Everywhere you turn people are talking about the Metaverse. Well what is that and what does it have to do with NFTs? Or Real Estate?
The NFT market is hot. Over the past several months the industry has not only been getting hotter but also getting more complicated and creative. There are more buyers than ever before and an increasing number of projects are also expanding their scope. There is a so-called “metaverse real estate rush”, but it is important to understand what that means as well as the difference between Metaverse land and spaces. This is an important distinction to make and one we want our community to be aware of.
What is the Metaverse?
Don’t overthink it, in many ways the metaverse is just a 3D web page. You can create one for free with Spatial if you want to think about us like a metaverse Squarespace.
The term Metaverse was first coined in the 1992 Neal Stephenson science-fiction novel, Snow Crash. It is a portmanteau of meta (beyond) and universe, transliterating to beyond our universe. Former Microsoft executives J Allard and Boyd Multerer credited the book as their inspiration when developing Xbox Live. They famously made it required reading for all development team members. Spatial gave it as a gift to our interns!
The Metaverse in most definitions refers to a persistent virtual world. Of course, what is confusing about that definition is that currently there are dozens of metaverses and not all are immersive worlds. To channel Charlie Fink, it’s useful to distinguish between lowercase m metaverses, of which there are currently too many to name, and the capital M Metaverse which is an ever-forming united reality — one that is growing and changing daily.
Spatial is a metaverse and, having been founded in 2016, we have been for years (even if we just started using the word & branding ourselves as such). We bring together creators and their communities around their art. We are also contributing to the capital M Metaverse which is not only about AR/VR, it’s not just about virtual rooms, spaces, land, cryptocurrency, decentralization. It is a fundamental belief in the virtues of web3.
In October 2021, Facebook’s parent company changed its name to Meta to symbolize its aspirations to build the Metaverse. According to Mark Zuckerberg, Meta intends to create an interconnected virtual world. In this world, people can socialize, work, and play. Zuckerberg may have re-energized interest in the metaverse, in reality, it has been in creation for decades. The Metaverse is the future of the internet, just as cryptocurrency is the future of money and NFTs are the future of digital assets. If Web 1.0 was the beginning of the Internet and the current Web 2.0 was the rise of dynamic content and social media, then the Metaverse may be the central component of the future Web 3.0.
Many people in the NFT and DeFi space talk about being part of the Metaverse. This speaks to the interconnectedness of these industries. One does not succeed without the other. As an interconnected virtual world, the Metaverse offers people nearly infinite possibilities to create virtual versions of markets, assets, services, from art galleries to the Metaverse real estate. Blockchain technology provides the opportunity for a fair, open, and decentralized economy.
How NFTs Work in Real Estate
Real estate NFTs are fundamentally identical to any other type of NFT. You need cryptocurrency to purchase one and obtain a digital asset in exchange. What the NFT grants you entirely depends on the type of property and the tokenization method employed. The underlying technology of NFTs is the blockchain, serving as a decentralized proof of ownership for any digital asset. NFTs, or non-fungible tokens are popular for representing digital art or collectibles. There has never been a better time to join a creator economy, but there is a lot to be mindful of before jumping in.
Causing some confusion for people not familiar with the intricacies of the web3 space; companies are also selling real world goods and places as NFTs. In Tampa the first ever IRL (“in real life”) home was auctioned off as an NFT. This was an interesting choice because it speaks to just how disruptive and pervasive NFTs are becoming. It also makes a lot of sense in terms of quickly and securely transferring a deed. Every industry will be touched by web 3 and decentralized finance. This example provides a great foundational explanation of what is also happening at a virtual level, in the non-physical world, aka Metaverse.
That is in some ways the best way to understand the Metaverse, everything that is happening in the real world industries but decentralized, mirrored, virtual. When it comes to real estate however, different metaverses (softwares) are taking foundationally different approaches.
How Are NFTs and Real Estate Connected to the Metaverse?
