In 2021, while most of the world was still in lockdown, a handful of crypto natives and retail investors made a killing buying and selling digital real estate. Business was booming.
But how did we end up here?
We put our Sherlock hat on, grabbed our pipe and trench coat to go out and do a little investigating ourselves. Would you be shocked if we told you that digital real estate had been around… for years!?
When you think about it, domain names, online ads, and websites are all pieces of digital real estate that are being traded daily. Arguably the biggest Bitcoin bull, Michael Saylor, has made more than $100 million, simply from selling domain names. Talk about a savvy businessman.
In this article, we’re focusing on the next evolution of digital real estate: virtual property in the Metaverse. This might be a heavy concept if you’re new to this, so let's unpack this.
Image credit: Ameer Basheer | Unsplash
When crypto natives talk about digital real estate, they typically refer to virtual property in a digital world, where the components are sold off as NFTs. What's this virtual world we’re talking about, you ask?
Well, there are many.
One way to think about digital real estate NFTs is as portals to different virtual worlds. Some worlds are similar to the physical one we inhabit, with busy corporate offices, exclusive social clubs, and gated communities with tennis courts and swimming pools. Other places are more futuristic, allowing you to buy virtual property in a Cyberpunkish landscape. In these metaverses, you can own a piece of virtual estate using a digital currency like SOL.
All of these projects are built around the concept of a metaverse. Crypto heads like to toss that word around like a bored baseball. But here’s a secret: Most of them don't have the faintest clue what it means.
So let's define it.
Image credit: Christine Sandu | Unsplash
When we speak of one Metaverse, we’re referring to all the metaverses that exist collectively. See, there are many metaverses, and we can pick and choose which ones we want to inhabit.
So, the Metaverse is an alternate virtual world where people can interact in countless ways. It could be a coworking space or an immersive 3D game.
The term gained considerable traction following Facebook's rebrand into “Meta”. We all watched Mark Zuckerberg's video, and thought, "So the platform that we used to play FarmVille on is now a virtual world? Not very subtle, Mark."
Think about all the things you do on a weekly basis, whether it’s hustling to get those dolla dolla bills (dolla dolla bill y’all), or having a blast with your friends in the kitchen for your weekly poker sessions. The vision for the Metaverse is to grant you the ability to do all those things, but in a virtual setting.
And you can do so much more.
Remember your friends Tom and Jerry from your World of Warcraft days? You know, the ones you spent countless hours with online because no one would talk to you in real life. So you wallowed away the hours chatting and beating in-game bosses that come in all shapes and colors… all without ever meeting them.
Well, in the Metaverse, you finally can meet them and play your favorite game immersively, providing you and your friends with an even richer in-game experience. This obviously won’t be the only use case for the metaverse. Buying virtual property presents another massive opportunity. If you want to become the Metaverse version of Mr. Monopoly, grab your top hat and monocle. After all, buying virtual plots of land and renting them out to earn recurring passive income can make you a Metaverse tycoon.
We have to make one thing crystal clear, though. Not all metaverses are created equal, and that’s by design. See, there are different metaverses that will serve specific use cases.
Centralized players like Microsoft and Meta are building their metaverses around virtual work and immersive gaming experiences. It's likely that you'll have a digital avatar that represents your real-life version, with all of your awesometacular swag.
Crypto metaverse projects on Solana offer the same utility as on other chains, but have one clearly distinct advantage for savvy investors: Better money-making opportunities. This leads us to the next logical question:
Why might someone buy a virtual plot of land? Isn't real real estate the "real deal"?
As we mentioned early on in this article, investing in virtual plots of land presents a booming opportunity. So much so that the entire Metaverse space is valued at a whopping $209 billion! But let's see how that holds up against the traditional real estate business.
The U.S. housing market had decades to reach its current market valuation of $43.4 trillion. That figure puts into perspective just how massive an opportunity digital real estate is.
Even if it reaches just 1% of the U.S. housing valuation, that means the digital real estate market would reach a $4 trillion dollar valuation. For context, that would be 4X more than Meta’s current valuation. (Stick that in your robot pipe, Zuck.)
Digital real estate has only been around for a few years, so you can bet your pretty Satoshis that a ton more exciting opportunities are coming out of this space. While speculating with digital real estate NFTs remains a risky venture, purchasing digital land will allow you to explore the space and gain exposure to any potential upsides.
