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Does the Metaverse also have a real estate bubble? The real estate speculator has lost everything

DATE POSTED:September 4, 2022

As a derivative of the blockchain, Metaverse real estate is naturally “hot and cold” with NFT and cryptocurrencies.

On September 1, the 2022 World Artificial Intelligence Conference opened at the Shanghai World Expo Center, and the Metaverse became the main topic at this event. Liang Youmei, President of Meta Greater China, delivered a video speech at the conference, saying that the Metaverse is the next chapter of the Internet, and Meta’s vision is to make the world more connected through the Metaverse. Perhaps when Neil Stephenson wrote the science fiction novel “Avalanche” 30 years ago, Neil Stephenson would not have imagined that the “Metaverse” would become the new chapter of the Internet. 

Although it is unclear whether the Metaverse will become the 3.0 version of the Internet, those who followed suit and speculated in the Metaverse a year ago may have lost their money. According to the latest report released by the Metaverse land information aggregation platform WeMeta, based on the relevant data of the six major overseas virtual real estate platforms, the average price has dropped from about US$17,000 per block in January this year to about US$2,500 in August. USD/block, a drop of more than 85%, while the weekly trading volume has also dropped from a peak of $1 billion in November 2021 to about $157 million in August 2022. 

Previously, in November last year, singer Lin Junjie announced that he had purchased 3 virtual real estates on the Decentraland platform for US$123,000, but as of now, the valuations of these three virtual lands have fallen by 81.5%, 80.1% and 80.4% respectively. In fact, not only Decentraland, but the virtual real estate prices of five other Metaverse real estate platforms such as The Sandbox, Voxels, SomniumSpace, NFTWorlds and SuperWorld can only be described as appalling. 

Last year, with the soaring market value of Robles after its listing, and Facebook’s renaming of Meta and its plans to launch the Metaverse, the concept of the Metaverse was all the rage, and it has the potential to become a new outlet. Limited by the development level of sociology, whether it is “Roblox”, “The Sandbox” and other Metaverse communities, they all choose the idea of ​​​​simulating the civilized world at the real level to build the Metaverse, which leads to the fact that there are also Metaverses in the Metaverse. The concept of “land”. 

Since there is “real estate speculation” in the real world, the Metaverse, which is known as a replica of reality, can of course also “real estate speculation”. In fact, the gameplay of real estate speculation in the virtual world is not the creation of these Metaverse real estate platforms. As early as many years ago, games such as “Fantasy Westward Journey” and “Tianya Mingyue Knife” have given transaction attributes to the real estate or home system. However, what is different about this round of real estate speculation in the Metaverse is that real estate speculation in online games is often due to the fact that the house itself is bundled with fictitious values. Players are not buying “houses” but these values. ” is closer to the real land. 

The developers of the Metaverse platform describe it as a world with civilization attributes, and land is undoubtedly an indispensable resource for building a civilization, so it naturally has the value of hype. For example, American rapper Snoop Dogg purchased virtual real estate in order to hold private virtual concerts, parties, art gallery exhibitions and other activities here, and expand his acting career from reality all the way to the Metaverse. 

But the question is, can real estate in the Metaverse really follow the same logic as in reality?Obviously not. The reason why the prime locations in the real world are valuable is because the real world must follow the rules of physics. The limitations of physical conditions prevent us from arriving at any point on the earth in an instant, which also highlights the value of the location. But what the Metaverse breaks is geographic isolation, and the real Metaverse obviously shouldn’t have the concept of location. 

Not only that, the NBA Dallas Mavericks owner and well-known investor Mark Cuban once said, “Real estate is valuable in the real world because land is a scarce resource. However, this scarcity does not necessarily apply to yuan universe”. As we all know, real-world houses are valuable because they are also tied to other values ​​such as education, medical care, work, etc. In other words, economic activity measures the value of real estate. 

Manhattan 200 years ago was not an inch of land, and Shenzhen was only a small fishing village before the reform and opening up. It was through the development of human economic activities that the two have become prosperous today. Regrettably, at the current level of the Metaverse, it is impossible to support an independent cycle of economic activity in it, or there is nothing that can be done in the Metaverse that cannot be done in the real world. The main attribute of the current Metaverse is entertainment, not production. 

Chen Xiaohua, executive director of the Metaverse Industry Collaborative Innovation Center in the Science and Technology Park of Beijing University of Posts and Telecommunications, said that virtual real estate is essentially a type of NFT, and its intrinsic value is generally based on its scarcity (coordinates/land type). In fact, whether it is real estate speculation or NFT in the Metaverse, when the Metaverse cannot have its own economic activities, it is destined to be combined with the application scenarios of the real economy, but as long as virtual reality technology is not widely popularized, it is destined to be It’s just empty talk. 

Therefore, there is only one thing about real estate speculation in the Metaverse that is very similar to the real world, and that is the need for a steady stream of “takers”. 

Since virtual real estate enjoys the uniqueness and scarcity brought by NFT, it will inevitably be dragged down by the concept of NFT. Since May of this year, affected by the thunderstorm incident of the algorithmic stable currency Luna, the cryptocurrency market has plummeted, and even NFT has entered the downward channel. Coupled with the rumors of various NFT operators running away, NFT itself has also begun to encounter problems. cold. In contrast, a house in reality at least has residential attributes aside from other factors, but a house in the Metaverse is really just a string of data. 

And as a derivative of the blockchain concept, the real estate of the Metaverse will obviously be “hot and cold” with NFTs and cryptocurrencies.