Is the metaverse real, or really just a false economy?
- US$106 million was spent on virtual property in just one week in November.
- Billionaire Hong Kong real estate tycoon Adrian Cheng snapped up a large area of metaverse platform, the Sandbox.
- Whether a passing fad or legitimate enterprise, digital land buying is on the rise.
There is a land grab gripping the world but it’s property which you cannot step on. You can’t even touch it, save for the feel of clicking your mousepad, laptop, or smartphone.
The snapping up of digital land is accelerating in the metaverse, as a growing number of digital platforms build interactive worlds complete with virtual entertainment and businesses.
To date, there are only a limited number of plots of ‘land’ available in the two biggest metaverse platforms – the Sandbox and Decentraland.
Yet last month, some US$106 million was spent on virtual property in just one week, with purchases of digital land, virtual luxury yachts, and other assets, according to data from DappRadar.
Adrian Cheng, the billionaire Hong Kong real estate tycoon, recently ventured into the metaverse with the development of one of the largest virtual land plots on blockchain gaming platform the Sandbox (as reported by Grafa).
Mr Cheng’s virtual real estate will form part of a ‘Mega City’ virtual world that will feature start-ups from the Greater Bay Area, which are supported by him.
The Sandbox, which is a subsidiary of blockchain gaming unicorn Animoca Brands, allows people to build a virtual world and monetise in-game items, which can include digital plots of land that can be traded as non-fungible tokens (NFTs).
If you’re a regular reader of Grafa, you would know that NFTs are digital assets that use blockchain technology to verify ownership.
Are these digital land acquisitions a sound investment, or are they creating a false economy?
A false economy, or a false market, occurs when prices are manipulated and affected by erroneous information, preventing the efficient negotiation of prices. These types of markets are often marred by volatile swings because the true value of the market is clouded by misinformation.
One could argue that with the volatility of cryptocurrencies this year, crypto could be considered a false economy.
What are the actual drivers of value of digital land and property in the metaverse, and are they real or artificial?
The health and success of any market relies on the dissemination and sharing of accurate information and data to all participating parties. Accurate information allows for the correct valuation of companies and assets, which allows investors to make judgments based on that true knowledge.
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