Prices of blockchain-based virtual real estate on the metaverse increased by 879 percent between September 2019 and March 2022, according to a study.
Blockchain data platform Chainalysis’ study uncovered big differences in the prices of land in various metaverse projects and found that investors have been doubling down on digital assets for the purpose of “flipping” to turn a quick profit.
“Blockchain-based virtual real estate (VRE) offers both present-day and prospective benefits to the people who own it. Currently, the ability to create exclusive virtual events and communities is one of the major use cases that is translating into the sale of virtual real estate,” said Ethan McMahon, Economist at Chainalysis.
The research also suggests that 10 out of 11 of the metaverse projects that were studied held their VRE NFTs for less than 25 percent of the time the NFT collection had been live, and that six out of 11 held it for less than 15 percent, indicating that most VRE purchases are being made for the purpose of “flipping,” or holding assets for short periods of time with the intent to sell it quickly and make a profit.
“Companies and individuals are also utilising these virtual spaces to set up digital galleries where videos, images, NFTs, and interactive objects can be showcased,” said Mcmahon.
“Because the metaverse is such a nascent space, most of these are hard to foresee. That said, we believe that a couple of drivers may be whether AR/VR [augmented or virtual reality] systems are more interoperable or proprietary, and the pace of adoption of new computing technology.”
Tech giants like Meta, Microsoft, Nvidia, Sony, and Epic Games recently formed the Metaverse Standards Forum (MSF) in an effort to create open standards for all things metaverse, including AR, VR, and 3D technology.
It remains to be seen whether these companies will build out their metaverse(s) in a way that is interoperable with current metaverse projects and blockchain technology, but it would follow logically that such integration would drive up the value and demand for blockchain-based real estate projects, Chainalysis said in a statement on Thursday.
“In the near future, we see this demand being driven further by use cases such as renting and leasing, free airdrops of future Virtual Real-Estate NFTs, and perhaps most importantly, integrations with virtual reality and augmented reality functionalities,” McMahon added.
“The more immersive and life-like the virtual experience, the more likely it is for NFT-based ownership to feel tangible to users. So, the faster VR technology grows, the better it is likely to be for metaverse land offerings.”