Talk about funny money

Not a big crypto/NFT fan, here.

Not that I don't spend my share of time in the virtual world, but if I'm going to buy something I'd just as soon have it be something tangible, and I'd just as soon pay for it using money.

I'm old school that way.

But out in the metaverse, plenty of folks are throwing good money - make that funny money - after virtual assets, and investing in crypto, digital versions of artwork and baseball cards, and nonexistent real estate. I repeat: NONEXISTENT. REAL. ESTATE.

Welcome to the new world, where physical real estate is so last century and virtual land swaps transact in cryptocurrency rather than dollars. The idea behind the metaverse is that eventually this becomes the next phase of the Internet, in which people socialize and conduct business virtually and need better places to go than Zoom. (Source: Boston Globe)

It would be one thing if people were paying a few bucks to buy their nonexistent dream house in their nonexistent dream neighborhood next to their nonexistent dream neighbors. But there are folks going pretty deep in to get their piece of big nothing. As in:

Last year, a buyer shelled out $450,000 to become Snoop Dogg’s neighbor — not in real life, but in Snoopverse, a metaverse that boasts a virtual replica of the rapper’s house. 

A number of celebrities - c.f., Snoop Dogg - have jumped into the virtual world to squeeze even more money out of their fans. (Kind of surprised that Trump hasn't had someone set up a virtual Mar-a-Lago where his more fervent cultists can grab prime real estate nearby. Talk about there goes the neighborhood.)

Anyway, all that money to not live next door to Snoop? Sure, it's less than it would cost to live next door IRL. It's still a lot of money, and I want to know whether the virtual Snoop comes out to chill with the bro who paid 450 large to live next door. 

Really, surreally, I just do not get it. 

As the article pointed out, one of the (many) odd things about virtual real estate is that the laws of supply and demand don't seem to apply.

One thing to be in a super-heated pricey RE market where there's not a lot of housing available, and there's no prospect of building more. 

Maybe it'll be under water when the Poles melt, but until then, homes in my neighborhood - Beacon Hill - are likely to stay in demand - the 'hood is charming and has a great location, location, location - and remain scarce. There is no available space and no one's going to let a developer tear down a bunch of brick townhouses built in the 1860's and put up a high rise in their place.

But in the metaverse, there's seemingly infinite capacity to build more and more virtual structures on more and more virtual lots. And the construction costs are next to nothing. 

Sure, every virtual house in Snoopverse can't be next to Snoop's. But why wouldn't Snoop build a virtual vacation home, a virtual urban crib. The land's no limit. Neither is the sky. 

Despite the traditional laws of economics, and the traditional expectation (i.e., myth) that the consumer is rational, there's a lot a money pouring in to virtual Nowheresville. 

Real estate sales across the four major metaverse platforms (Sandbox, Decentraland, Voxels, and Somnium Space) totaled $501 million in 2021, according to MetaMetric Solutions. Prior to the crypto crash of recent weeks, sales were projected to top $1 billion this year.

(Snoopverse is "located" in Sandbox.)

So who's buying?

Largely folks who speculate in crypto. And, despite the expensive spots like the nonexistent home next to Snoop's nonexistent home, an undeveloped parcel can be had for as little as $500. So Joe Cryptoblow can afford to get in.

There still aren't all that many Joe Cryptoblows. Only 25,000 crypto wallets hold real estate in the great nonbeyond that is the metaverse. 

While the metaverse real estate market is tied to crypto, there's not a lot of concern about the impact of the crash of crypto that's been going around for the last year or so. Analysts see the metaverse real estate market as more dependent on social media than on crypto. They expect it to rely more on fans who'll want to rub virtual shoulders with their idols - celebs, athletes, influencers - and/or gameplayers who spend their lives socializing in the unreal world, than on crypto speculators who are betting everything on that market.

I will be sitting this out. 

But maybe those who are living their lives more virtually than i do are on to something.

If you're never going to be able to afford a big house, or are just plain content to live with a smaller footprint and not own a lot of stuff; if you don't want to fill your closets to bulging with clothing you'll wear once, but might want to buy a cool virtual sweater; if you don't want to hop on a polluting plane to fly to a destination you can visit virtually, maybe this is a more economical and environmentally sensible way to live.

Not that there's no environmental cost. All this crypto mining has a pretty wide carbon footprint. And datacenters are big energy suckers. Still, doing your consuming virtually likely has a less negative impact on the environment than buying all this tangible stuff you don't need and that will end up in landfill. 

Anyway, it's all funny money to me.