The metaverse's development has rapidly created interesting new blockchain use cases. As 2020 was such a massive year for the metaverse and Non-Fungible Tokens (NFTs), it's no wonder that virtual land has become a hot topic.
Some NFT sales of land have reached prices greater than properties in the physical world, making the concept difficult to grasp for some. In fact, there are actually a lot of similarities between digital and typical real estate. So what is the metaverse and how to buy digital real estate? If that’s what you’re trying to find out, read on!
What is the Metaverse?
The metaverse is an online, virtual world that will combine multiple aspects of our digital and real lives, including work, socializing, and recreation. 2021 saw many tech giants, including Meta (previously Facebook), Microsoft, and Epic Games, begin developing and exploring the space. Blockchain technology plays a crucial role in the metaverse as digital ownership, identity, and economies are central concepts.
What is Digital Real Estate?
As mentioned, metaverse projects are digital worlds that users can usually explore with 3D avatars. SecondLive, for example, provides areas and venues for concerts, conferences, and expositions. While projects like SecondLive don't let users purchase a permanent virtual reality space, other metaverse worlds do. Developers create large maps of land as divided into small parcels as digital real estate to sell on the market.
To represent the unique ownership of the area, users purchase NFTs linked to a particular plot of land. You can purchase these plots through a land sale directly from the project or on the secondary market. Exactly what you can do with NFT land depends on each project.
How to Buy Digital Real Estate
The hottest metaverse platforms for purchasing digital real estate are Sandbox and Decentraland. For both apps, you’ll need to download a Chrome extension called Metamask, an online wallet designed to hold digital assets. Next, you must fund it with either SAND (for Sandbox plots) or MANA for (Decentraland properties), two ETHereum-based cryptocurrencies.
Once your Metamask wallet is sufficiently funded, you’re ready to shop for virtual real estate. First, let’s dive into how to purchase plots on Sandbox.
Sandbox
1. Go to TheSandBox.com/game.
2. Click on Market.
3. On the left panel, scroll down to NFT Type and click on Lands.
4. Choose the filter that best fits your needs (e.g. Newest, Oldest, Lowest Price, Highest Price). For this tutorial, I’ll be selecting Lowest Price.
5. Select the plot of land that catches your eye and click on Buy.
6. After clicking Buy, OpenSea (an NFT marketplace) will launch, taking you to the property listing. Link your funded Metamask wallet to the site by clicking on the wallet icon.
7. Take note of the highest offer as you’ll need to outbid it to get the seller’s attention. Click on Make Offer.
8. Next, input how much you’d like to offer in SAND (make sure you have enough SAND in your Metamask wallet or you’ll get a “Not enough SAND to make offer” message). Note: You can buy SAND on Binance or KuCoin and transfer it to your Metamask wallet.
9. Select how long you want your offer to last: 3 days, 7 days or a month. If you prefer, you can set a custom date. Click on Make Offer.
10. Your Metamask wallet will pop up and you’ll be prompted to click on “Sign” (to validate your intention to make an offer on the OpenSea listing).
11. Finally, you should see your offer appear under Offers. If your offer gets accepted, you’ll be notified via email.
Decentraland
As mentioned, before purchasing anything on Decentraland, your Metamask must be funded with a cryptocurrency called MANA. You can buy MANA from Coinbase, KuCoin or Binance and transfer it to your wallet. Once you’re set, here are the steps to buy digital real estate on Decentraland.
1. Go to Decentraland.org
2. Scroll down to Trade and click on Start Browsing.
3. Click on Sign In followed by Connect.
4. Click on Metamask. This will allow the website to see the funds inside your wallet. Note: If you get a “Could not connect to wallet error,” click on the Metamask icon on Google Chrome and click on Next followed by Connect.
5. Click on Land (located on the top-left corner).
6. You’ll land on a page that shows you a map of Decentraland (all the plots that are on sale are highlighted in light blue).
7. Click on a plot of land that has a price and location to your liking.
8. Click on Buy and follow the prompts to the plot of land.
Keep in mind that location is just as important in the metaverse as it is in real life. Landholdings next to plazas (green areas) and districts (blue areas) have more value than plots on the outskirts of Decentraland. The downside is that they’re the most expensive on the map, but there’s a possibility that they can appreciate the fastest and make greater profits for owners.
Another downside you must consider is that, unlike PolkaCity, Sandbox and Decentraland does not dole out passive income to landowners. As of this writing, investors make money by buying up properties, waiting for an increase in value and flipping them for profit.
Tips before buying your first Digital Real Estate
Buying virtual land in the metaverse should be treated like any other investment or financial transaction. Make sure to do your own research and consider the points below:
1. Buy your virtual land from a reputable source. If you purchase the land through a project's sale, make sure you have the correct official link. If you buy land from someone else, never make any transfers directly to their wallet. You should always make the sale through a trusted, reputable marketplace or crypto exchange. OpenSea would be a good place to start.
2. Decide if you want to buy or rent your NFT land. Depending on your needs, you might not need to purchase a piece of land. For example, you might want to host a single event in a popular district. If the platform you're using supports rentals, then the price you pay depends on the plot's traffic, closeness to other important plots, and its size.
3. Consider the NFT land's project carefully. The project you choose will determine the utility and partly the cost of the NFT. If you want to speculate and resell your land, look at the project's fundamentals, such as popularity, number of users, and team. If you're going to sell advertising space or take part in another use case, research which metaverse platforms are most suited to your needs. Not all NFT projects will succeed, so make sure to consider the financial risk before buying NFT lands. If you buy land that has no use or demand, you might end up holding it forever.
Closing Thoughts
To many, the idea of virtual land sales might seem far-fetched. However, you only need to look at the rise of NFTs, digital collectibles, and the metaverse to understand how NFT land has developed. The idea isn't much different from owning a website or other virtual space.
Now that you’ve learnt what is the metaverse and how to buy digital real estate on two of the most popular metaverse projects, we’ll leave the rest to you. But as a word of caution – although metaverse properties are all the rage, they’re still highly speculative assets. The metaverse market could plummet at any time, leaving you with worthless digital real estate. Hence, do invest responsibly.
