The rise of metaverse concept has ignited the surrounding industries of related concepts. The most shocking may be the “real estate speculation fever” of metaverse. On a foreign platform called the sandbox, a piece of land became the highest price of land in the virtual world at a transaction price of US $4.3 million (about 27.3 million yuan), while the last high price transaction record was just a week ago. In addition, a virtual real estate developer bought a piece of land for about $2.43 million (about 15.42 million yuan) on decentraland.
However, metaverse real estate is not in kind and cannot create value like real land. The author believes that the significance of virtual real estate is limited and the speculation attribute is more important.
Asset scarcity and value consensus
First of all, let’s take a look at these suddenly popular virtual real estate transactions. Taking decentraland as an example, this is a 3D game similar to a simulated city. From the design of the game, it is obviously moving towards metaverse. However, due to technical reasons, decentraland is far from reaching the experience of metaverse in film and television works. Therefore, combined with this experience, the land value on decentraland is only recognized by players, and can not form a consensus among the majority of the public. If decentraland becomes a metaverse world in the future, the current land price may increase significantly.
The reason why virtual land can also have value mainly comes from the scarcity of its digital assets. This scarcity comes from the property right mark of NFT non homogenous token. NFT has the characteristics of verifiability, uniqueness, indivisibility, tamperability and traceability. Therefore, although the virtual world can be reclaimed indefinitely, after the generation of NFT, any two kinds of virtual goods or land are different, and this uniqueness constitutes a condition for the scarcity of goods.
The second condition that makes goods scarce is demand. For example, decentraland players believe that decentraland will become metaverse, or more people believe that decentraland can develop into metaverse in the future, so they have reached a consensus on the value of virtual plots in decentraland, thus forming the basis of speculation. This psychology has created the demand for virtual real estate.
So, is virtual real estate hype? I don’t think so. Because plots are unique, the values of different plots are different. For example, if a virtual plot is next to the land of celebrities or the activity center of the game, then the plot obviously has higher prices than other plots. This also shows that different regions of the Internet world also have different regional advantages, Traditional economic theories still apply. In addition to the value given by the location of the virtual plot, the virtual plot itself also makes it have certain use value by carrying some activities, such as holding concerts, social networking and e-commerce sales. Without the ownership of the plot, it is difficult for you to carry out these activities.
There is no doubt that the core of metaverse real estate speculation lies in the value of virtual space itself, but the extent to which this value can form a consensus is debatable. Because metaverse is still a long way from being realized, and even whether it can be realized in the end is still in doubt, the real value of virtual space is very limited. However, because of the Metaverse explosion, virtual space has been recognized by many block game player. Under the capital’s support, the price of virtual property has started to rise gradually, because it is out of its own value, so there is suspicion of bubble.
Metaverse real estate speculation faces multiple risks
Therefore, Metaverse real estate has a very big risk, and the most important thing is the risk of bubble. As the price of virtual real estate is far higher than the value, the stories related to value will become more and more difficult to tell. When this wave of concept boom subsides, the virtual high value of metaverse real estate will become a reality. Secondly, the uniqueness of metaverse’s real estate is in doubt. Although NFT makes virtual real estate unique, when people care not about its real value, but about its hype value, the supply will increase rapidly, the metaverse real estate game platform will expand rapidly, and the market hype will eventually lose focus. Thirdly, there are security risks in metaverse economic system. Metaverse economic system is based on blockchain technology. Cryptocurrency improves the security of transactions by similar asymmetric encryption, but it also facilitates the theft of cryptocurrency. In addition to theft, the fluctuation of the value of cryptocurrency, cryptocurrency fraud and Ponzi scheme also affect the realization of metaverse real estate speculation. Finally, the cyclical risk of the industry. Metaverse currently belongs to the concept period. Once the development encounters a bottleneck and the industry is cold, the price of virtual assets may plummet. Moreover, due to the lack of supervision system of the current virtual economy, it is difficult to avoid market stampede when the market encounters a cold wave.
However, metaverse real estate speculation has indeed attracted people’s attention to NFT. The characteristics of NFT are very suitable for marking the property rights of digital assets. In the past, digital assets did not have property rights, and any piece of code can be copied indefinitely. However, NFT binds digital assets in the form of smart contract, which is like inserting a banner representing ownership on digital assets. The benefit is that metaverse has the foundation for building an economic system. For metaverse, the economic system includes metaverse currency, digital assets in metaverse, metaverse trading mode, etc. Through NFT, the rights of digital assets in metaverse can be confirmed, so as to complete a closed loop of commodity economy.
From the current transaction cases, metaverse’s transactions are mainly conducted through cryptocurrency. From the perspective of development, the author believes that we can try to promote the confirmation of digital assets by combining with digital RMB, so as to promote the development of metaverse’s whole industry. The author suggests that to promote the development of metaverse, policies need to go deep into metaverse’s economic system and come up with a set of solutions together with the platform.
It is worth noting that although the concept of metaverse is very good, we should still be vigilant against possible economic risks. From the current metaverse economic system, this is an extremely free and open market, which can be said to have no rules. Before there is no credible economic system template, we must be vigilant against the possible negative impact of metaverse development. Fortunately, the governance concept in the domestic economic field in recent years is correct. Both the supervision of the financial industry and the attention to the disorderly expansion of capital have played an important role in economic and social development.