Is the yuan universe buying a real investment or a bubble?

Published on 1/18/2022   705 views   0 Comments  

Source:Financial Association

Author: Liu Rui

If a year ago, someone proposed to spend millions to buy a house in the virtual world, it might be considered crazy. But a year later, not only many companies, stars, but even professional institutions such as PwC joined the army of "Yuan universe real estate speculation", which made many people begin to feel confused - is the real value of real estate speculation in the virtual world?


Stars and professional institutions have successively entered the "Yuan universe real estate speculation"


In the past few months, the news that many companies and stars have spent millions on buying real estate in the virtual world has been reported from time to time, impacting people's nerves:

Digital asset investment group tokens Metaverse group, a subsidiary of COMUSD 2.43 million (about 15.45 million yuan)Purchase a piece of digital land of the virtual platform decentraland at a high price;
Pop singer Lin Junjie spent aboutRMB 780000Bought three virtual lands on decentraland;
Yuan universe real estate company Republic realUS $4.3 million (about 27.42 million yuan)Bought a piece of land in the sandbox virtual world - the most expensive virtual land transaction in the world so far.
At the end of December last year, even professional service institutionsPWCBoth bought a piece of digital land in the meta universe, but the transaction price was not disclosed.

Lin Junjie showed off the yuan universe land he had purchased on the Internet

With the support of many digital asset investment companies and celebrities, the real estate price on the digital platform decentraland has increased by 400% to 500% in the past few months. If the price per unit area is calculated, the price of many digital land has been comparable to the average land price of first tier cities in the United States - or even higher.

In the meta universe, buying a house usually uses the tokens of the platform itself - such as the token sand of sandbox platform and the token mana of decentraland platform. As the price of digital land is getting higher and higher, the price of these tokens themselves is also rising. At the beginning of March last year, the exchange price of sand was only 25 cents, but by the end of last year, sand had once risen to $8.51 - which means that if you invested $1000 to buy sand last spring and sold it at the highest point, you will make about $850000.


The internal logic of "Yuan universe real estate speculation"


If we carefully understand the "real estate speculation fever" in the virtual world, we will find that this upsurge actually has its internal logic.

First of all, the most basic logic supporting the virtual real estate boom isThe prospect of "meta universe".

After Facebook changed its name to meta, the popularity of the concept of "meta universe" ignited instantly. The "meta universe" is regarded by many people as the next form of the Internet world after the Internet and social media, with great development potential.

For example, digital asset investment company tokens Andrew kiguel, CEO of COM, firmly believes that "metauniverse is the next iteration of social media." A report recently released by grayscale, an encryption asset management company, estimates that the business scale of the digital world may grow to $1 trillion in the near future.

Other well-known consulting companies have similar views. Bloomberg industry research report predicts that metauniverse will reach US $800 billion market size in 2024, while PwC predicts that metauniverse market size will reach US $1.5 trillion in 2030.

Although constrained by technological productivity, we are still far from the 360 degree immersive digital world envisaged by meta, buying a piece of digital assets in advance to "occupy the pit" and "enclosure" may be regarded as a means of "investing in the future".

Trading center in decentraland

Secondly, similar to the real "real estate speculation", the "real estate speculation" in the virtual world is also largely based on the supply of real estate"Scarcity""Scarcity" is the most essential source of speculation.

In the current hottest virtual "real estate speculation" platform, the supply of digital land has an upper limit. This setting itself is to ensure that the value of virtual real estate will not depreciate wildly.

For example, in the sandbox platform, a total of 166464 plots are available; In the decentraland platform, there are 90601 plots in total, and only about 44000 of them are allocated for private trading. If you want to open a new plot of land, it must be voted by all currency owners and all real estate holders on the platform - which is almost impossible.

Third, real estate in the virtual world also existsFunctional value.

Although the real estate in the virtual world can not be lived like the real estate, they are not worthless. Investors can use them for business or leasing. For example, the digital land purchased by PwC mentioned above is to establish relevant professional service consulting centers; In addition, many well-known enterprises have purchased virtual land on the meta universe platform to advertise their brands.

Given that the plots on the virtual platform are limited, after all the digital land is sold out in the future, if other enterprises want to advertise in the virtual world, they have to lease the land from the existing owners - the benefits may be unimaginable. Moreover, this scenario seems not far away: at present, 70% of digital land has been sold on the sandbox platform.

Therefore, digital land, which is usually close to business areas and has a greater flow of people, can often be hyped for higher prices - usually the price of good plots can be 1 to 2 times higher than that of ordinary plots.

"Kung Fu ice room" in sandbox world

In addition, digital land prices around celebrity residences can also be hyped higher. For example, someone had previously spent $450000 to buy land next to the virtual house of rapper snoopverse, just to be neighbors with stars.


Virtual real estate speculators' way to make money


Usually in the digital world, digital assets are bought and sold in the form of NFT - which means that it is very simple to buy virtual land compared with real estate transactions - directly from the platform or through developers.

After buying land, the treatment of virtual asset investment companies is also similar to that in the real world: some plots will be directly idle and sold after the price rises; For some plots, real estate companies will invite designers and game development companies to design and build houses or shopping centers, and then retail them or charge rent - no different from real estate developers.

In fact, the layout of some virtual real estate development companies has begun to take shape.For example, the digital asset investment company Republic real, which spent 27.42 million yuan to buy yuanuniverse land, mentioned above, already has about 2500 pieces of digital land on 19 different yuanuniverse platforms, and some of them have started development. The company's current key development projects include a shopping center mainly leased to virtual fashion retailers and a large luxury community, which is mainly composed of about 100 villas. The company is ready to sell its retail to individual players.

Villa, shopping center, wharf and other projects currently developed by Republic real

Another digital asset investment company, tokens COM is currently developing an 18 storey business building in decentraland, and the company is ready to rent it to the cryptocurrency exchange. Another piece of digital land in the fashion district they purchased is intended to be leased to fashion companies - according to the CEO of the company, buying this fashion district land now "is like buying Fifth Avenue in the 19th century".


The high risk of "Yuan universe real estate speculation" can not be ignored


Although the above sounds tempting, it must be noted that all this is the ideal situation of building a "meta universe" platform.This means that if a single "meta universe" platform loses traffic and attention, or the virtual currency fluctuates sharply, it may affect the value of "virtual real estate" in the hands of investors, or even lose everything.

In addition, the lack of regulation is also an important issue. Different from the real estate transaction with mature supervision system, the real estate transaction in the meta universe world still faces many regulatory gaps. For example, how to define the nature of yuancosmic real estate, how the law protects yuancosmic real estate, and how to mediate in case of transaction disputes... When there is no solution to these problems, the investment risk can be imagined.

Even Janine Yorio, co-founder of Republic real, which focuses on real estate speculation in the meta universe, admitted that investing in digital real estate is risky.

It's very, very dangerous. You should only invest the money you are ready to lose, "jorio said." this is highly speculative and based on the blockchain. We all know that cryptocurrency is very unstable, although it can also bring huge returns. "


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