Category: Decentraland

Real Estate Brokers for the Blockchain-Based Metaverse Platforms: Trend or Fad?

See also: The Billion Dollar Real Estate Company Using VirBELA For Its Virtual Offices

Of course, virtual real estate brokers are not new; Second Life, over the 18+ years of its existence, has had dozens and dozens of companies who buy, subdivide, and sell virtual land for your home or business use. In fact, that’s how the first person to earn a million dollars (U.S.) in Second Life made her fortune! Anshe Chung even had her avatar featured on the May 2006 cover of BusinessWeek magazine (see image, right), an event which sparked a boom period for Second Life, as many people and companies piled on, lured by the opportunity to make some money.

And the newer, much-hyped blockchain-based virtual worlds are going through a similar boom at present, with a predictable result: the rise of the real estate agent who specializes in selling land on the blockchain to individuals and companies!

The Metaverse Property website homepage

Among the pioneers in this rapidly-evolving market are Metaverse Property, which was established by the Canadian cryptocurrency entrepreneurs Michael Gord and Jason Cassidy. They describe their service as follows:

The Metaverse Group is a leading virtual real estate company offering exposure to this burgeoning industry via the Metaverses. We facilitate the acquisition of virtual property along with a suite of virtual real estate centric services that are provided by pioneers of the crypto, blockchain and non-fungible token (NFT) industries.

We currently offer (or plan to offer) the following services to help you enter and engage in the metaverse:

• Buying and selling of virtual real estate across the Metaverses
• Development of virtual land (we help bring your dream to life)
• Expert level consulting for all major metaverses
• Finding a rental within the metaverses to fit any need
• Property management of existing real estate
• Marketing and advertising your business in the metaverse

At press time, Metaverse Properties is brokering the sale of NFT-based virtual real estate in Decentraland and Somnium Space (both of which have already launched), and The Sandbox (which recently completed a first, closed alpha test, and is expected to launch later this year):

And even some real-life real estate brokers are jumping on the bandwagon. Kim Velsey wrote in New York magazine last month:

Tal and Oren Alexander, the brothers who became famous for closing megadeals in their early 20s then moved onto the biggest deals ever in their early 30s — they represented Ken Griffin when he bought that record-setting $238 million penthouse at 220 Central Park South in 2019 — recently announced that they’ll be developing and selling luxury real estate in the metaverse…

The brothers have formed a partnership with Republic Realm, a metaverse developer that recently paid $4.3 million for virtual property in the Sandbox, one of the more popular metaverses. (It also owns a 259-parcel virtual estate in Decentraland that it bought for about $900,000.) “We want to just focus on trophy properties in the various metaverses,” Alexander told the Real Deal. This will take the form, according to Republic Realm, of an “architecturally significant master-planned community.” Which sounds a little (or very?) depressing.

Real estate has always been about status and shelter, skewing increasingly toward the former as one moves up the economic ladder. Speculators like Republic Realm and the Alexanders are banking (literally) on the fact that you can take the shelter piece out of the real-estate equation altogether, leaving just speculation and status. 

Kim raises an important point about all this speculation in blockchain-based virtual real estate, which is all about artificially-induced scarcity: that it’s a luxury item, a status item, something to give you (or your company) bragging rights. Real-world real estate agents like the Alexanders wouldn’t give a toss about the metaverse unless they smelled an opportunity to make money.

As I have written before, we’ve already seen the rise and subsequent fall (circa 2006 to 2008) of Second Life, when everybody and their dog trooped in, set up shop, then just as quickly trooped out a year or two later, when they realized that the money-making opportunities were just not what they had hoped for. It takes more than just setting up a virtual version of your brand to make money in the metaverse!

And, while the current signs for the blockchain-based social VR platforms and flat-screen virtual worlds certainly do look very promising, it still remains to be seen whether all this excitement will translate to the average, non-crypto consumer. All the people and companies who are currently investing in virtual real estate in Cryptovoxels, Decentraland, Somnium Space, and other NFT-based real estate won’t have a problem attracting the blockchain enthusiasts, the crypto bros (and women, and those who identify as non-binary).

