Amidst all the business of crypto and NFTs, another digital asset recently made waves when a virtual superyacht was sold for around US$650,000 (or 148 Ethers at the time). While this NFT pales in comparison to the US$69 million fetched by Beeple’s artwork, it still represents the most expensive piece of asset sold on The Sandbox metaverse.

This sale also comes at the heels of a rash of property sales involving the metaverse. There was a plot of land that went for 618,000 Mana (or about US$2.43 million) on the virtual world Decentraland. Over at gaming platform Axie Infinity, it sold one of its Genesis Land plots for 550 Ethers—roughly US$2.3 million at the time of its sale.

All these point to an undeniable fact: one of the hottest property markets today cannot be found anywhere on Earth—only virtually. Welcome to the metaverse.

While it may seem that these transactions are being done with “funny money”, do remember that cryptocurrencies, whether BitCoin, Ethereum or Mana, are backed by real-world money and early investors are going all in.

Photo: fortnite.com

WHAT IS THE METAVERSE?

Before understanding why people are readily buying up these virtual plots of land, we need to find out exactly what they are buying. And so begets the question: what exactly is the metaverse?

While it’s been bandied around these days by everyone including your mother, the term ‘metaverse’ traces its origin from Neal Stephenson’s seminal novel Snow Crash published nearly 30 years ago, where it referred to a virtual 3D world inhabited by avatars of real people. If you think that this concept isn’t new, you’re correct. It’s been revisited countless times in sci-fi novels and movies, such as The Matrix and most recently in Ready Player One.

If you want a simpler explanation, then think of a virtual, immersive world where people can go to explore, play and work—anything to live their life. If you see someone playing Roblox, Minecraft or even Fortnite, then they have entered and are interacting within the metaverse.

Photo: reddit.com

SO WHY GET IT ON THE ACTION?

While still early days, a lot of the signs point towards a future of the metaverse going mainstream. Experts believe that as technology marches on, we will be living our lives virtually. We adults have taken the first step towards these future with all the online activities we’ve been doing—online shopping, curating content, Zoom conversations, etc. The next generation is taking it further by being fully immersed in their games. It’s only a matter of time when these two intersect and create a full-fledged world where everyone can be both productive and entertained.

Further proof of this belief in the metaverse is when crypto investing firm Grayscale revealed that the entire metaverse is potentially a US$1 trillion revenue stream for advertising, e-commerce and hardware sales.

Further interest in this virtual world was stoked when Facebook’s holding company rebranded to Meta during the summer and announcing its intent on focusing on the metaverse as the future of the company and the internet. Founder Mark Zuckerberg doubled down by saying “From now on, we’ll be metaverse first, not Facebook first.”

It may be hard for a traditional investor to wrap his or her head around the concept of using real-world money (converted to crypto) to purchase a property or asset that exists only virtually. But it is happening, and it’s happening a lot. It’s like the Land Rush in 1800s America or when home buyers here in Hong Kong try to buy into a property. They’re staking their claim and paying for the potential of what that property could be.

One thing to note though: unlike in the real world where if you buy, say a yacht, you can take it to different places where you want. In the metaverse, most platforms currently exist individually and any digital asset you might have purchased exists only in that asset. That is bound to change as the metaverse gets fleshed out and behaves more like the real world, but right now that limitation exists.