Virtual Villa 🏝️

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Virtual Villa

On Monday, we talked about how a metaverse company, TerraZero, issued a virtual mortgage. The 2-year, $45,000 loan is the first mortgage to be issued in the metaverse and it’s a sign of the virtual real estate boom. According to MetaMetric Solutions, real estate transactions on the most prominent metaverse platforms totaled $501 million last year. And many experts believe sales could double this year as the metaverse grows in popularity.

Over a dozen platforms are selling virtual real estate and nearly every week, new platforms pop up. Sandbox, Decentraland, Cryptovoxels, and Somnium are known as the “Big Four ‘’ metaverse platforms, and they are currently dominating real estate sales. Sandbox leads the way with 62% of available land on the four platforms and three-quarters of all land purchases this year.

Republic Realm, an active investor and developer of the metaverse real estate ecosystem, paid a whopping $4.3 million for land in Sandbox. With their new virtual land, they are building 100 islands, each with its own villas. Ninety islands were sold on the first day for $15,000 each, and some are currently on the market for more than $100,000. Would you pay for a virtual island for $15,000? Many investors wouldn’t.

The key dilemma for investors is assigning value and risk to an asset whose scarcity is artificially created and whose future is unknown. This is also part of the reason some investors are skeptical about NFTs and cryptocurrency.

Despite the skepticism, companies, large brands, and investors are rushing to get in on the ground floor of the next digital Manhattan or Soho.

I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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