They will, however, also have to entice Joe and Jane Average Consumer to pay a visit, set up a wallet and an avatar, obtain and spend cryptocurrency, and stick around long enough to help build a strong community. And that’s going to be a much harder sell.

We could see a repeat of what happened in Second Life, as companies realized that they were spending a lot of money on something that wasn’t helping their bottom line, and then largely pulled out. Or we could see great success, who knows? (God knows my track record at making predictions on this blog is absolutely abysmal. I once infamously predicted that Cryptovoxels would fail miserably, and they have been going from strength to strength! I also predicted that Virtual Universe would be a hit, only to have it fold. So, meh, what do I know??!?)

But I do find it amusing how so many people are breathlessly talking about the metaverse like it’s some new thing, as if the non-blockchain-based virtual worlds and virtual worlds never existed for them. Half the time now, when I click on an article talking about the metaverse, all it talks about are NFT-based virtual real estate. There’s just so much more out there, and I believe it’s important to take a broader view of all this, especially in the current hype cycle of all things metaverse.

So, to answer the question in my admittedly click-bait blogpost title: are virtual real estate agents a trend or a fad? I would argue, based on my 14+ years of experience in Second Life, that they are an already-established trend worth watching. I think that there is a possibility that in the future, real estate agents will buy, sell, and trade virtual properties, acting as brokers for individual and corporate customers who don’t want to fuss with their purchasing experience on OpenSea and other NFT marketplaces, and are willing to pay to have somebody advise and navigate them through all the fussy details of owning a piece of the metaverse.

Editorial: The Current Business Land Rush in the Blockchain-Based Virtual Worlds (and the Forgotten Lessons from Second Life’s Corporate Boom)

It’s déjà vu all over again.

—Yogi Berra (source)
The virtual office of accounting firm Prager Metis International in Decentraland (image source: The Wall Street Journal)

This morning, I read a January 7th, 2022 article in The Wall Street Journal titled Accounting Firms Scoop Up Virtual Land in the Metaverse (archived version), which discusses how PricewaterhouseCoopers and Prager Metis made acquisitions last month to begin operating in the metaverse. Please go over there and read the article in full; below is the section pertinent to my editorial today:

Businesses across industries, including real estate, technology and cryptocurrency, have been purchasing digital land on platforms such as Decentraland and the Sandbox. Executives have started drafting business plans for operating in those virtual worlds, which are typically conceived by videogame developers.

Prager Metis International LLC, a New York-based accounting and advisory firm, on Friday said it opened a virtual three-story property on a site it bought for nearly $35,000 in late December. The firm, which operates 23 physical offices in the U.S., Europe and Asia, made its purchase on the Decentraland platform in partnership with Banquet LLC, a firm that funds and manages blockchain ventures.

Prager Metis plans to use its virtual building to advise companies and other new and existing clients on tax and accounting issues, Chief Executive Glenn Friedman said. The firm expects that many of its clients, particularly those in the entertainment and fashion industries, will seek its services in the metaverse as more companies decide to conduct business there, according to Mr. Friedman. “If the metaverse is going to replace the internet, then certainly business is going to use it,” he said.

Other accounting firms are also venturing into the metaverse. PricewaterhouseCoopers in late December said its Hong Kong unit acquired virtual real estate in the Sandbox, a subsidiary of software firm Animoca Brands Corp., for an undisclosed amount.

“The Metaverse offers new possibilities for organizations to create value through innovative business models, as well as introducing new ways to engage with their customers and communities,” William Gee, a partner at PwC Hong Kong, said in a statement.

And, like Yogi Berra once famously said, I got déjà vu all over again.

In November 2017, in the earliest days of the RyanSchultz.com blog, I wrote:

I still remember the crazy heyday of Second Life, with the hype machine set to maximum, from 2006 to 2008. Everybody was going on about how virtual worlds in general, and Second Life in particular, were going to revolutionize business and education. News organizations like Reuters, countries like Sweden, and big corporations like American Apparel and IBM trooped into SL and set up sims.

