My Secret Recipe for Investing in the Best of the Metaverse
- Despite the current downturn in most investment markets, Metaverse still offers long-term potential for risk-averse investors.
- But not every virtual world is created equal – some are shocking to virtual real estate investors.
- Here are some of the items I look for in a good Metaverse platform that will bring staying power to the virtual real estate market.
If you’ve ever thought about buying property in the Metaverse, there’s no better time than now. With both the stock and crypto markets down, the acquisition cost is the lowest in months. In addition, there are more stocks to choose from and opportunities for long-term gains.
Even if the markets don’t drop, I’ll still give you the same advice when it comes to real estate in the Metaverse: buy with a plan in mind and a long-term acquisition strategy. And like now, you’ll get a little cheaper too (who doesn’t love discount shopping?).
So what do I look for in the best investments in the Metaverse universe? I will tell you a little about my secret recipe.
1. Metaverse property must be secured by NFT Many digital platforms allow you to purchase virtual items, but in most cases you don’t have physical items. Platform owners can set the rules (check the EULA), eg b. Whether you are allowed to resell these items, and they can decide how to modify the item as the platform evolves.
When it comes to virtual real estate, this is a bigger problem than a virtual crown for your avatar. If platform owners can dictate what you can and can’t do with your virtual property, is it yours?
Look for platforms that sell digital items backed by NFTs, including real estate in particular. The NFTs act as proof of ownership, and the rights associated with them are described in the NFTs Permits. So they do not meet the whims of platform owners. After all, you want to be able to resell, rent or build your virtual land as you wish, right?
If your platform offers a lot through a third-party marketplace that sells NFTs, such as OpenSea or NonFungible.com, or you need to store your purchase in a crypto wallet, you’ve found virtual stakes secured by NFT. If you can only buy from the platform and the information about your purchase is only stored in your account on that server, then you haven’t.
2. Shop only in worlds where you have a say. When you buy a virtual country, you have quite a few options. You can choose a world in which the company that built the world is also responsible for the rules and regulations, or you can choose a world with a decentralized autonomous organization (DAO). Metaverse platforms containing DAOs like The Sandbox and Otherside owned by the Bored Ape Yacht Club give you voting rights for an owner or crypto holder and thus a say in how your world works.
For example, if there is a username that is particularly offensive, you can vote to block it and even create a rule to block it in the future. You want to change something in the world, eg b. Can users rent their land within the platform without having to sign a contract? You can suggest a change to the platform and the community will then vote on it.
But not all DAOs are the same. So before you commit, you need to be clear about what you can do with your voting rights and how much control you actually have as a resident of a particular platform. Some people may not want to get involved with the platform’s policies, but it’s important to have the option if an issue arises that you need to address.
3. Watch out for worlds with too many – or too few – time slots although there are no exact dates for this yet, keep in mind the law of supply and demand. If you buy a virtual lot on a platform that has only 100,000 lots, and that platform is popular with users and investors alike, then those stakes should be more valuable over time. You can check global documents or basic description to see how many lands have already been minted.
We can take a look at Superworld, which has 64 billion seats on offer. For the three months ending May 9, 2022, the highest average daily sale price was $382.32 on April 3. Decentraland’s lowest average selling price, containing a total of 90,601 lots, for the same period was $1,697.29 on April 20, a low-volume selling day when someone got a good deal.
It can also be said that one has to be careful with a platform that has very few plots. I generally trust worlds from 75K to 200K; Because they are likely to increase in value, maintain that value, and provide plenty of reasons to keep coming back.
Community is what drives value in the Metaverse When it comes to investing in the Metaverse, it’s important to understand what really creates value there: the community. People can spend their time online in many ways, so they should choose your Metaverse platform – and they should have a compelling reason to stay there.
Even if you are not interested in running your own Metaverse business or creating an experience, you can find good tenants who are willing to do these things but are not ready to invest in their own land yet. In this way, you not only earn passive rental income, but also help strengthen a sense of community in a growing world.
This consistency is what finally makes the platform. Just look at what Second Life has accomplished in a world before the Metaverse was a serious concept: Linden Labs, the parent company of Second Life, reported a GDP of $500 million at the end of 2021. This world is much smaller than the Metaverse platforms It is modern, has no blockchain technology (so no NFTs) and has been around since 2003, so it is technologically disadvantaged in many ways. However, Second Life is our best model for seeing what the Metaverse might look like two decades from now, and it shows us what to look for when making long-term investment decisions.
Citi predicts that the total addressable market for the modern Metaverse will be between $8 trillion and $13 trillion by 2030. But if your world doesn’t retain its users as Second Life does, you might miss out on this opportunity.
My secret recipe for investing in the best of the Metaverse first appeared in The Motley Fool Germany.
City Group (NYSE:) is an advertising partner of The Ascent, a Motley Fool company. This article was written by Kristi Waterworth and posted to Fool.com on 5/14/2022. It has been translated so our German readers can join the discussion.
The Motley Fool does not own any of these shares.
Motley Bean Germany 2022
This article first appeared in The Motley Fool