virtual land.
Disclaimer: This guide is not a financial advice. Do your own due diligence and more importantly – do not invest money you cannot afford to lose.
In short, what is NFT real estate?
NFT real estate refers to the ownership and trade of virtual land or properties within a digital world, represented as non-fungible tokens (NFTs). These virtual properties can range from simple plots of land to more complex structures and developments.
How does NFT real estate work?
NFT real estate works by using blockchain technology to establish proof of ownership for virtual properties. Each NFT represents a unique piece of virtual real estate, and the owner of the NFT has the right to use, trade, or sell the property as they see fit.
How do I purchase NFT real estate?
You can purchase NFT real estate through a marketplace or platform that specializes in NFT real estate sales, such as The Sandbox or Decentraland. You will need to set up an account and have a cryptocurrency wallet in order to make the purchase