Owning digital land comes with zero maintenance costs. This is probably the greatest advantage that digital property has over the real estate business. A digital asset like that has no water leaks, no broken furniture, and definitely no termites. (Did we mention, no annoying tenants who complain all the time? What a win!)
Real estate investments may generate passive income. (The same can be said of digital real estate investments, though!) The difference? The real stuff comes with maintenance costs, which tends to increase the more expensive the property is.
Look at any celeb’s house. While we all dream of living in a $20 million mansion, no one actually dreams about covering its maintenance costs. (Oh yes! $5000 for newly insulated window panels in the upstairs bathroom please.) Even the pool boy can get quite expensive when you own several of them.
Yeah, yeah. We hear you, real estate investors. Buying and renting things like a rental property also generates passive income. But it's hard to automate and become something more than your typical landlord (like a real lord) unless you scale considerably, which means buying a lot more property, and in turn adding significantly to your costs.
Buying digital land presents enormous income potential as well as cheaper customization options, with none of the time-consuming activities that come from owning real property.
What do we mean by customization?
In the traditional real estate market, if you want to customize your house, you have to pay for costly renovations and buy new furniture, decor, what have you.
Not so in the world of virtual reality. If the project allows it, you can completely customize your estate, from the way it looks to the people it hosts. It could be anything from a fancy-schmancy corporate office with a polished mahogany desk to a rave party house decked out with a DJ set, body paint, glow sticks, and everything in-between.
Word to the wise
Investors in digital and real estate share one maxim: Location, location, location. Jeff Bezos and Bill Gates live in the same neighborhood. (Coincidence? We think not!) Becoming their co-resident will cost you a lot more than buying a family house in downtown Seattle. The same holds true for digital estate. If you want to become a successful virtual estate investor, purchasing properties in a popular neighborhood with a lot of foot traffic is a must.
Investing in digital real estate is much easier and way quicker than doing it in real life. Real estate deals can take forever to get finalized. (Jumping through bureaucratic red tape can be a nightmare.) For example, closing on a house could take up to 60 days, depending on the type of house and the real estate transaction.
Buying digital real estate on Magic Eden, though? Couldn't be any more different. Let us walk you through the process. In its entirety, it shouldn’t take longer than 5 minutes if you’ve already got some SOL in your wallet.
Once you’re ready, here’s how to invest in digital real estate in 5 simple steps:
Step 1: Navigate to Magic Eden's website.
Step 2: Look for a project you like.
Image credit: Tanyo Gochev
This is the most crucial part of the process. This part will either make or break your career as a metaverse property mogul. That's why it’s essential to know exactly what you're looking for, because different projects offer various opportunities.
For instance, buying a LUX NFT gives you access to a metaverse that combines social and gaming elements. Compare this with a project like Solsteads, which grants you an estate for hosting virtual art.
For the purposes of this article, let’s buy a LUX NFT.
Step 3: Log into your wallet.
Let’s use the Phantom wallet for this article. If you’re not familiar with it, here's a quick guide on how to set it up.
Image credit: Tanyo Gochev
Step 4: Find the right NFT by studying the attributes of the property.
Image credit: Tanyo Gochev
The color of the card determines the type of property we are looking at. A green one represents an apartment, a red card stands for a duplex, gray signifies a condo, light brown is the color assigned for penthouses, and a white card gets you a mansion.
Let's start small and buy an apartment.
Step 5: Connect your wallet and press “Buy Now”. And you're done!
We’re still very early in the digital estate space, especially on Solana. Projects like LUX, Portals, and Sovana are the first generation of Solana-based metaverses, and more like them will follow suit soon enough. So it makes sense for us to dip our clammy hands in and buy up some sweet, sweet digital estates.
Doesn't have to be a big investment either. All old school lords of the land started out with a single unit and slowly built up their portfolio. You can follow the same strategy and become even more successful, given that you'll be operating in a nascent industry.
So start small by buying just a single digital estate NFT, and go from there. That purchase will help you get some skin in the game, and take advantage of any additional opportunities that may arise. And we can guarantee that there will be plenty of those, especially on Magic Eden.