Much of the activity in the various channels on the Decentraland chat server revolves around the buying and selling of LAND, which is the name they actually use for the 10m-by-10m parcels of virtual real estate that were first auctioned off in December 2017 and January 2018. It’s not yet known when the next auction of LAND will take place, so currently the only way to obtain LAND is to buy it from an existing owner.
Here’s one example of some LAND parcels currently for sale, along with their asking prices (this is a screen capture of part of an image shared by a seller on the chat server) :
The red circle to the left, near Vegas City (the proposed gambling district), is three parcels of LAND together in a reversed L shape. Asking price is 80,000 MANA, which, according to today’s value using this MANA-to-USD converter tool, works out to about US$8,749. According to Decentraland believers, this land is considered more valuable because it is located next to what is anticipated to be the lucrative and busy gambling district.
Now, mind you, you can’t even VISIT this land yet, and there is as yet NOTHING in Vegas City. The Vegas City investors are still wrestling with what they want to do with this large expanse of pooled property, how best to organize themselves, and how to split their anticipated future profits. There’s been quite a bit of discussion and even open conflict amongst the members of this group. The three main organizers were initially going to do an Initial Coin Offering of their own blockchain-based Vegas City token, until Decentraland (the company) poured cold water on that idea. (Decentraland is turning out not to be as “decentralized” in authority as some early idealists might have hoped. I think this sort of disillusionment happens in all virtual worlds. Eventually, the parent company has to step in and set corporate policies which the users might not like, want, or appreciate. Ask Second Life users who tried to set up banks and casinos.)
The red circle in the upper right corner of this map is a slightly smaller area (2 adjacent parcels of LAND), in a possibly less desirable location, for which the seller hopes to get his asking price of 25,000 MANA, equivalent to US$2,734. Again, all LAND prices are based on speculation, on anticipated future value. And obviously, some people jumped into Decentraland hoping to make some sort of profit by flipping LAND parcels.
In my opinion, these are astronomical prices, far outstripping what people have spent for virtual land in established virtual worlds like Second Life (where a full sim, 256m-by-256m, is US$600, with an additional US$295 per month maintenance fee). And Second Life land is widely considered to be expensive! Quite aside from the significantly higher up-front costs for much smaller pieces of land, it’s not immediately clear whether there will be any other fees (either monthly or one-time) associated with Decentraland real estate.
What’s worrying me is the fact (as I have said before) that the technical aspects of the Decentraland project are lagging far behind the financial ones. People have spent thousands of dollars on this virtual real estate (with prices actually reaching US$120,000 for one 10m-by-10m parcel of LAND) without a really good sense of what they are actually going to be able to build there, how they are going to build it, who’s going to visit it, or how to monetize it.
My fear is that this virtual land market is becoming a financial bubble, with people already making outrageous claims as to what you can do in Decentraland. It’s like the Wild, Wild West all over again. It is beginning to remind me of some famous financial bubbles of the past, like the Dutch tulip bubble. Everybody is piling on, expecting to become rich.
I’ve already gotten some flak from certain quarters in Decentraland for being a negative Nancy, for not being a true believer in the value of the blockchain, for being one of the relatively few people to say, “hey, wait a minute…” in the midst of all this fevered speculation. I’ve argued with people who assert that the scarcity of land in Decentraland is real scarcity, not artificially-induced scarcity, and that land scarcity is a good thing.
But (and I do apologize for mangling a line from the movie Field of Dreams) there’s absolutely no guarantee that if they build it, they will come.* The social VR/virtual world marketplace is getting increasingly crowded, and many competing products are more fully featured, and based on models of virtual land abundance, as opposed to scarcity. Sansar experiences can be 4 km by 4 km, and I know that Sinespace regions can be much larger than that (I’m not sure that they have a maximum size limit, although I seem to remember Adam Frisby telling me they could be as big as 32 km by 32 km. I know you could drive a dune buggy for half an hour in one direction in Sinespace’s single Grand Canyon region, before reaching the edge. It was seriously impressive!)
I’ve already written about virtual worlds that foundered due to misplaced priorities and bungled promotion. Having watched various platforms come and go over the past decade (Cloud Party, Blue Mars, Twinity, etc.), I have learned that building a successful virtual world is a much bigger and tricker endeavour than most people realize. In many cases, it’s like trying to fix all the parts of an airplane, one by one, while it’s flying in mid-air. Only in the case of Decentraland, people are frantically bidding up seat prices on a plane that hasn’t even been shown to be able to take off yet.
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*Yes, I know that there is no guarantee that Sansar, High Fidelity, Sinespace, etc. are going to succeed either. But unlike Decentraland, they are already actual working platforms which you can visit, test, and evaluate directly. Each has already attracted a small but committed group of avid tinkerers and experimenters. So far, the only truly successful virtual world is Second Life, still going strong after fourteen years and still profitable for Linden Lab, and many new social VR platforms are now fighting to inherit that mantle. Not all of them will succeed. I still do believe that at least one of the Big Five tech firms (Amazon, Apple, Facebook/Oculus, Google, and Microsoft) will release a social VR/virtual world product that we haven’t seen yet, funded from their deep pockets, and roil the marketplace even further. It’s an exciting but perilous time for any new virtual world. We may well end up with a Facebook-like situation, where one company dominates the market. We’ll see.
UPDATE March 5th: I was able to confirm that the maximum size of Sinespace regions is 32 km by 32 km, which is amazing!
