In this article, we dive deep into the metaverse exploring opportunities surrounding investing in virtual real estate. Plus, we discuss several elements to consider when learning how to buy real estate in the metaverse. This includes using a Web3 wallet and having a solid investment strategy. Finally, we’ll explore the different reasons why so many are looking to buy real estate in the metaverse and how this could be a profitable opportunity.
At the end of this article, you will understand how and where to buy real estate in the metaverse. However, you will need to be familiar with investing in cryptocurrencies before investing in virtual real estate. For readers who have yet to invest in crypto assets, we strongly encourage you to see our Crypto for Beginners course. Moralis Academy offers expert guidance for investing in crypto assets for the first time in this course. Plus, students discover how to safely store assets offline. For the safest way to start investing, check out Moralis Academy today.
Exploring the Metaverse
Many different terms are flying around to describe the metaverse. Common phrases include “3D virtual worlds” and “simulated realities”. In science fiction, the metaverse is viewed as one single virtual reality where users can interchange with various alternative realities. However, in actual reality, the metaverse is a blend of different technologies, including virtual reality (VR), augmented reality (AR), artificial intelligence (AI), and distributed ledger technologies (DLTs) such as blockchain. In addition, there is no single metaverse application. Moreover, the term “metaverse” describes applications that provide mixed reality worlds that users access through VR headsets, AR devices, or browsers.
The metaverse is largely based on the physical world, promising an innovative digital extension of our existing environments. For example, the metaverse contains digital assets, including land, real estate, and cars. As such, many profit-making avenues available in the real world are transferable to the digital metaverse world. Moreover, opportunities in the Web3 metaverse apply to anyone, with no prejudicial or discriminatory gatekeepers. As a result, many people unable to gain access to financial development opportunities in real life (IRL) are turning to the metaverse as their primary source of income.
Metaverse Non-Fungible Tokens (NFTs)
Decentralized Web3 metaverse applications run on a blockchain network powered by a community of computers called nodes. Thus, transactions and financial activities on metaverse applications are immutable and transparent. Every asset within the metaverse is, strictly speaking, a piece of code representing a non-fungible token (NFT) written into the blockchain. NFTs are individual assets that are unique and cannot be broken down into smaller units.
NFTs are responsible for structuring the environment within a metaverse application. Surroundings can be interchangeable with land, real estate, decorations, experiences, wallpapers, and skins as NFTs. Plus, users, as individuals, are unique NFTs. All avatars, clothing pieces, accessories, hairstyles, and even tattoos, can operate as digital NFT assets as well.
Learning How to Buy Real Estate in the Metaverse
Learning how to buy real estate in the metaverse isn’t tricky. Unlike the real world and traditional estate agents, the metaverse land and real estate assets are borderless and permissionless. That means buyers don’t need to be local to the property, spend days arranging viewings, and weeks waiting for the transacting paperwork to go through. The metaverse operates 24/7 with transaction finality in seconds. Also, multiple potential buyers can view the same virtual real estate simultaneously.
Each metaverse application will have its own investment parameters for users. The type of cryptocurrency accepted for assets, the type of assets available, plus the utility and exclusivity of assets are individual to each platform. However, there are a few common things to consider when learning how to buy real estate in the metaverse. That includes how to transact, store, and monetize real estate within the metaverse.
Web3 Wallets
The first thing you will need to familiarize yourself with to buy real estate in the metaverse is a Web3 wallet. Furthermore, there are different Web3 wallets available, including “hot” (online) and “cold” (offline) wallets. Cold storage is always the safest option for HODLing long-term investments. However, akin to keeping some cash available in your wallet, users store funds in an online Web3 wallet to interact with different platforms.
Some centralized Web3 wallets may offer a custodial service, where the project will look after users’ private keys, which may require KYC (know your customer) identity documents. On the other hand, following the ethos of decentralization, most Web3 wallets are permissionless. As such, anyone with internet access can set up and use their Web3 wallet anywhere in the world.
Web3 wallets store a variety of crypto assets, including different cryptocurrencies and NFTs. For users hoping to buy real estate in the metaverse, they must have a Web3 wallet to carry out the transaction. As mentioned, there are many different wallets to choose from. However, most metaverse applications offer compatibility with the world’s number one Web3 wallet, MetaMask. Moreover, for a step-by-step guide to setting up a MetaMask wallet, save our “MetaMask Tutorial” article for later. Alternatively, see our Master DeFi in 2022 course at Moralis Academy. Here, students receive video instructions conducted by industry experts for installing and navigating the world-leading Web3 wallet. Start your Web3 journey the safe way with Moralis Academy today.
Metaverse Applications
Next, after setting up a Web3 wallet, is to head to your chosen metaverse application. There are many decentralized applications (dapps) to choose from, available on many different blockchains. The second-largest blockchain and the leading smart contract blockchain, Ethereum, hosts the most metaverse dapps. To be able to buy real estate in the metaverse, users will need to hold some of the metaverse platform’s assets or the native chain’s assets that the platform runs on. For example, the SAND token allows holders to purchase assets within The Sandbox metaverse application. In addition, users can invest in metaverse assets using Ethereum (ETH) as the asset of the underlying chain.
The necessary cryptocurrency is specific to each application. Check which cryptocurrency you need to purchase, and then head to a crypto exchange to buy the relevant asset. Sometimes, metaverse applications include a built-in exchange to allow users to easily invest in the native asset. Other times, users may need to use a separate third-party crypto exchange to buy and hold a platform’s token in their Web3 wallet.
