NFTs power metaverse purchases and sales, but mostly as a fledgling technology. While many misinterpret NFTs as nothing but overpriced GIFs and avatars, they truly are the future of purchase in the metaverse. Eventually, this will apply to digital properties.
NFTs utilise blockchain technology to establish individuals as owners of assets, and it’s auto-recorded on a network like Ethereum or Solana. As such, when you decide to sell an asset on an NFT marketplace like OpenSea, the buyer can see everyone who’s ever purchased, sold and owned that asset — even the expenditures behind those transactions — because, as mentioned, they’re recorded on a public ledger.
When we apply this to the purchasing of property in the metaverse, homeowners can, once all conditions are met, auto-transfer their titles to buyers without dealing with third parties, swaths of contracts and towering paperwork. If NFTs take off in the future, any industry that involves ownership and paperwork (e.g. trust companies, real estate, vehicles) will simply rely on blockchain tech.
Metaverse land is available to purchase as it’s very expensive – unsurprising seeing as the metaverse will be worth $200 million by 2024. On Decentraland, one of the most popular metaverse apps, the cheapest parcel you can get is valued at about $5,500.
Early this year, TerraZero made headlines for helping someone secure a $45,000 Decentraland plot with a mortgage. The Web 3.0 company didn’t disclose how much the client paid for their down payment, nor did it divulge the interest rate, but TerraZero did reveal that it was a two-year mortgage.
“We’re not doing 30-year mortgages,” TerraZero CEO and founder Dan Reitzik told National Mortgage News. “We don’t want to do anything more than two or three years, and that’s because the market just isn’t mature enough like the regular housing market. In shorter terms, interest rates are obviously higher than if you were to buy a piece of land in the real world.”
Why would someone even want to buy property in the metaverse? What’s the point of living in Web3? Well, most buyers who purchase metaverse property aren’t looking to use it as a digital domestic piece of land. Most properties owned are purchased with the benefits of advertising in mind. Some buyers are content creators with fantastical, whimsical ideas. For example, artists may want to construct a virtual music stage atop their digital plot, hoping to attract adoring fans to Decentraland, only allowing paying concertgoers to attend. After all, deadMau5 and Paris Hilton held concerts in Decentraland last year, so why can’t they do it, too?
As for now, anyone can connect their crypto wallet to the Decentraland app, create an avatar and walk around its vast virtual world. You’ll see casinos filled with poker tables, sprawling fields and parks, music events, and more. You can purchase new gear for your avatar by equipping your wallet with an Ethereum-based cryptocurrency called Mana.
However, perhaps it would prove more useful for investors if Decentraland sold virtual billboards and marquees and just genuine ad spaces rather than properties. If they’re located in high-traffic hubs, they’ll be valued higher. Advertisers can pay the owners of these virtual ad spaces via monthly or annual subscriptions, allowing investors to recoup their investments.