The virtual real estate market has been growing at an exponential rate. After all, the earliest metaverse games, such as Second Life, are still a 21st-century phenomenon, while the traditional real estate market is often called the world’s oldest industry.
The NFT craze has been bringing new life to virtual real estate, particularly by Next Earth, which is a virtual replica of Earth on the blockchain. Next Earth sold over $1.3 million worth of NFT-based real estate in the world’s first Initial Tile Offering.
Virtual homes are a status symbol – just as much as owning a car or property in the physical world is – and provide a sense of individuality and identity that many people desire. With so many NFT collectibles being sold, it’s no wonder that this trend is catching on across the board, from gamers to artists to sports fans and beyond.
The NFT Market is Exploding
The NFT market has seen rapid growth over the past few years. In 2020, there was an estimated $13 million in total sales volume between all blockchain-based virtual worlds and digital economies (including all non-fungible tokens). By the first half of this year, that number had surged to $2.5 billion. It’s anyone’s guess as to where the NFT market will be in 1, 5, or 10 years, but the trend is clear: NFTs are increasingly in demand.
Collectibles have always been popular investments: from baseball cards to stamps and coins, people are attracted to them because they offer a tangible store of value, are scarce, and can be easily collected by investors.
In the case of virtual collectibles, many people already collect things digitally: they follow their favorite artists on social media or check TikTok every day for new content from influencers they admire.
Nowadays it’s also possible to invest in sports teams or professional athletes with fantasy sports platforms like DraftKings or FanDuel – but these types of investments don’t quite fit the traditional definition of a collectible since you can’t actually own them; instead you just “own” a piece of their future performance on the field/court or in the fantasy league arena.
NFTs provide an opportunity for fans to take ownership of something that matters to them outside of just being able to say that they own part of something. When considering investing in NFTs, people should consider whether their investment aligns with their values and interests – not everyone will want to support brands that aren’t aligned with what they believe in.
Naturally, this extends to the concept of virtual real estate, as we all want the feeling of home somewhere, whether that’s a skyscraper in Tokyo or a village in Kenya.
The Metaverse is Emerging
Virtual worlds have been around for decades, but only recently has the term metaverse come into common parlance. Initially coined by Neal Stephenson in his 1992 sci-fi novel “Snow Crash,” the metaverse refers to a shared online universe that is accessible through a variety of devices.
In recent years, this vision of the metaverse as an interconnected digital space has become reality with the rise of blockchain-based platforms like Next Earth. Virtual real estate is also becoming increasingly valuable as more people from all walks of life seek refuge in them—sometimes called “metaverse nomads” or “tile-dwellers”—spending increasing amounts of time there.
This influx of new users has created intense demand for virtual real estate properties on these platforms, driving up prices across the entire NFT market.
Real Estate NFT: A New Asset Class
Nonfungible tokens are cryptographic assets that are necessarily unique and scarce, unlike traditional crypto assets. This makes them fundamentally different from fungible tokens which can be duplicated infinitely.
Like cryptocurrencies before them, NFTs have surged in value over the past several years. As we’ve seen, this is due to both speculative mania surrounding their potential, and real demand to be a part of the growing metaverse with your very own piece of land.