Enter the Metaverse
We have entered the phase of the next revolution bought by the metaverse. Yes, the metaverse is here to stay. People can choose not to embrace or agree with it, but they can’t deny its existence, increasing popularity, and crazy worldwide adoption.
People also didn’t believe in the internet revolution when it first started. It doesn’t mean that the internet doesn’t exist now. It has revolutionized the world, and the early movers have cashed in on the opportunity and have also been able to plan their financial strategy around the internet. They didn’t oppose the online banking systems but quickly regulated and secured how it was carried out.
Professional Advisors, such as estate practitioners and financial advisers, are experiencing something similar in their industries today. Thanks to the metaverse and decentralized currencies, they have even more complex problems to face. Due to decentralized economies and systems, we can’t track the virtual assets of people, and they can lose it all if they lose their wallets, encryption keys, forget their passwords or lose recovery phrases.
With increasing problems like these, lawyers and financial advisers need to learn more about the workings of these digital assets to help devise financial plans for clients who own such virtual assets. But most importantly, these advisors must understand the metaverse and how digital assets work to assist your client in preparing a succession strategy.
Growth and Expansion in the Metaverse
The metaverse represents the next phase of the digital revolution – very much akin to the internet’s early introductory stages. Given its positioning as the latest phase of the eternal technological revolution, there is greater room for growth and expansion in the virtual world. There are many early, mid, and late adopters; the metaverse world has mostly speculators, professional real estate agents, and celebrities as early adopters. These people have adopted the ideas and started putting money and other resources into the platform through purchases and investments.
According to a study of internet users conducted in late 2021 by Statistica, more than half of those surveyed would join the metaverse world for employment opportunities such as virtual workplaces and networking. 48% of respondents cited art and live entertainment as the primary reasons for joining the metaverse world, while 44% cited crypto investment and non-fungible tokens. Among the things that can be bought and invested in on metaverse include virtual land, brand stocks, gaming, events, and advertising spaces, avatars, branded items, and arts, among other products that can be virtual or brought into reality.
While some other companies are still waiting on the sidelines, trying to find their place and balance in the risk-reward equation. The most prominent social app community, Facebook, announced its name rebrand to Meta in October 2021, expressing its focus on building its digital world. Since then, interest in metaverse real estate has skyrocketed.
According to NonFungible, there were about 133,000 real estate transactions in the metaverse in the year 2021, in comparison to the 6.18 million existing homes sold in the United States. Sandbox, Decentraland, Cryptovoxels, and Somnium are the most prominent platforms that have dominated real estate transactions in the previous year, accounting for the sales of metaverse estates, which reached $500 million last year. There are 268,645 parcels of various sizes on the four platforms.
According to research from Republic Realm, Sandbox dominates the market, with 62% of available land on the four platforms and three-quarters of all land purchases in 2022. In December, each of Sandbox’s 166,464 plots sold for the ether equivalent of $12,700, and the plots are 96 meters by 96 meters in size (106 yards by 106 yards). Decentraland has 90,600 parcels, each measuring 16 meters by 16 meters and selling for $14,440 in ether. According to a metaverse data source, sales of virtual lands might reach roughly $1 billion in 2022.
According to BrandEssence Industry Research, from 2022 to 2028, the metaverse real estate market is predicted to increase at a compound annual rate of 31% each year.
The property’s location is considered one of the most important things when dealing with real estate on any metaverse platform. Just like when you initially enter particular places in the real world, there are regions where people congregate. Those areas would surely be more valuable than areas with lesser or zero activities. Having virtual-physical positioning in regions where people congregate is another reason for the metaverse land rush. It offers numerous other opportunities such as branding, marketing, and connectivity.
Besides real estate, other investment opportunities and asset ownerships are available to investors on the metaverse, and collectors have maximized every possibility. Assets on the metaverse are vast and include and are not limited to:
- Gaming Characters
- Gaming Character Upgrades (Player skins, weapons, etc.)
- In-Game Assets (Cars, car parts, aircraft, speedboats, etc.)
- Virtual Designer Clothing Items (Brands like Gucci have stores in the metaverse)
- NFTs (Art, music, etc.)
- Staked, Nested, and Yield-generating NFTs
- Crypto Tokens
- Play-2-Earn Tokens
- Billboards (Rented out to companies for ad placements)
- 3D Artworks
The possibilities of owning assets in the different metauniverses are endless.