It’s the new property boom which is set to turn millennials into millionaires – but none of the new homes they’re snapping up actually exist, and never will.
Digital real estate in the virtual metaverse is the hottest property on the market and tipped to be worth trillions of dollars within just two to three years.
‘It’s going to be huge,’ Curtin University digital expert Professor Vidy Potdar predicted. ‘People are going to make a lot of money on it.’
It’s the new property boom which is set to turn millennials into millionaires – but none of the new homes they’re snapping up – like this one – actually exist…and never will
Early adopters are already paying millions to get in on the action to snap up tracts of digital land to build virtual online homes which they will then sell to new users.
Some say that it may already be too late to get on board to make the biggest profits as prices are already starting to soar worldwide.
But others predict even a small investment now could pay huge dividends – and may be enough to put down the deposit on a real home…or even buy it outright.
‘Some might see it as owning something that doesn’t actually exist – but the more savvy ones will see it as a very big investment,’ says Sydney-based metaverse developer, Colina Demirdjian.
‘Ultimately if you’re getting in early, it becomes an investment that can grow exponentially quicker than owning a real home in the in the real world.’
Colina Demirdjian and her identical twin Hripsy are applying the finishing touches to their own metaverse, Diverse, created by their Sydney-based app company Double Trouble
In the US, the Sandbox metaverse has seen virtual land prices soar from US$25 for a plot to US$30,000 after rap star Snoop Dog moved in and set up a presence.
Digital real estate developer Everyrealm paid a staggering US$4.3 million for a tract of land in Sandbox too, a record amount in the sector which is dominated by Sandbox, Decentraland, Cryptovoxels and Somnium.
The virtual property bubble is exploding on the back of massive investments by Bitcoin millionaires who made huge cryptocurrency profits after small investments a few years ago turned into life-changing fortunes.
They are now ploughing their cash into the newly-emerging metaverses in the hope of repeating their digital speculation success.
It has been further fuelled by Facebook’s parent company rebranding as Meta and founder Mark Zuckerberg pledging to invest massively in the virtual world.
The sprawling, realistically-rendered 3D environments aim to be better than real life, and somewhere users will want to live, work, play, socialise and shop.
The sprawling, realistically-rendered 3D environments aim to be better than real life, and somewhere users will want to live, work, play, socialise and shop
Futurist Mark Pesce warns the virtual world is all about perceived value only.
‘I call it un-real estate,’ the honorary associate of University of Sydney’s digital cultures program.
‘It’s a property deed to a place that doesn’t exist in the real world. It’s only redeemable in that particular plot. So it’s like a store credit that you can only spend in one store.
‘You might be able to get someone else to buy it – but that’s basically it.
‘The idea of where it gets its value from and how it holds that value is based entirely on how much bubbling ferment there is around a particular metaverse – and how much they can stir up people to make them think that these places are valuable.’
Most importantly for many millennials is the ability to reinvent yourself into any form you like without the need for cosmetic surgery, as a tweaked version of their real-life form or a complete transformation.
The worlds will be accessed by augmented reality glasses – where the real world and virtual world can merge seamlessly – or virtual reality headsets which immerse users completely in their artificial world.
But all that immersion will come at a price – and experts are predicting the values of virtual possessions will soar on the back of increasing demand and deliberate limitations to preserve value.
Everything will be for sale in the virtual worlds too – from virtual homes to virtual gadgets to virtual furniture and most especially virtual fashion.
The commercial side of the metaverse has already attracted global brands like Nike and JP Morgan who are setting up presences at the centre of metaverse world – which in turn drives up the value of virtual homes near the virtual CBDs.
Colina Demirdjian and her identical twin Hripsy are in the process of applying the finishing touches to their own metaverse, Diverse, created by their Sydney-based app company Double Trouble.
The former law students made a fortune in their 20s through a mobile phone app that created lifelike cartoon avatars and they are now ploughing the profits back into their new virtual universe.
It’s projected to be home to 30 million users with land prices already starting at $10,000 – and they are passionate advocates of the brave new online world.
Most importantly for many millennials is the ability to reinvent yourself into any form you like without the need for cosmetic surgery, as a tweaked version of their real-life form or a complete transformation
‘Last year alone, virtual real estate was worth $500 million in sales and this year it’s expected to hit $1 billion,’ said Colina.
She believes many companies will intertwine the real world with the digital world – and give you a virtual version of anything you order in the real world to have in your metaverse… and vice-versa.
TITLE DEEDS OR NFTS
Underpinning the virtual world are NFTs – non-fungible tokens – which are digital assets with ownership logged by blockchain.
Blockchains are complex algorithms which keep a secure log of digital items and who paid for them.
But they are essentially only a digital receipt – and because of the very nature of the internet, they do not give the owners copyright of their digital asset, which requires copies to be transmitted over the internet.
‘There was a case a couple of months ago of some folks who bought the NFT of a script draft of an early version of sci-fi movie Dune,’ revealed futurist Mark Pesce.
‘They thought that actually gave them rights to produce a Dune film.
‘They really had no idea that just because they owned this NFT, that they didn’t actually own the copyrights to the source material.’