Metaverse applications will often have an NFT marketplace with a list of assets available to buy. Often, if virtual real estate is on offer, it will be categorized and listed within the shop or marketplace of a metaverse application. Alternatively, some applications allow users to design and deploy their own NFTs in the metaverse. This creates opportunities for anyone to sell their own virtual real estate assets within an existing application.
NFT Marketplaces
An alternative place you may be able to buy real estate in the metaverse is through a third-party NFT marketplace. Offering virtual assets and goods via leading NFT marketplaces puts a project in front of new potential users. Further, NFT marketplaces can be a convenient way for potential investors to select, refine, and categorize assets they may be interested in.
Most NFT marketplaces will require users to have a Web3 wallet to buy any NFTs. However, not all do. The leading NFT marketplace, OpenSea, allows investors to buy NFT assets with their debit or credit card using the third-party payment provider, MoonPay. As such, this lowers the technical hurdles for many investors. However, to transfer a digital asset such as virtual real estate between an NFT marketplace and a different metaverse application, users will need a Web3 wallet.
Investment Strategy
Above all, no matter the platform or application, you must create an investment strategy for buying real estate in the metaverse to be profitable. Jumping into an investment without any prior research can be a costly move. Before you buy real estate in the metaverse, evaluate the strength and popularity of the metaverse project. Does the project have a roadmap for development, scalability, or sustainability? Is this application a “flash in the pan” pump-and-dump scheme, or does it have a solid team of developers, advisors, and a history of continuous growth? Make sure to do your own research before investing in any assets.
Other elements to consider in the investment strategy are the length of investment and any utilities during the investment period. Some people try to buy assets at a discount during the early rounds of a project’s development, then flip the assets for a profit when the project launches. Other investors may consider holding an investment more long-term. Further, holding the investment for a longer period creates additional avenues for generating income. The timing of an investment can also be significant. For example, investing in real estate towards the end of a bull market means you may take a loss during a bear market. To learn about the best ways to invest during a downturn in the markets, see our “How to Invest During a Crypto Bear Market” article. Or, to learn more about why the market fluctuates, save our “Understanding Crypto Crashes” article for later.
Why Buy Real Estate in the Metaverse?
The metaverse is a futuristic and exciting concept for many people, creating virtual economies with sound money principles backed by computer science and mathematics. The first wave of NFT hype in the metaverse was with in-game assets – interoperable across different blockchain gaming applications. The second wave was the launch of metaverse land, with many metaverse projects selling all available land plots during the initial sales rounds. Now, there appears to be a growing trend of people wanting to buy real estate in the metaverse. Below, we discuss a few reasons as to why that might be.
HODL Investment
The word “HODL” is an abbreviation for “hold on for dear life”, a popular saying among the crypto community. Just like virtual land, finding quality real estate in promising up-and-coming projects could prove a profitable investment in the future. Plus, HODLing virtual real estate allows investors to earn additional passive income avenues with the investment.
Offer Goods or Services
If you have your own piece of real estate in the metaverse, you can easily set up an NFT marketplace within the space. As a virtual retailer, you could sell a range of virtual goods exclusively available from your estate. Or, you could tokenize metaverse experiences that can only be purchased or experienced within your space.
Earn a Passive Income
If you don’t want to create your own virtual business, you could rent out the real estate to other people. Also, as the cryptographic owner of the digital space, you have full autonomy over the time and cost parameters for renting. Doing this requires minimal oversight. Renting out real estate helps other entrepreneurs that are seeking space to sell goods or services. Plus, you could receive commissions on any assets sold for doing so.
Virtual Renovations
For more creative entrepreneurs with more time available to dedicate to a project, you could opt to run a virtual renovations business. For example, investors could buy real estate and then somehow add, redesign, or enhance the existing asset. Afterward, they could sell it for a profit. Moreover, as any adjustments to an asset’s makeup or ownership are fully transparent on the blockchain, virtual renovators would have detailed public property portfolios of their work.
Exploring How To Buy Land in the Metaverse – Summary
The emergence and development of the metaverse bring many investment opportunities in many novel ways. The cryptographic security, immutability, and transparency of blockchain technology make it ideal for underpinning digital assets in the metaverse. Following many successful virtual land sales in 2021, the focus has shifted towards people seeking how to buy real estate in the metaverse. Akin to the passive income opportunities that come with owning real estate in real life, purchasing real estate in the metaverse can be a profitable investment.
In real life, purchasing real estate is incredibly challenging. On a global scale, most people never earn enough to ever purchase a property. Further, the legal and financial hurdles in transacting real estate are timely and expensive. On the other hand, investing in virtual real estate is permissionless. If you buy real estate in the metaverse, you can choose to rent it out, create a business, or hold it as a long-term investment. To be able to buy real estate in the metaverse, users will need to be familiar with Web3 wallets and using cryptocurrencies.
For the best place to learn about the basics of blockchain and Web3, check out Moralis Academy! Our Blockchain & Bitcoin Fundamentals course is the perfect place to begin your blockchain education. Discover the history of blockchain, how a global network of computers collaborates, and why the technology is so revolutionary. Alternatively, check out the Moralis blog! We provide a wealth of free educational content for readers to broaden their knowledge of Web3. For example, why not start with our “Rust & Solana” or “What is Web3?” articles next?
