What Is Digital Real Estate and How Does It Work?
Many people invest in digital real estate as it offers perceived stable recession-proof cash flow. Online entrepreneurship and technology are unquestionable driving forces that encourage investors to buy digital assets in the Metaverse. What is digital real estate, and how does it work? What cryptocurrency projects should you consider?
What is digital real estate investing?
Digital real estate investing is the process of investing in properties that exist in the virtual world. Such virtual worlds were created with code. Here are some familiar names: Metaverse, Decentraland, Sandbox, Axie Infiniti, Bloktopia and many more.
This type of investing can be a lucrative way to generate income, as digital assets have the potential to appreciate in value over time. When investing in digital real estate, it's important to do your research to identify opportunities with the greatest potential.
For all intents and purposes we will focus our attention on Metaverse but this pretty much applies to most such virtual worlds.
What is the Metaverse?
The Metaverse is a digital world that intersects with the real world. This means that elements of our world are present in the digital one and vice versa.
The Metaverse doesn't have to relate to our reality. It can constitute an imaginary world created according to the author's preferences. It is coded in, much like a video game.
However, since it's easier to make a model of something you know, the Metaverse usually refers to our world, or uses patterns known in sci-fi.
Now when you know what the Metaverse is, it’s time to talk about digital real estate investing.
Where can you buy digital real estate?
To buy a digital real estate asset, first you need to create an NFT wallet. When it’s set up, it’s time to put in a bid for an asset either directly from the Metaverse project or using a third-party platform like Rarible, MagicEden or OpenSea.
If you have enough cash to bid on the items, you can buy digital real estate.
As with actual properties, location is everything so the most expensive pieces of digital plots are close to parks, entertainment areas and central hubs.
5 top Metaverse cryptocurrency projects worth the investment
If you want to invest in digital real estate, you should consider:
- Sandbox - it’s the most famous Metaverse crypto project. It’s based on the Ethereum blockchain. Sandbox is extremely user-friendly and accessible. Thanks to it, you can easily develop assets and then sell them for profit.
- Axie Infinity - it belongs to the group of the most prominent Metaverse projects. It's a game and NFT ecosystem built on the Ethereum blockchain. The ERC-20 Axie Infinity Shard (AXS) and Smooth Love Potion (SLP) are its native cryptocurrencies. To play, you need a team of Axies. You can buy or get them from another player. Tokens and NFTs can be stored in an Ethereum or Ronin wallet. Axie Infinity allows for almost instantaneous transactions. Players can sell tokens and Axies without using the Ethereum blockchain, which reduces transaction costs.
- Decentraland - it was founded in 2017 by Esteban Ordano and Ariel Meilich. It's built on the Ethereum network. It represents a virtual reality ecosystem where people can buy LAND, a non-exchangeable token representing a piece of a virtual map (digital real estate). MANA is the native currency, and community members can use it to buy LAND in the marketplace.
- Zepeto - it’s an easy-to-use platform which allows you to create your own characters with accurate physical attributes. You can use it to build your own game, develop it, and sell it in the future.
- Star Atlas - it’s built on the Solana network which enables efficient transactions. The game takes place in 2620. Its main goal is to get wealthy thanks to traveling around the universe in a spaceship. It allows users to purchase digital assets such as land, and equipment for the crew or ship.
But how to evaluate the value of your digital real estate once you want to sell it?
What are digital real estate multiples?
Digital real estate multiples are metrics used to estimate the value of a digital asset for sale.
They typically range between 20x or 50x the annual average net profit of the online asset.
So, when buying or selling an asset, you can calculate its estimated value by multiplying the next monthly profit by the multiples.
What affects the value of digital real estate assets?
- revenue forecasts,
- revenue streams
Digital real estate investing is a smart move for people who are looking for a way to diversify their income.
To start your adventure, you can simply create a new digital real estate asset or purchase an existing item in the Metaverse. With the right strategy, its value should increase over time.