NFT Virtual Land platform prices increase by 42,000% in one month
Plots of virtual land are sold at astronomical prices; some NFT Next Earths in Vatican City grew 42,000% in one month. These aren’t works of art, rare wines, or antiques – they’re digital real estate on a blockchain.
In Next Earth, a tile (or one hundred square meter plot) in Vatican City sells for over 42 BUSD, while Monaco sells for over 14 BUSD per tile and Macau sells for around 4 BUSD per tile. Oddly enough, the famous Arc de Triomphe was initially purchased for around 100 BUSD and resold for 3,400 BUSD on the first day of the Next Earth NFT market launch.
But what does this astronomical increase in value mean for users looking to buy virtual real estate? What role does scarcity play in driving up prices, and how can buyers determine if an investment opportunity is here to stay?
The answer goes back to something central to Economy 101: supply and demand. People are willing to pay large sums for virtual real estate, creating what looks like an opportunity for first-timers who know where the demand is.
Supply and demand in the metaverse
The supply of virtual land is currently limited, while demand is exploding. The term “metaverse” was coined by Neal Stephenson in his 1992 sci-fi novel Snow Crash. It refers to a virtual existence that exists independently of the real world.
Besides Next Earth, examples include Second Life and Minecraft, both of which are owned by video game companies. There are also many other metaverse in development. When NFTs become mainstream, users will be able to truly own pieces of Metaverse, so the demand for virtual land will only grow.
Since these metaavers have yet to become popular outside of tech circles, there haven’t been many ways for ordinary people to buy NFTs. With the launch of Next Earth’s new NFT Marketplace, however, that is about to change.
Scarcity increases the value of TVN
The scarcity of virtual land, coupled with the possibility of owning real estate in an entirely virtual world, has created a market for blockchain-based real estate that few would have predicted just a year ago.
Naturally, there is fierce competition among landowners for virtual land plots. The result has been dramatic price increases, especially in virtual counterparts in Vatican City, Macau and Monaco.
Why are people paying so much for digital real estate? Because it’s rare! There is only a limited amount of tiles available. And while most virtual tiles aren’t built (i.e. turned into virtual buildings or resource-generating assets), those tiles will still determine who will live in Next Earth’s metaverse and participate in its activities.
What to look for when buying NFT
With non-fungible tokens, it’s important to understand how they compete with their traditional counterparts, such as real estate and gambling, and whether or not they have what it takes to be successful.
Real estate remains one of the most popular means of investment for people, despite the current housing shortage in the country and the rapid appreciation of assets like city apartments. Why? Real estate has high fixed costs but low marginal costs, which means that when a property is renovated or added, these expenses do not increase as much as those incurred by other sectors.
In the virtual metaverse, real estate is owned for other reasons: users want to have custody of assets in the digital realm and claim a stake in something that interests them, be it their hometown or a famous landmark.
Linden Lab, developer of Second Life, is an innovative company that has become an unlikely success after capitalizing on technological advancements by creating a more engaging virtual world through avatars.
Today, projects like Next Earth are taking the idea of virtual land to the next level with NFTs, which for the first time allow users to truly own virtual property on a replica of the Earth.
Photo by Morgan Housel on Unsplash