Digital Real Estate As the news continues to report on the ever-changing world of digital real estate and the metaverse, a lot of people have questions. The main one: What is digital real estate? This once-obscure asset type is being regularly thrust into the headlines and with little explanation of what it is or why it’s worth anything.
Before you can discuss digital real estate, you have to talk about the metaverse. This is where digital real estate exists, after all. When talking about the metaverse, a lot of different terms get thrown around, but for the sake of anyone interested in digital real estate, the definition is pretty simple.
Digital Real Estate
The metaverse is a series of 3D virtual worlds built to allow users to interact much like they do in video games, as well as in real life. You can meet your friends there, attend parties and educational events, buy things, and even hold title to virtual real estate.
Although there are many metaverse worlds, there is only one metaverse, and you don’t need any special equipment to connect to it. The most popular worlds are easy to visit with a desktop computer, or even a smartphone.
Digital real estate is to the metaverse what real world-real estate is to the real world. You can think of it as buying land on another planet, where the rules of Earth no longer apply. Like buying land on the moon, there are still a limited number of parcels per platform, which creates scarcity and helps establish a more stable value.
Depending on the platform in which you purchase virtual real estate, the land you buy can have various attributes. In more realistic platforms, this is typically limited to the size of the lot and a unique location, which can be found on the world map. In platforms that are more gaming-focused, it might also include additional attributes such as natural resources that can be mined and sold.
Right now, businesses and real estate investors are testing the waters to see just how far they can push the limits of digital real estate, but there are many common use cases that have already developed.
For example, you might open a digital billboard business on your virtual real estate, selling ad space to companies interested in testing the waters. Or, if you want to build something more interesting, you might create a shopping center where you can rent individual sections out to tenants to create passive income.
Business owners are also taking advantage of what is possible in the metaverse by creating digital twins of their company headquarters for meetings with staff or clients, expanding their company’s footprint by creating interactive experiences based on their branding, or sponsoring special events that appeal to their target audiences.
Many fashion brands have gotten very involved in the world of virtual apparel via the metaverse as well. They’re using their virtual real estate for selling unique clothing items for avatars, using non-fungible tokens (NFTs) and opening up a whole new revenue stream.
A lot of people wonder why anyone in their right mind would buy land in a world you can’t see, smell, hear, or touch. There are many reasons to buy digital real estate. If you think back to the days of the beginning of the World Wide Web (WWW), it seemed silly to buy a website or a URL, but we know now that those things are often quite valuable for companies looking to reach their customers.
Metaverse real estate is much the same. While some people are buying it to hold, many others are buying it with a purpose in mind. For example, you might buy a parcel large enough to open an entertainment venue and book acts that would attract people who want to buy tickets. Or, as mentioned above, you might simply want to build a bunch of rental units and rent those to companies that aren’t ready to buy metaverse real estate but want to test the waters or need help with development of their projects.
Just as with real world real estate, digital real estate is valuable because people want it. This is the reason anything is valuable. But, in the case of virtual real estate, there are several attributes that help to explain its value.