A property company’s recent purchase of a site in a trendy part of town for £1.9 million would have caused few eyebrows to be raised, except for the fact that the plot was not real.
Investors are spending thousands, even millions, of pounds on virtual blocks of land that exist only online.
Companies are buying what they hope will soon be prime real estate in the metaverse — a digital world that Silicon Valley executives believe will be the next evolution of the internet.
The metaverse is expected to be a series of digital worlds that people can jump into, either by using virtual reality goggles or simply through their computer, where they will be able to meet friends in digital form as well as conduct work meetings, go on dates, attend concerts and visit art galleries.
One of the most popular of these worlds to have emerged for investors is Decentraland, described by The New York Times as the “metaverse’s answer to Silicon Valley”. Its city, Genesis, is accessible to anyone with a computer and has a district for shopping, fashion, arts, gambling and even work conferences. It is divided into 90,000 parcels of land, each representing about 50ft square.
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In a sign of the burgeoning craze for digital real estate, plots in Decentraland cost about $20 in 2017. They are now worth about $10,000 each.
The plots rose in value sharply after Mark Zuckerberg announced in October that he was changing Facebook’s company name to Meta. He said that he would be investing billions of dollars in creating the infrastructure for a metaverse, calling it the “next frontier” for connecting with others online.
Sam Hamilton, community and events lead at Decentraland, said that while the amount of money changing hands for virtual sites might surprise some people, such deals were likely to become more prominent.
“In five years, instead of clicking on a two-dimensional website to buy the latest fashions, you will walk down a virtual high street in a three dimensional space,” Hamilton said. “You will choose garments and try them on and you will care as much about dressing your avatar as you do in real life. If you think along those lines then what’s a shop in a fashion district worth if it has a global audience, where people are spending hundreds, if not thousands, of dollars on digital wearables?”
A plot in the fashion district at Decentraland was bought by Tokens.com, an American company, for $2.5 million. The company, which owns half of Metaverse Group, is considered one of the first virtual real estate businesses.
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It plans to rent out the site to luxury fashion brands. People visiting the space will be able to buy digital clothing for their avatars or maybe see garments they can order for the real world.
Other companies have entered the digital world, including Coca-Cola, which has a giant can that can be entered, and Sotheby’s, the 277-year-old auction house which launched a site in June to show digital art. “This was science fiction when I was young,” Hamilton, 48, said. “It’s real life now”.
The virtual blocks are bought with Mana,Decentraland’s cryptocurrency, with one Mana worth £2.59 at present. Any purchase is completed as a nonfungible token, a unique code that records the owner in a digital ledger.
