Belfort says bitcoin’s price surges are thanks only to a belief by buyers that there will continue to be ‘greater fools’ who they can sell the asset to at a higher price.
“There’s no fundamental value [with Bitcoin], it’s all based on the next guy and the next guy,” he says. “Get out if you don’t want to lose all of your money because … there’s a very good chance it’s going to crack. And when it really cracks, you’re not going to be able to sell on the way down, there will be no liquidity.”
I got interested in the project back in January when I had no idea virtual land ownership was even a thing. I was just searching different blockchain projects and stumbled open Decentraland. A crypto blockchain project inspired by novels such as Ready Player One and Snow Crash.
After a bit of researching I was hooked and decided to jump right in buying my first couple of properties for around $500 USD each.
Now, 6 months later, I’ve bought and sold 100’s of properties and made close to $100,000 USD doing it!
And now Matty wants to share his knowledge with the world! For the low, low price of only 1 Ethereum coin (US$485/CDN$686), this guy will teach you everything he knows about flipping virtual land for profit in Decentraland:
Someone recently posted the following offer to sell an 80m-by-60m parcel in the initial Genesis City region in Decentraland (each red square on the map below is one 10m-by-10m piece of virtual real estate, called LAND):
That’s right, a million dollars for 4,800 square meters of land. Compare that with Second Life, where a 65,536 m² plot sets you back US$600.00 with a monthly fee of US$295.
The seller justifies his asking price by saying, “but there’s nothing else on the market of this size with this much land next to a road”. Keep in mind that proximity to a road is a moot point when you can usually teleport from place to place in any virtual world (but, of course, you can’t even visit Decentraland yet, let alone teleport anywhere).
The only active, functioning part of Decentraland at the moment is the land market, where people are frantically buying and selling virtual land in anticipation of making a huge profit when Decentraland actually goes live (and nobody can say when that will be, yet). Given how extremely competitive the virtual world market is, and how much further ahead most of the other platforms like Sansar, High Fidelity, and Sinespace are in terms of functionality, this is extremely risky speculation.
I notice that since my last blogpost about the Land Marketplace in Decentraland, the developers have turned off the website’s ability to sort and view the marketplace listings by most expensive first. So you can no longer easily find out what the most expensive land is selling for. Well, actually, it’s still pretty easy to see, you just select the sort by Cheapest option and scroll to the very end of the listings:
I just keep shaking my head, and I keep watching from the sidelines.
As I have written before, I am shocked at just how much money some people are asking for their LAND. I used the new Decentraland Marketplace website to find a piece of LAND for sale near the central square in Genesis City, for sale for 13,140,000 MANA (their cryptocurrency):
You may wonder what the cheapest LAND parcel is selling for. It’s 8,500 MANA for one 10m-by-10m parcel of LAND, which works out to about US$740. This makes Second Life (a virtual world you can actually visit) seem like a bargain! It makes any other virtual world seem like a bargain.
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.
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.
*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!