A Metaverse world, like Roblox for example, may run using a particular cryptocurrency and offer its users the possibility to buy land in their Metaverse. Developers may create separate digital worlds with different attributes, each with its own parcels and NFT property. They might also divide existing worlds into specific neighborhoods or subdivisions.
In these metaverses users must first purchase land then they can place NFT houses, NFT furniture, and other NFT decorations on their plot of virtual land. The developers may limit the number of available lots and properties to a specific amount to create scarcity and desirability, minting NFT land corresponding to each one and placing them on the market for initial sales. Once sold to their first owners, the developers retain no control or oversight over the digital assets. Ownership, trading rights, and associated responsibilities rest entirely within their owners’ hands, creating a decentralized market.
Valuing these digital plots is near impossible, any metaverse land you own is only as valuable as the platform it is on is popular. And, there is theoretically an unlimited amount of virtual real estate to be sold, as the internet is unlimited. Since there is a gold rush currently, many plots of land are artificially inflated in value, despite offering no experience or utility. Some of these plots are even only available on platforms that have yet to launch a product. Even further, some companies are selling plots of land that are connected to real world spaces (like owning the air rights above a building). The only problem is that there is no single source of truth for who owns augmented space. Which means 100 different companies could currently sell the augmented rights to your house. Sounds like a serious boom or bust risk to us (and probably something that will soon be regulated).
In Spatial people can purchase spaces, not land, these are intricately designed 3D rooms that have utility. You can buy a gallery to hang your NFT art, or an auditorium to stage virtual events, the possibilities are endless. Once you have those assets you can create a space for free. You can create as many spaces as you like or need.
We prefer a more straightforward approach. People buy something in Spatial that has built-in utility. We allow people to create for free and empower artists to mint with us if they desire to turn their space into an NFTs. Those NFTs can then be purchased and brought easily into Spatial for personal use, community events, or rented for programming. Creators are of course also able to mint on their own and help their buyers bring their spaces into the metaverse.
Spaces hold utility, and there is certainly a lot going on in the Metaverse! People need experiences and rooms in the metaverse at an increasingly rapid pace. The pace at which the metaverse has been adopted certainly has a connection to the isolation experienced by the pandemic. After the plague comes the renaissance.
So How Should You Get Started in Metaverse Real Estate?
The short answer is…don’t. Metaverse land is a hugely speculative investment currently that in most cases will certainly go to zero. Instead, you can claim your space in the metaverse via Spatial for FREE, and you can buy gorgeous virtual environments designed by some of the world’s leading artists to help provide your space with utility and attract others to visit.
You can check out some of the existing environments we’ve minted and sold here
Helping Metaverse Communities Thrive
At Spatial, we saw a natural fit for NFTs to solve a key problem for our community. We had amazing creators struggling to make enough profit even when charging huge fees for the clients who could afford customization. Very justified fees considering the time and expertise that goes into them. On the other hand you have our everyday user who wants to customize their space but does not have the technique or money to create 3D assets. By helping creators mint collections we were able to sell incredible spaces at a more accessible price. Now the spaces Spatial have minted Museo and Bozo Island are being used to foster community building and help businesses thrive.
The idea of delving into NFTs allowed us to prove out this monetization channel for all these amazing artists and creators on our platform. Our co-founder Anand Agarawala describes that “in the same way NFTs have enabled people to quit their job and focus on art full time. We (Spatial) hope we can do that for 3D artists and 3D creators. To be a platform that sets up this virtuous cycle between creators developing awesome, beautiful virtual worlds and folks who want to support them or hold virtual events or meetings”.
What makes a Spatial metaverse space NFT so valuable is their immediate utitlity. A utility that comes with an ultimate goal of bringing people together to create meaningful connections and memories just as we all do in physical places. Community is core to the metaverse and the foundation of web3. The metaverse holds spaces to come together to enjoy and experience culture.
You are better off buying an NFT of a gorgeous space or commissioning a custom metaverse space than spending money on a plot of land. There are many metaverses that will host your space without that added fee.