But Colina Demirdjian compares NFTs to collectible trading cards which can often dramatically increase in value.
‘There’s a mindset shift that needs to be done for the general public,’ she says. ‘When you are buying something in the digital space, you are owning something of value.
‘It’s not tangible, but it’s still valuable. You can buy something, keep it, collect similar things or sell it someone else.
‘And it may give you prestige or access to certain groups or communities, or it can substantially increase in value.
‘And it’s yours to do with whatever you like.’
McDonalds have already begun work on creating a metaverse restaurant which will deliver whatever you order in the virtual world to your real world front door.
Adidas, Samsung and Coca Cola have also been quick to get in at ground level to expand their brands into the new online worlds.
Colina sees a day where you could buy an outfit at Big W – and instantly have the same clothes available in your virtual wardrobe too.
Likewise furniture from Temple and Webster or a television from Harvey Norman – or you could test drive owning a fishtank online before taking the plunge for real.
The biggest challenge for metaverse creators is attracting users and then making them stay – and Diverse aims to do it by making dreams come true.
‘We want to make it better than life,’ said Colina. ‘We plan on allowing everyone to live out their dream lifestyle and live their best life.
‘We want to bring a lot of realism where people can connect with individuals and inhabit a new land and just enjoy what we can do with technology.’
Professor Vidy Potdar says there will be an even simpler reason people will log in.
‘It’s fun!’ he insisted. ‘It’s a place you can go when you can’t go anywhere.
‘You can meet new people in the metaverse which you otherwise would not meet in real world.
‘It’s a different kind of experience for people and especially the younger crowd. They want to try something new.’
He added: ‘We are just at the beginning of what could be something really big and something quite transforming going into the future.
‘We are at that initial stage, the hype stage at the moment, where everyone is kind of excited. There is a lot of investment that is being poured into the startups currently.’
Others are more sceptical – but say if you are lucky enough to have some money you can afford to lose completely, it could be worth a gamble.
But they warn the window may already have closed on making massive money.
‘I would not advise people to make this investment,’ said Sydney futurist Mark Pesce.
‘If someone wants to take a punt and spend a couple bucks or even 100 bucks because it’s a risky investment – and maybe it’ll pay off big someday, but maybe it’ll go to zero – then there’s no problem.
‘If you go in knowing all of that, then you’re an informed investor and it’s your own money. You’re a grown up and you can make your own decisions.
Futurist Mark Pesce, honorary associate of University of Sydney’s digital cultures program, warns the virtual world is only about perceived value
‘But if someone is naive and being told, “Oh my god! There’s real estate here! You can make a real estate investment! You can afford it! It’s going to appreciate…”
‘Then that’s probably crossing a line…’
He added: ‘It is no longer early in terms of Metaverse land pricing.
‘It’s not like Bitcoin which is probably at the top of its market now – but it’s not early, and my gut feeling is that it’s already too late to make the really big profits.’
Either way, Colina insists it’s the future.
‘It’s going to be the next world,’ she says. ‘It’s the internet, but it’s web three. We’re making a transition from 2D to 3D
‘So if you want to be like socially and culturally cool, you will need to be in the metaverse.
‘It’s not going to happen on your phone. It’s no longer going to happen on Instagram. People are looking for more immersive realism and escapism.
‘You want to wear beautiful clothes, you want to buy beautiful property. This is going to be the place where you’ll have all those dreams come to life.
‘And that’s why the investment is going to be huge.’
Former law students Colina and Hripsy Demirdjian made a fortune in their 20s through a mobile phone app that created lifelike cartoon avatars like these ones of themselves seen here
ENVIRONMENTAL IMPACT OF NFTS
Everything you buy in the virtual metaverse will be most likely be logged as NFTs on the Ethereum blockchain.
The verification process of adding to that blockchain is highly energy-intensive and is called mining which is done by massive computer farms.
The blockchain system rewards miners with cryptocurrency for their effort, which has sparked its own massive digital Bitcoin mining industry.
Professor Vidy Potdar, director of blockchain research and development lab at Perth’s Curtin University which has developed a greener system called XPC
But the environmental cost of this process is huge and is said to be a major contribution to climate change.
Some estimate just one NFT can require the same energy as up to two month’s electricity use by a single EU resident.
As the metaverse expands dramatically in coming years, that environmental impact is set to get even greater and potentially more harmful.
Perth’s Curtin University has now addressed the issue by developing a new greener system called the XPC blockchain.
‘Bitcoin was designed to be energy intensive, because it is a completely trustless system,’ explained Professor Vidy Potdar, director of blockchain research and development lab at Perth’s Curtin University.
‘You don’t know anyone in the Bitcoin network. Anyone can download a copy of the Bitcoin and become a bitcoin miner.
‘The reason why Bitcoin uses the algorithm – which is called a proof of works – is as a way to ensure that the Bitcoin network is not compromised.
‘But security versus energy consumption is not related. You can get similar levels of security with less amount of energy if you design a blockchain with that as a criteria.
‘That’s what we did at Curtin’s Blockchain Research and Development Lab.’