(Of course, most of those organizations trooped out of SL just as quickly as they trooped in, leaving the field to the many mom-and-pop businesses that give SL its vibrancy.)

And in July of 2018, I wrote:

Second Life went through a period (around 2006-2007) where many real-life companies, like American Apparel and Playboy, trooped in and set up shop. Almost all of those corporations left after a year or two, not seeing any real value for their investment of time and money in SL.

But, you may say; but!! It’s different this time around, you may say. And you may well be right. Perhaps, this time, all the stars will align and people will create an avatar, go into a social VR platform or a virtual world like Decentraland or the Sandbox, figure out how to dress themselves, move around and talk, locate your virtual office or shop, and actually transact business. But, for anybody who was in Second Life between 2006 and 2008, during a previous iteration to the current metaverse hype cycle, this all has a rather familiar ring to it.

Businesses who want to set up a virtual office or shop in any metaverse platform—Decentraland, the Sandbox, venerable old Second Life, wherever—need to stop and ask themselves the following pertinent questions (and yes, a consultant like Cathy Hackl, Godmother of the Metaverse, would probably charge you a pretty penny for this advice, but hey, me, I’m going to give it to you for free!):

  1. What is your use case? Prepare a written-down description of the ways in which a user would interact with your virtual office. Yes, I’m serious! WRITE IT DOWN AND THINK IT OUT. A formal use case would establish the success scenarios, the failure scenarios, and any critical variations or exceptions to your plan, before you commit.
  2. Who is your target audience? Who are you hoping to reach by setting up a virtual office in social VR or a virtual world, that you you wouldn’t already reach? NFT enthusiasts? Crypto bros? Your Joe or Jane Average consumer? If there’s a mismatch between your target audience and the people who actually use the platform, you need to take a step back and rethink this. You shouldn’t expect a sudden influx of people who are different from the demographic of the current userbase, either.
  3. How technically savvy is your target audience? For example, during Second Life’s boom, many academic libraries set up virtual versions, only to later close them when they realized that expecting people to install and set up a Second Life client, just to look for information or ask a reference question, was too steep a learning curve. In other words, the price of admission was too high. (Yes, I know, Decentraland is web-based, but that, too, has a learning curve and its tricky set-up bits, particularly if you are new to cryptocurrencies, blockchain, and NFTs.)
  4. Will this virtual office be staffed? Or will it just be a place where an avatar can get information, kind of like a fancy, three-dimensional brochure, but with NFTs and videos? 😉 And, if you do plan to staff it, will you have posted office hours? Keep in mind that most metaverse platforms operate 24/7/365; will you have people working in shifts? At the same time, paying someone to hang around in Decentraland or the Sandbox, waiting for someone to wander in, could potentially be expensive.
  5. Seriously, ask yourself why you are doing this, and keep digging until you hit bedrock! Are you setting up a virtual office just for the bragging rights? Are you just responding to all the recent articles about the blockchain-based metaverse which are triggering your FOMO (Fear Of Missing Out)? Are you responding to someone else’s FOMO (e.g. your CEO or CTO)?

    So go look into the mirror, and ask yourself why. And whatever answer you give, keep asking yourself why, again and again and again, until you strip out all the corporate-speak and bafflegab and bullshit and you hit your underlying bedrock, your true motivations and intentions. THEN act.

There, you see? Auntie Ryan could definitely give the Godmother of the Metaverse a run for her money! 😜 (Seriously, love you, Cathy! Don’t change what you’re doing!)

Look, people (and by “people”, I mean corporations); I’m not saying don’t do this. I’m saying: if you choose to do this, then carefully think about what you are doing, and why you are doing it, before you jump in feet-first, and start flailing about. And (shout-out to Cathy!) hire consultants who will advise you. (Hey, forget Cathy, hire me! Me!!!)

