The Sandbox metaverse currently holds the land transaction record, having sold a plot of land for €3.8 million in a single exchange last December.
Is the virtual land market turning into a digital property bubble?
The virtual land industry in the “big four” metaverses – specifically, Decentraland, Somnium Space, Cryptovoxels, and Sandbox – surpassed €440 million in 2021, and this figure is expected to double in 2022.
Is the market, however, overheating? Indeed, even some of the pioneers behind these metaverses are concerned about the rising costs of plots of land in their virtual social universes.
Artur Sychov, CEO and founder of Somnium Space, spoke to Euronews Next about the flood of monetary theory that is driving up environmental costs.
“There is a lot of hype and there are a lot of, unfortunately, players in the market which try to take advantage of people,” said Sychov.
“There’s a lot of people who don’t understand why they’re buying and they’re trying to speculate on it, which is an absolute no go and they should never do that”.
As per Sychov, financial backers purchasing up virtual land NFTs to ultimately make money on them as the costs climb conflict with the soul of virtual social universes, which ought to be about makers, building networks, sharing workmanship and sharing encounters in virtual space.
“The bubble – and I have to say, the media is also complicit in it because the articles or the news videos, they don’t go into depth and into details, right? They just mention the prices because it’s a very catchy thing to mention and I understand,” he said.
“But it creates this kind of bubbly thing where people say, ‘Oh my god, OK, there’s an ability to earn some money and I will buy this parcel. Whatever that parcel is, I would never even build [on it or] take care of it. I’ll just buy it and hope that I will sell it later for a higher price”.
How do you acquire a virtual land work?
Virtual land deals work similarly as NFT deals. Possession is ensured by a novel piece of code put away on a blockchain that affirms a singular’s rights over an advanced resource in a manner that can’t be changed.
“Land is an NFT, so that is, effectively your deed of ownership that is yours, yours to own forever,” said Dave Carr, formerly of Decentraland and currently involved with virtual real estate aggregator Parcel.
“There are also mechanics in development at the moment, such as rentals and fractionalisation of NFT, which is the splitting apart of an NFT so that people can own a piece of that overall NFT. And that’s something that’s rapidly being developed”.