MetaVerse Real Estate: What is it? What Are the Risks and Rewards of Investing in this metaverse real estate boom?

MetaVerse Real Estate:

What is it? What Are the Risks and Rewards of Investing in this metaverse real estate boom?

The world of cryptocurrency seems to be taking us all by surprise and with this technology, we have opened a whole new sphere, the virtual world!

Crypto whales are really fighting to get parcels of virtual land which to the ordinary person, this does not make any sense at all.

Last year, the real estate in this new strange world, called the metaverse reached half a billion dollars, and if this trend continues, it is possible that its sale might reach and even exceed 1 billion dollars this year. Companies globally are even participating in the purchase of big parcels of land, and then developing them to lease them later which sounds surreal.

One of the questions that you may be asking yourself is leasing these developed parcels to whom? Surprisingly, many people are willing to take a gamble. According to the CEO of Metaverse Group, Lorne Sugarman, a company specializing in buying this virtual land developing it, and leasing it out, he compares the ‘great land grab to “the early days of European settlement in the US.”

The Metaverse world will grow in value economic wise as more people and brands buy, and it is already happening. Early speculators,

So what is Metaverse? Many technologists say that Metaverse is the next level of the internet. It is like the real world only that it is not. In a virtual world, people can play games, connect with friends, attend meetings and even go to virtual concerts.

BUT WHAT ARE THE RISKS?

Some academics argue that Metaverse is as real as real gets, it not synthetic as many people believe, and people should invest in this virtual world, but according to Edward Castronova, a professor of media at Indiana University is having none of that and certainly won’t be investing in virtual property. He argues that the “current metaverse real estate boom is a speculation market,” and that booms “like this have been happening every four-five years since the early 2000s.”

Even though short-term speculative gains are possible, Castranova has “never seen long-run value emerge from a virtual land product.”

LET’S TALK ABOUT THIS VIRTUAL LAND BOOM

As you may have already guessed, a land boom simply happens when there is a rapid increase in the market value of the real property. The value or the price will continue to rise reaching unsustainable levels, then declines, sometimes rapidly.

About a century ago, Florida experienced a land boom where prices rose to epic proportions and the land speculations were based on hype and lies rather than actual economic realities. If that doesn’t sound familiar, as I am sure it is not, let me bring you closer. Many of you experienced the financial crisis of 2007-2008 when the real estate burst had some real ripple effects. One thing is for sure, real estate bubbles can be extremely difficult to identify, the line between the intrinsic value and the current market value is a fine one.

With Metaverse, however, identifying the real estate bubbles is easy. The period that occurs before a crash is called a froth. A frothy market is characterized by bullish investors that intentionally ignore the market fundamentals. Also, speculations and supercharged emotions reign, investors cast aside their rational thinking.