However, he had been sizing up alternative options in locations he considered both more affordable and a better long-term investment (with more potential for upside, i.e., price appreciation). My idea of a close alternative would be oceanfront land on a Hawaiian island, or perhaps in the picturesque Italian town of Positano — the views are to die for. But no, that wasn’t his brilliant investment thesis; instead, he decided a puddle-side lot in a remote beach town in the Southeast was the 10x move.
Before I could protest and provide him a list of Zillow links to more promising properties, he’d already contacted the real estate agent, had his nearby family members check out the property in person, and put in an offer. I sure hoped this puddle would be viewed as a “lake” through the rose-colored glasses worn by the droves of future inhabitants migrating from the North to the Southeast, enough so to drive up the future price significantly…
His offer — which was 15% below asking price — was met with the best response imaginable!
I was elated to hear that another buyer beat him to the punch and had already gotten their (higher) offer approved; they were just tieing up loose ends before updating the listing to “Sold” in the next few hours.
Unfortunately, that wouldn’t be the end of it, nor would he decide to redirect his property search to a more desirable location. While he continued to peruse the available lots in similarly undesirable, remote neighborhoods, a few doubts started popping into his head.
- Was it really a good idea to put 30 to 40% down (that’s the minimum for undeveloped land) on a lot in an area that undeveloped? Could a large chunk of that down payment be better invested elsewhere on a higher-return asset?
- Was he really going to bank on retirees snapping up his property, given that they’d have to start from scratch building a house — a formidable task many 60-somethings might rather avoid? It wasn’t a big or bustling enough city (no real companies or offices) to assume working-aged people would flock there — and it wasn’t desirable enough for remote workers or digital nomads to purchase either.
- What about flooding, a hurricane, a tornado, or any other type of natural disaster? Couldn’t that come out of nowhere and compromise his entire investment?
Right about that time, an alternative investment opportunity gripped his attention, courtesy of “FinTwit” or the financial community on Twitter.
Why buy physical land when you can buy virtual land? If we’re talking price appreciation, isn’t the whole world going virtual anyway?
I walked into his office, also known as our bedroom (courtesy of the new “work from home” way of life), to find him strolling through a large green field. Or should I say his avatar was prancing through the field? When I asked what he was doing (I’m no accountant, but he is, and this didn’t seem like auditing a financial report to me…), he giddily offered to show me.
He transported us to a nightclub…which could have been cool, but there were very few people around and not much to do, other than maybe buy overpriced NFTs? Next, we jumped into an art gallery adorned with a variety of eye-catching paintings and sculptures. Finally, we were back to the field — or another field, it was hard to tell — where a dozen or so other avatars were bumbling around, doing not very much.
He then started rattling off the price tags of various items. Apparently, this virtual world didn’t come cheap. Listen, I understand how in-app purchases work for digital games, so sure, I could expect some pop-ups allowing us to purchase tools or tokens to advance our progress and win the prize. But no — this was different. This wasn’t a game — and there was no “prize” or “winning” at all. Those pop-ups, or items for sale, weren’t in-app purchases; they were investments.
This was a virtual reality made up of real investors who were pouring thousands — even millions — into building places, companies, and other things in this virtual metaverse. My fiancé had decided this — investing thousands into a virtual plot of land, rather than hundreds of thousands into real land — was the better move. Maybe he’s right — it sure is a heck of a lot earlier-stage than physical land, which has been around for…ever? Personally, I needed more details before going all-in on this Decentraland thing.
Get ready to wrap your brain around the economics of Decentraland’s virtual metaverse — we’re talking land, currency, and kittens.
Plots of land in the Decentraland metaverse are NFTs (non-fungible tokens) split into virtual world parcels. This particular virtual world is built on a token called MANA, and there is a standard exchange rate in which 1,000 MANA = 1 Land (unclaimed, before customizations or price appreciation on the secondary market). That said, parcels are distinguishable and can vary in price (be worth thousands more MANA), based on three things:
- Whether or not they’re adjacent to hubs (things to do or high-value areas)
- If they offer an identity mechanism
- Whether they’re able to host content
Here’s why this “Land” is supposedly valuable — or part of the reason why my fiancé thinks it’s a good investment: There is a fixed supply of MANA, or the coin used to make purchases in Decentraland and to buy land. That scarcity of tokens due to the limited supply means one simple thing: If more people want to get involved in Decentraland, the demand for those MANA tokens, or the currency, will increase. If demand increases and supply remains fixed or decreases as more MANA tokens are tied up by other users, the price will subsequently increase (simple economics, also known as the law of supply and demand).
Likewise, there’s a fixed supply of land in Decentraland — to be exact, there are 90,000 parcels, each measuring 16 by 16 meters (or 52 by 52 feet). Each parcel is unique, thanks to its location on the Decentraland map, but parcels can also be built upon and further customized (to further increase their value). For anyone feeling intimidated by their lack of technical skills, there’s good news: You can customize your land using the Decentraland builder, which doesn’t require any digital development expertise and is similar to the user-friendly builders found in games like Sims.
Oh, and customization doesn’t stop within the Decentraland builder. You can actually bring and host outside content and events, including ads, concerts, and artwork NFTs for sale, all within Decentraland. There are casinos being built, ad space available for purchase, and many NFT creators and digital artists selling their work within this metaverse.
I should probably mention that the rules that govern Decentraland are kind of subject to change — but don’t worry, it won’t be a big tech CEO making those calls. Instead, all changes to their metaverse are voted upon by MANA-holders, and 2,000 MANA = 1 vote. Therefore, if you want to be the boss of this virtual world, you may want to start hoarding MANA ASAP.
If you weren’t sold on owning land in Decentraland, no worries; you could just get a cat. By cat, I mean a CryptoKitty. Decentraland has a partnership with CryptoKitties, and there are 5,000 different types of CryptoKitties subtly slinking around the Decentraland metaverse, some of which will be special editions. Wouldn’t you like to go on a virtual scavenger hunt to capture a potentially valuable limited edition NFT kitten? It almost reminds me of PokemonGo, except a lot more expensive…
What’s the catch, you might ask? Why not go all-in on a virtual estate, spend your days scavenging for CryptoKitties, and your nights developing new NFTs to sell in your virtual galleries? Here’s why the kittens might be a better use of time than developing a virtual gallery, nightclub, or theme park: There are only about 10,000 daily active users currently on Decentraland (as of April 2020). That’s a pretty small addressable market for whatever you’re virtually selling…That’s not to say the daily active userbase won’t grow, but rather a nod to just how early-stage of an investment this is.
But then again, my best friend’s ex-boyfriend got into Bitcoin when it was incredibly early-stage, and he’s sitting happily on tens of millions $ these days…
Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://themakingofamillionaire.com/my-fianc%C3%A9-almost-bought-us-a-waterfront-lot-but-he-chose-decentraland-instead-7e02941a9d29?source=rss——-8—————–cryptocurrency
