Enlarge image
Inflation in the Metaverse:
Property prices in the virtual worlds have risen sharply
Photo: AP
The virtual world "
Decentraland
" is smooth and colorful. Styled artificial figures, so-called avatars, dance across a green meadow. A red balloon rises into a bright blue sky. Anyone can play and create their own avatar via an internet browser, but visiting Decentraland as a "guest" is, well, a little limited. In order to really enjoy the foray through the virtual world, the makers of the platform advertise, you should do two things: Create a user account and connect it to your own crypto wallet.
That makes sense.
A visit to a fairground is also more fun with a full wallet than with empty trouser pockets.
"Take enough money with you!"
Anyone who takes this motto to heart and roams through the new virtual world equipped with cryptocurrency will have a similar experience as Disneyland visitors in Paris: everything is pretty expensive here.
Whether the virtual worlds are called "Decentraland", Somnium or "Sandbox": The price shock also affects avatars.
Plots must be paid for in cryptocurrency.
A "non-fungible token" (NFT) is used as a land register entry, which is stored on the blockchain and serves as proof that this or that property has actually been purchased.
And the prices that are called in the virtual world are in some cases far ahead of the real world: in 2021, more than 500 million dollars have already been sold through the sale of virtual properties.
Analysts estimate that sales could double again this year.
$2.4 million for a virtual lot on the high street
Real estate price bubble and inflation in the metaverse: This has only a small part to do with bored super-rich who have had enough of their yacht off Saint Tropez and their villa on Ibiza and are now looking for new investment targets in the virtual world. Many of the larger deals are being made by cryptocurrency investors who are hoping for a new cryptocurrency price rally.
At the end of November, the crypto investor Tokens.com spent the equivalent of 2.4 million dollars on a virtual property on Decentraland's "shopping street".
Payment was made in the cryptocurrency Mana, and the deal was processed via the NFT trading platform Opensea.
Andrew Kiguel
, head of Token.com, told CNBC that his deal was worth it: "Land prices have risen by up to 500 percent here in the past few months," enthused Kiguel.
And what will happen when thousands of avatars eager to shop, all with pockets full of cryptocurrency, soon romp around in Decentraland or other platforms in the metaverse?
Anyone who now buys a property in a virtual "hot spot" such as a shopping street or in a prominent neighborhood, according to the steep theory, is doing nothing wrong.
Even if it costs the equivalent of a few million dollars.
"The music plays where new visitors go first or where many visitors gather," says Kiguel.
Virtual Monopoly - gamblers hope for price explosion
The same applies in the virtual world as in the real world: location, location, location.
Shortly after rapper
Snoop Dogg
bought a virtual mansion on the Sandbox platform, property prices in his neighborhood rose.
A buyer later paid the equivalent of $450,000 to be a neighbor of Snoop's avatar.
Singers like
Justin Bieber
or
Ariana Grande
are already appearing at concerts in the Metaverse with their own avatars.
And party monster
Paris Hilton
tried to upgrade her newly acquired virtual island by throwing a New Year's party there and appearing at the virtual desk as a DJ.
In virtual Monopoly it is important to secure Parkstrasse and Schloßallee early on
Buying a virtual lot is quite simple: you buy either directly on the platform or from a virtual lot developer.
This includes, for example, "Republic Realm".
The development company spent around $4.3 million on virtual properties on Sandbox alone last year – and resold them at a profit.
"We sold about 100 virtual private islands in 2020 for $15,000 each," Republic Realm owner
Janine Yorio
told CNBC.
In October 2021, Mark Zuckerberg triggered a gold rush in the scene when he declared the Metaverse to be the business model of the future and also renamed the Facebook group "Meta".
The metaworld was the hot new thing for investors.
Today, a few months later, these virtual islands are already worth many times over.
The recent development attracts numerous project developers, crypto soldiers of fortune and gamblers.
"But it remains very, very risky," says Yorio.
"You should only spend money there that you can do without if necessary."
Like Meta itself, it is "simply a big bet on the future".
Real estate investor and crypto fan Kiguel is not alone with his real estate hopes on virtual Fifth Avenue.
In the summer of 2021, an investor in Decentraland had already spent the equivalent of around one million dollars to build a virtual shopping center there.
Avatars can get new clothes there at steep prices, but according to research by the Reuters agency, the digital shopping center has recently been extremely poorly frequented.
Patience is required in the Metaverse - Meta's price crash disrupts the party
Patience is required in the metaverse: This was also the experience of meta boss
Mark Zuckerberg
, who admitted this week that the virtual reality business still needs time.
In real life, Tiktok and Apple are making life difficult for the social network Facebook, so Zuckerberg is now pinning his hopes on the digital world of Metaverse.
In the fourth quarter, however, sales in the "Reality Labs" division increased by only a modest $120 million to $837 million.
At the same time, the operating loss rose from around $2.1 billion in the same period last year to $3.3 billion.
For the whole of 2021, the division racked up more than $10 billion in losses, mostly from spending on research and development.
Investors panicked and at times sent the Meta share down by 25 percent.
More than 200 billion dollars disappeared within a few hours.
It cannot be ruled out that after the tech bubble on the stock market, the real estate bubble in the metaverse will also burst and investors there will soon experience a similar drop in prices.
But patience and a firm belief in the beauty of the virtual world are required if you really want to enjoy a visit to "Decentraland" or "Sandbox".
