What makes digital real estate so valuable?
Over the past two years most remote workers will tell you that they are tired of zoom meetings or video chats and often say they have ‘zoom’ fatigue. The process of being in front of the camera interacting and seeing yourself for hours on end is emotionally and physically draining. It’s a new kind of performance people suddenly have to prepare for. Now that almost everything is recorded there is this constant underlying pressure to ‘be perfect’ in ways never before needed.
Zoom addressed some of these issues by offering the option to separate participants in a video call from the physical rooms they are in. It’s sort of a 2d video hack to make zoom calls more engaging by giving users the opportunity to create their own private digital spaces. People personalize spaces with artwork, landscape scenery and anything which suited how they wanted to communicate or feel. But it’s at best, a temporary fix to a more substantial issue which is how do we want to redefine and reimagine work.
The value of digital real estate (land NFTs) is the promise of new metaverse platforms transforming digital engagement by having an immersive world with physical spaces, geography, spatial audio and the ability to move to completely new worlds in an instant.
By having a digital avatar of yourself in these blockchain enabled platforms suddenly you have all of these paint points solved:
- Do not need to travel
- Do not need to be on video (not everyone wants to be an influencer)
- Do not need to prepare physically to be in front of people
- Do not get fatigue from seeing yourself and have to keep your physical energy and expressions engaged and activated for hours on end.
The value of these web 3 digital worlds is determined by the activities users want to participate in there and how the spaces support or amplify those activities. Whether it is a live concert with friends from all over the world in a platform like Decentraland or teleportation to far off galaxies, being able to do something you otherwise would be unable to do in the physical world or on zoom is why there is so much speculation, interest and business investment in metaverse lands.
Digital real estate is not new to web 3 as early web 2 companies like the NY Times and Wall Street Journal sold ‘scarce’ advertising space on their websites. As these central entities grew larger and aggregated more data spaces could be sold and rented. What’s different about this next incarnation of the web is that digital assets like NFTs make it possible for individuals to uniquely own (and not just rent) these metaverse lands.
As the platforms get built out it’s conceivable that the NFT land lot you own could be a portal to another platform, or rented out, or even transferred and reused elsewhere. This creates a level of decentralization and tamper resistance not before possible with digital real estate. Because the records of NFT land sales are publicly accessible owners can be revealed adding greater transparency to the process.
Even though some will scoff at property ‘scarcity’ in these new digital worlds, the reality is that building out any well planned blockchain enabled digital twin in Unreal Engine 5 requires extensive planning, a highly skilled team, and extensive levels of bandwidth and cloud hosting. While virtual lands can be extended, neither developers nor investors have a vested interest in ‘inserting’ new buildings in virtual cities or changing pre-determined parameters of spaces. The value of the lands is directly tied to the sanctity with which the platform developers execute the project.
So proximity and location are very important for metaverse land investments. If you own the NFT land lot next to Snoop Dogg’s in Decentraland, you naturally will be constantly getting a ‘blue ocean’ of new users walking past your land. What this means is that the value of your land in the metaverse is predicated on what’s in local proximity rather than the full geography of the platform.
And then more broadly, which platform you invest in. At the time of this writing Sandbox and Decentraland are the largest blue chip NFT land investment platforms and are perceived as first movers in the space. But there will be thousands of metaverse platforms in the future to purchase land on. Ultimately what matters is how people will use the the various spaces in a metaverse platform, how equipped a digital space is serve to those activities and how overall valuable those activities are to users.