Decentraland is probably the most developed and popular digital world when it comes to digital real estate at the moment, where thousands of users buy and sell – for as much as $900,000 – virtual real estate with freedom and ease, in addition to the security provided by blockchain technology.
So, is virtual real estate legit?
Yes! More and more investors are starting to show great interest in digital lands as a new opportunity to generate income because they have it clear; virtual worlds have enormous potential to display advertising, sell products and services, organize events, and more.
Today, we’ll talk about Decentraland and virtual real estate, what they are, what possibilities they offer for investors, and what the future holds for this new technological trend. Let’s get started.
What is Decentraland?
Decentraland users do not like Decentraland being referred to as just another videogame. And they’ve legitimate reasons.
In reality, Decentraland is a virtual reality platform that works on the Ethereum (ETH) blockchain. It’s a platform that allows you to work, build, and create things.
And what can you create in Decentraland?
Virtual worlds. And this is not a reason for tagging it as another Minecraft clone.
Although Decentraland obviously has characteristics of a videogame, it has greater possibilities; users can carry out a wide variety of actions starting from the purchase of virtual parcels of land and the subsequent construction on them. Just as you would do in the real world when buying a piece of land.
But contrary to what happens with video games like “World of Warcraft” or “Minecraft,” Decentraland doesn’t belong to its developers, but to the users themselves, since it’s a “public” digital platform in which there is no central organization that enforces rules. The entire economy of Decentraland is generated and managed by its users.
This means that any user can freely buy and control the content of their digital lands while generating income through construction and other additional activities.
All of this is possible thanks to the use of blockchain technology which allows for the ownership of any plot of digital land without the possibility of falsification.
The idea for Decentraland originated in the minds of Argentines, Esteban Ordano and Ariel Meilich in 2015, but the project took two years to complete its development. Finally, in August 2017, the entrepreneurs held an Initial Coin Offering (ICO) with which they raised 86,206 ether – 26 million dollars at that time – in exchange for MANA tokens, the Decentraland token.
The funds were managed by the Decentraland Foundation to promote the development of the platform, at the same time that they also put into operation the decentralized autonomous organization (DAO) to deliver management of the project to its users.
How does Decentraland work?
In Decentraland, users can interact with portions or parcels of virtual land called LAND. These plots of land can be purchased to “build” on in a similar way to what happens in Minecraft – although many users also resell them.
In reality, each portion of LAND is nothing more than a non-fungible token or NFT on which it’s possible to create videogames, 3D objects, applications, digital services, dynamic 3D scenarios, etc. Each LAND parcel measures 16 x 16 meters, but doesn’t have a height limit.
This means that if you want to build a mall in Decentraland, you’d have to acquire a good number of parcels to be able to finish it. In addition, LAND is a scarce resource, something necessary to increase demand and incentivize the creation of quality content.
In order to buy LAND, you must have MANA, Decentraland’s native token, which is used mainly to buy these plots. When many LAND users form communities dedicated to a common theme, these communities are called States or Districts and just like you’d vote in your real-world community, users can also vote in Decentraland to solve any problems that may arise over time.
Now let’s talk about MANA
As I already mentioned, MANA is Decentraland’s native token. It’s an ERC-20 token that is used first of all to buy LAND plots, but which can also be used to pay for goods and services in Decentraland, and the auctions of “Genesis City,” a city created by a group of Argentine developers.
LAND portions were originally sold by Decentraland’s own development team, with a starting price of 1,000 MANA, but now their prices range from 11,000 to several million MANA.
What is virtual real estate?
Before answering this question, it’s important to understand what the metaverse is. Basically, the metaverse is a shared virtual or digital space that aims to imitate or reproduce the characteristics of the real world. This metaverse is packed with millions of possibilities for anyone to fulfill their fantasies. Taking the Minecraft example again, users can do almost anything they can think of, but with the difference that in the metaverse, there are almost no limits.
In fact, Minecraft is a kind of metaverse, only that in this case, the environment depends a lot on the developers in order to for it to evolve.
In the metaverse, users can buy virtual real estate, just as we would when buying a piece of land in the real world, with the difference that the portion of virtual land that you buy in the metaverse, only exists in that specific metaverse.
Many of these virtual worlds have their own cryptocurrencies, as it happens with MANA in Decentraland, and several companies are already working on the possibility of creating a single and global metaverse that allows communication and interaction between all the metaverses out there – a new kind of 3D Internet?
Another difference with videogames is that in the metaverse, there is no predefined goal; the idea is that users can have social and economic interaction with each other in a virtual and open world with near infinite possibilities. The use of Blockchain technology guarantees the legitimacy of commercial transactions, allowing users to be real owners of their own avatar, plot, building, store, etc.
Blockchain and NFT technologies help to give a sense of real belonging to each user. In other words, they are proprietary.
For example, a user can build a house, convert it into an NFT token, and then put it up for sale on the market. If another user buys the house, he can then place it on his own virtual plot and add other NFT objects to it.
And not only that, in these virtual spaces, be it a house or a football stadium, it’s possible to experience the feeling of presence and social interaction at parties, walks, festivals, concerts, sporting events, dinners, games, etc. All of this allows the development of a virtual economy with the potential to extend into the real world, as is the case with cryptocurrencies and NFTs.
Is virtual real estate legitimate?