I remain optimistic that this iteration of the metaverse will take off (unlike Second Life’s relatively short-lived and now seemingly-forgotten corporate boom). But my optimism is tempered by my 14 years of experience in SL…I often joke that I got my Ph.D. in the Metaverse from the University of Second Life! 😉 That experience informs my perspective as I passionately explore and write about the ever-evolving metaverse on this blog.

Second Life is the perfect model of a mature, fully-evolved metaverse platform, which newer entrants into the marketplace would be wise to study, and learn from both its many success stories and its failures, controversies, and scandals.

Decentraland Introduces a Royalties System for Their Blockchain-Based Virtual World Platform

The blockchain-based virtual world Decentraland has announced the implementation of a royalties system for items such as avatar wearables, a proposal originally suggested by their community (and passed by an overwhelming majority vote).

According to the official announcement on the Decentraland blog:

Up until now, when a wearable creator made a sale in the primary market, they received the listing price minus a commission of 2.5%, which went to the Decentraland DAO. However, when the sale occurred in the secondary market, the owner of the item (not necessarily the original creator!) received the sale price minus the 2.5% commission, which still went to the DAO.

With the implementation of Royalties in the Decentraland marketplace, only primary market commissions are destined to the DAO, while those in the secondary market now go straight to the creative hands behind the wearables.

Creators of new and existing collections on Polygon will be able to set a beneficiary address per item in the collection management tool, be it themselves or a third party. If a wearable is sold multiple times, it is now up to the creator to decide who benefits from all those sales!

The announcement notes that “royalties are not retroactive, so listings created before this launch will not be eligible to receive them.” I assume this means content creators and resellers will have take down old listings and put up new ones as a result.

Philip Rosedale has, in the past, mused about setting up some sort of royalties system for Second Life, but unfortunately it never came to pass. As far as I am aware, this is the first virtual world (blockchain or non-blockchain) to implement such a system.

Image taken from a previous version of the homepage on the Decentraland website

Barbados to Set Up an Embassy in Decentraland

The Caribbean nation of Barbados is planning to set up a virtual embassy in the blockchain-based virtual world Decentraland. While the idea of a country setting up an embassy in a virtual world is not new (both Sweden and the Maldives have had embassies in Second Life), this is the first time that a country has set up an official presence in a blockchain-based virtual world, and perhaps a sign of things to come.

According to a recent CoinDesk article written by Andrew Thurman, Decentraland is not the only metaverse platform the country is looking at:

In what could be seen as a historic step toward the legitimization of the metaverse, the island nation of Barbados is preparing to legally declare digital real estate sovereign land with the establishment of a metaverse embassy.

The Barbadian Ministry of Foreign Affairs and Foreign Trade signed an agreement on Sunday with Decentraland, among the largest and most popular crypto-powered digital worlds, for the establishment of a digital embassy. Per a press release provided to CoinDesk, the government is also finalizing agreements with “Somnium Space, SuperWorld and other Metaverse platforms.”

Both Decentraland and Somnium Space I could see as possible sites for a virtual embassy, but SuperWorld? Really? The last time I looked at the SuperWorld project, back in January, I was less than impressed with the concept. I wonder how much the Barbadian officials understand about the metaverse, if they lumped SuperWorld in with Decentraland and Somnium Space. Let’s hope they are getting good advice!

The CoinDesk article goes on to say:

With the release of the embassy, tentatively scheduled for January, Barbados will become the first country in the world to recognize digital sovereign land. The Ministry of Foreign Affairs, The Ministry of Science and Technology, and many other governmental bodies reviewed the plans over “several, several months,” said [Barbados’ ambassador to the United Arab Emirates, H.E. Gabriel] Abed.

The country has also retained legal counsel, as the embassy will set a number of unique precedents. So far experts have said that the embassy will be compliant with international law as well as the Vienna Convention.

Barbados is among the friendliest countries in the world for cryptocurrencies and has been among those leading the charge on the development of a central bank digital currency.

A view of Barbados (Photo by Kathryn Maingot on Unsplash)

Thank you to Akumie for the tip!