This is the last of five articles that follow our first article, Myths About the Metaverse: True or False?
The NFT market is set to reach $13.6 billion by 2022, showcasing a 35% CAGR from 2022 — this highly suggests that NFTs aren’t going to go anywhere anytime soon.
While there is skepticism surrounding the longevity of NFTs, and they are often seen as the hype that may disappear, this doesn’t change the fact that they are currently the only way to digital copyright assets in the blockchain.
One of the significant aspects driving the NFT market is the demand for digital art. Much like in the physical world, the majority of physical art holds more sentimental than monetary value — NFTs have flipped this concept on its head. Think about brands like Bored Ape and CryptoPunk, these brands have created, sold and traded their digital artwork on the blockchain with huge success — in 2022, sales of the Bored Ape Yacht Club NFTs reached over $1 billion USD.
NFTs are a fundamental technological evolution that facilitates ownership of a certifiable unique digital file without the need for a central authority to certify it. And while Bored Apes might go out of fashion, the technology is already being embedded in countless applications and use cases on a global scale.
Blockchain was founded by the anonymous persons behind bitcoin — under the pseudonym of Satoshi Nakamoto — back in 2008, and it’s been growing steadily — despite the technological limitations that have slowed its progress — ever since.
With this in mind, the idea that NFTs will simply fade away is not necessarily true due to the fact that they are reliant on technology which has since taken a foothold within today’s society. The key is to see past NFTs as being solely art-based digital assets, and instead, look at the potential they hold in terms of showing proof of ownership The Metadata that is linked to these different types of NFTs will enable real progress in the area of proof of ownership for individuals, whether that’s account IDS (Intrusion Detection Systems), in-game assets or event tickets.
The majority of these digital assets should have some form of utility or value associated with them being digital-only products. However, if you were to purchase a VIP pass that grants access to a whole library of video games, then whether it’s sold on Xbox or whether it’s sold on a Metaverse platform is completely irrelevant. For this reason, it could be said that consumers don’t necessarily care about purchasing digital-only assets.
So far, NFTs are still niche — we are yet to socialize these experiences on a large scale — it’s like saying nobody is interested in paying to advertise online. Of course, that was the case in 1995, but if those experiences are socialized, then global-scale adoption will soon follow. Is a tweet being YOUR tweet valuable to you? If you use Twitter, then it surely is because you have socialized that platform, but those who don’t use or see the value in Twitter, don’t care.
According to the recent survey, 49 US citizens (aged 20–60) on Amazon MTurk to find out how much people were willing to pay for their avatar’s wardrobe — 64% of metaverse users said that digital fashion should have the SAME value as physical fashion, and 25% thought it should even have a higher value (because it has more utility), and only 11% thought digital fashion should be priced lower. Of those who had no Metaverse experience (yet), 53% thought that digital fashion should have a lower value than physical fashion and 47% of ‘regular online shoppers’ would be willing to pay the same price for digital fashion as for the physical item.
This just goes to show that the value of digital assets such as fashion (avatar clothing) is mostly determined by whether people see a use for it. Or, simply whether they have been to the Metaverse or have an avatar, how connected they are or how much they would like to dress their avatars and appear in a certain way, digitally.
In the SPACE Metaverse, users can create NFT-based avatars for every occasion, for example, when users want to showcase their alter ego — people will be changing their avatar’s characteristics like they change clothes today, it will all depend on the occasion.
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Myth #10: Is Buying Virtual Land a Good Investment?
The BAYC (Bored Ape Yacht Club) isn’t just about cool monkey NFTs…
BAYC has been in the news recently due to another Metaverse project — Otherside, which relates to selling virtual land in the form of NFTs. Earlier this year, the brand put 55,000 land leases up for sale, and in one particularly good week, they secured 700 sales, with an average parcel price of 1.5 eth.
And they aren’t the only ones making waves in virtual real estate — Sandbox is boasting 160 land lease sales, and Decentraland has secured 40 sales for roughly 1.5 eth per parcel — and there are many more.
Yet, many people are still saying that buying virtual land isn’t a good investment, and these people are the same ones who said that Bitcoin would amount to nothing when it was worth $0.00001 USD. However, the use cases mentioned above grossly prove this theory wrong — buying virtual land has turned into a profitable business for many.
With dozens of Metaverse platforms online offering virtual land for sale, the key to profitability will be diversification. Even with this in mind, it’s highly likely that around 90% of platforms will go to zero, but for the remaining 10%, they will generate significant value.
‘Virtual land’ is poised to be the new domain name equivalent of the 3D internet, with the difference that ‘geographical’ proximity (in the virtual sense) will determine value rather than name. Virtual land has the same price dynamic as physical land in the normal world — every virtual land offers utility based on its location in the Metaverse. Therefore, virtual landlords have the market opportunities to either use the space as a business or rent the place out — which is converted into the yield. Again, like physical land investments, investing in virtual can be good if the investor conducts adequate research and calculates land cashflows and profitability.
Just like buying physical land — there’s always an associated risk of it being — or turning — into a bad investment.
Asking whether it’s a good idea to invest in virtual land is like asking how long a piece of string is. The real issue is that based on the current market condition, risk-averse investments are generally not the best approach for any seasoned investor because of the market capitulation. A recession is underway, and global economies are going to need at least a year to actually bring inflation to a standstill and reduce consumer spending — this will result in a very drastic change in disposable income from the low to mid-income user base.
In retrospect, virtual land isn’t necessarily a bad investment but it is not a wise one in the current market as the ROI would not be the same as it would have been a year ago.
As with any investment, it depends on the investor’s profile — it’s like saying stocks are a bad investment, some might be and some might not be. Investors will need to understand the nature of the investment in each virtual land (the volatility of the asset, the expected return within a certain timeframe, risks, etc).
Virtual land — along with NFTs in general — are on the higher risk end of the portfolio for now. Instead of putting money into things they are convinced will go up, investors should instead look at investing in something that has value to them. Yes, of course, things may go up, but if you’re not sold into it yourself, how can you expect others to be? That’s a general investment rule — believe in the product first.
At SPACE, we don’t think of virtual land as equivalent to physical land, we think of it as a domain that you own. The domain metaphor will help to prevent you from making bad purchase decisions. But yes, it does matter if your ‘domain’ is in a remote location in the Metaverse or at a popular central place and who your neighbors are, so choose your location wisely, depending on your goals and reason for purchase.
Join the SPACE Land Sales, where we’re enabling earning of $SPCE through a unique staking mechanism called Prestige Based Staking. Land unlocks higher Prestige NFTs which enables higher earning potential of $SPCE tokens.
See you in SPACE!