Many people were asking the same question years ago when Bitcoin appeared for the first time and later other cryptocurrencies followed it – and recently with NFTs.
The short answer is yes. Virtual real estate is a new investment opportunity.
As with real-world real estate, in the metaverse, users and investors can exchange, buy and sell virtual real estate as if it were just another NFT token. The difference is that when you buy a virtual plot of land, instead of acquiring an NFT artwork and a private key, you acquire a digital space to do and create whatever virtual reality allows you.
Thanks to blockchain technology, these virtual terrain tokens have a recognizable value that users can exchange for products or services from the metaverse itself, as well as from the real world. In addition, everything is publicly registered.
I do believe that Decentraland has probably laid the foundations for a new business model of upcoming developments in virtual worlds.
Why are people buying virtual real estate?
Many people still doubt whether they should invest in this. Consider the following: the price of virtual real estate continues growing and there are still no clear signs that the opposite will happen. This is the same that happens with any new technology in which some visionary people see economic potential; there is a race in which everyone wants to get the best positions.
Just look at how the demand for NFTs has increased in the last two years. More and more people want to enter this world, which causes prices to rise due to the shortage of virtual land. In fact, the demand for parcels in central areas in some of these virtual worlds is growing considerably, which is an indicator of where the market is going.
As I said at the beginning, investors know that virtual spaces offer near endless possibilities to monetize them and generate income in the medium and long term. Blockchain, NFTs, and virtual real estate are taking society to the next level of information technology.
It’s more than likely that before long, an increasing percentage of people will spend more time at home visiting galleries, shops, and events in virtual reality.
What can you do with virtual real estate?
As indicated in the Decentraland whitepaper on its official website, users can develop the following activities.
Users can develop applications in a 3D environment to provide interaction with other users.
This is possible thanks to the development of communities around large concentrations of virtual parcels, such as neighborhoods, parks, etc.
Many brands are buying and renting virtual spaces to put up their billboards.
The NFT collectibles fever has spread to virtual worlds.
The metaverse presents a new way of interacting and relating that goes beyond ordinary social networks.
But the possibilities are near endless. As with any property in the real world, what makes the difference in the virtual world is what users do with their properties, including:
Where different artists can display their NFT digital artworks.
From Tetris clones, to 3D platforms in the style of Mario games.
Where your favorite nasheed singer, entertainer, artist, public speaker, or favorite sheikh (Islamic scholar), can perform, teach, or speak in front of potentially unlimited audiences.
In summary; the virtual world offered by the metaverse allows interaction between brands and potential consumers.
Is Decentraland a good investment?
For all the good it has to offer, the world of virtual real estate also presents challenges for investors. As with any type of investment, this is an issue that must be carefully analyzed in order to avoid mistakes.
The market for NFTs continues growing, which augurs the same for digital lands, but there is still a long way to go to achieve the mass adoption of this technology. As with volatility in the cryptocurrency market, the value of NFTs is also volatile. However, the value of a virtual land also depends on how its owner develops it.
In this sense, there is no doubt that Decentraland will continue growing and expanding since virtual real estate represents a new opportunity with a high economic potential that in the near future could be worth much more than it is now.
As always, if you’re planning to invest, just remember to always do research and take proper precautions.
How can you buy virtual real estate on Decentraland?
Currently, there are two ways to buy parcels on Decentraland, either by purchasing directly on its marketplace or through a separate platform. Today, I’ll talk about the first option, since although the second is similar, it depends on the specific platform.
1. Get a wallet
Remember that the first thing you’ll need is a crypto wallet that can be integrated into your web browser and allows you to store ERC-20 and ERC-721 tokens. Naturally, you must have some MANA – it can also be Ether in case of buying outside the marketplace – in your wallet to be able to make the purchase. You can buy this with fiat money in one of the many exchanges available on the Web or in Decentraland itself.
2. Sign up for Decentraland
Go to the main page of the platform and register with a valid username and password.
3. Choose your LAND
Once you have registered, go to the purchase section and select a LAND that you liked. Before making the purchase, you’ll be able to see information related to your LAND in the corresponding section, including its price in MANA and its location.
4. Make your purchase
Once you have selected the plot to buy, you must connect your wallet with the Decentraland marketplace by logging in to your Ethereum account and making the payment according to the indicated instructions.
Is Decentraland halal?
Is Decentraland halal? Yes, Decentraland is halal. Decentraland is a platform that allows the user to perform many operations in what is called a “virtual world” as if they were in the “real world” and this is permissible. However, it is important for the Muslim to remember that in the Quran Allah says that He is, “Lord of all the worlds”. This also includes virtual worlds. This means that Muslims must uphold the same Islamic principles of “muamalat” (just dealings with people in a social and economic manner) in any world they participate in.
As for MANA crypto, scholars who generally rule that cryptocurrency is halal would also consider MANA as halal. MANA is the in-world currency for Decentraland. It allows players to purchase land and other goods and services on the Decentraland platform.
At this time, even though MANA is considered currency for the Decentraland platform, scholars would normally classify MANA as an asset.
It looks like virtual universes are here to stay. You can easily verify this thanks to the enormous growth and popularity that the different metaverses, especially Decentraland, are gaining. In fact, since investors and entrepreneurs have realized the enormous possibilities offered by this new trend, it seems that every month new competitors emerge, which are already generating millions – there we have the case of Axie Infinity.
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