What Is The Metaverse? What Real Estate Needs To Know As The Virtual Land Grab Unfolds
"Metaverse" is the latest buzzword to emerge from the realm of interactive technology. There is even a market for real estate in the metaverse, but considering its newness, where exactly it is going remains to be seen.
As the concept gains traction and grabs headlines, these are things commercial real estate needs to know.
What is the metaverse?
The metaverse doesn't have a precise definition, mainly because it doesn't exist yet, but it is generally characterized as interconnected virtual communities, or worlds, that people can access via virtual reality headsets, augmented reality glasses, smartphone apps or other devices.
Users can go inside a world to meet other people, work or entertain themselves. In November, singer Justin Bieber put on a show in collaboration with virtual entertainment company Wave that allowed attendees to watch an avatar of him sing. Other entertainers, such as Ariana Grande, The Weeknd and Travis Scott, have done the same.
What tech makes it possible?
Augmented reality, or AR, and virtual reality, VR, will be particularly important to interacting in the metaverse since AR will provide audio and sensors while VR will present the virtual world visually.
Some form of cryptocurrency will possibly emerge as the medium of exchange for the metaverse, with a number of metaverse tokens already in play, such as those created by Axie Infinity, Decentraland, Sandbox, Enjin Coin and Render Token.
Did Facebook (now Meta) invent the metaverse?
No. Facebook's decision to rename itself — and its stated new focus on monetizing the metaverse — has popularized the concept.
Science fiction writer Neal Stephenson coined the term metaverse for his 1990s novel Snow Crash, in which the protagonist navigates through such an interconnected virtual world. The science fiction concept of a computer-enhanced alt-world is older than that, however; the 1982 film Tron, for instance, anticipated the concept.
What has this got to do with real estate?
One persistent idea about the metaverse is that, like in the actual world, some parts of it will be more popular than others for work or play, and thus more valuable to anyone who owns those parts.
The Bieber concert happened to be free. But it is easy to imagine a concert in a virtual venue that charges admission. Whoever owns the venue would contract with an entertainer, much the way a physical venue does, in exchange for a take of the cut. Other virtual properties could include shopping malls or game sites.
Are investors taking metaverse real estate seriously?
Apparently. In October, Tokens.com Corp., a blockchain tech company, acquired 50% of Metaverse Group, an early player in virtual real estate, for about $1.7M.
In November, Tokens.com acquired a "116-parcel estate" in the Fashion Street district within Decentraland via its new part-subsidiary Metaverse Group. Decentraland said the deal is the largest metaverse land acquisition so far. The "land" was purchased for 618,000 mana (thought to equal about $2.4M), an Ethereum-based token used as currency in Decentraland.
How can property in the metaverse be finite, as it is in the real world?
There can be many virtual worlds — as many as people care to create — but if they are each designed to be limited in size, only a limited amount of "land" will exist.
Presumably, various virtual worlds will also be designed such that more land can't be added later, though there are no hard and fast rules. In a very popular virtual world, the rarity of land would hypothetically raise its value, just as in the real world.
For example, Decentraland has 90,000 "pockets" of land, each measuring 2,704 SF. They were all sold a few years ago, but there is a resale market for them now.
Is this a bubble?
Maybe, maybe not. Game platforms that allow multiple users already exist and are widely used. Those platforms are considered forerunners of the metaverse, but since the metaverse is still a hypothetical, it is hard to say how it will evolve from gameplay into something as content-rich as the real world.
Other uncertainties include who will develop the metaverse and under what rules it will grow, whether there will be one standard currency or many, and whether actual human beings will want to spend their time — and money — in a souped-up virtual world.
Still, some investors see the current uncertain state as getting in on the ground floor.
“It’s inevitable that the metaverse will be the No. 1 social network in the world," Metaverse Group co-founder Michael Gord told The New York Times.