Why Is Digital Land Valuable, and How Does One Buy It?
The concept of the metaverse has risen to prominence, even though it’s not a new term in the tech and gaming worlds. This newly found level of popularity could be attributed to the rise of blockchain technology, which has made it possible for investors to own virtual land and other goods in a 3D universe called the metaverse.
In the 1992 novel Snow Crash, Neal Stephenson described a metaverse where virtual real estate can be purchased and sold. About 30 years later, several projects have created new digital worlds that allow users to do just that and much more.
What is virtual land and why is it valuable?
Virtual land, also known as NFT or metaverse land, refers to an area of digital land investors can own in a metaverse. It is ownable because it exists as a non-fungible token (NFT), a digital asset that represents both virtual and physical items on the blockchain. So, when buyers obtain virtual land, they are actually holding an NFT in a personal wallet.
The virtual land NFT contains metadata, which is essentially information about the digital asset. For instance, such metadata contains details like the NFT name, description, and associated images. Buyers can use these details and the transaction history to verify NFT ownership. Also, NFTs are unique because the information they contain varies from token to token. For instance, two land NFTs within a particular metaverse are different because they have varied coordinates and their digital acreages aren’t the same. That means one cannot just interchange one land NFT for the other. If done anyway, a new type of land NFT is received. This makes NFTs as well as the virtual land non-fungible.
Months ago, investors had been spending thousands and millions of dollars on NFT land with the belief that they are potentially buying something that could be of even more value in the future. One strategy revolved around the anticipation of pre-buying advertising space.
The theory is that the metaverse could, in the future, become like a type of social media, attracting millions of people who will spend a lot of time exploring these digital worlds. This will provide an advertising opportunity for landowners, who will capitalize on the large traffic of people passing by their digital land each day. The advertising potential of digital land could, therefore, influence its prices. This shows that utility (purpose of the land) is a factor that affects the price of virtual land. Other factors include the platform a specific plot of land is native to, speculation, and location within the respective metaverse.
Large projects are likely to attract more interest and a higher user base than smaller projects. Hence digital land prices could be higher on these platforms. Location is also a major price determinant. For instance, virtual land inside Snoop Dogg’s Snoopverse in The Sandbox metaverse could attract higher prices in the future as owners seek to profit from this popular location and investors are likely to pay top dollar for the best spot. In 2021, for example, an NFT investor bought virtual land worth $450,000 in Snoopverse to become Snoop Dogg’s next-door neighbor.
What you can do with digital land
Similar to physical land, virtual land has many potential uses cases, of which many can be monetized. Here are several uses of NFT land:
- Flipping it for a profit: Investors can buy virtual land and sell it later for a higher price when demand increases, thereby making a profit. This is similar to how real estate is held in the physical world with the anticipation of selling it for a profit.
- Advertising: If your metaverse land is in a popular area on a popular blockchain with many people passing by, you can use it as advertising space and start earning an income.
- Construct infrastructure: Investors can construct stores, casinos, clubs, and hotels on their metaverse land to create an exciting experience for other users and income streams for themselves.
- Hosting events: NFT landowners can host concerts, art galleries, community meetings, and conferences on their digital land.
- Service provision: Service providers like financial lenders can use virtual land as office space, allowing them to offer their services to other metaverse users. To illustrate, accounting firms PwC and Prager Metis International LLC have procured virtual land to deliver their services in the metaverse.
- Gaming: NFT land has a use in NFT games. Also, landowners can create mini-games on their virtual land to benefit other community members.
How and where to buy virtual land
You can buy virtual land on the primary marketplaces of metaverses like Decentraland, The Sandbox, Treeverse, Somnium Space, and Cryptovoxels. NFT land is also available for purchase on secondary NFT markets like OpenSea and Binance NFT.
Below is the step-by-step process for buying virtual land:
- Visit the metaverse marketplaces to look for a virtual land sale. Alternatively, visit a secondary marketplace of your choice to search for more options. Pay attention to the price, the blockchain, location, as well as the total land area.
- After finding the virtual land you want to acquire, get a wallet compatible with the blockchain on which the NFT is based. For instance, the NFT land on Decentraland is on the Ethereum blockchain. That means you need a wallet like MetaMask to make the transaction.
- Next, purchase the platform’s token on crypto exchanges like Binance and Coinbase. For example, you need MANA to buy digital land on Decentraland and SAND to obtain metaverse land on The Sandbox.
- Buy Ether to pay for transaction fees.
- Once you have the respective platform token and ETH in your wallet, go ahead and click “Buy.”
- Confirm the transaction and wait for the NFT to arrive in your wallet.
Procuring NFT land is as easy as following the steps above. However, keep in mind that virtual land is an investment unlike any other. It requires caution and a lot of research before purchase and high price volatility is to be expected.