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Source: Republic Realm

'We’re All Speculating': Inside the Wildly Hyped Metaverse Real Estate Rush

Dubious promises of potential once-in-a-lifetime riches are driving speculators into a complete frenzy. “There’s a lot of hype, and it's not healthy,” one CEO said.

Gairad DeCastro is bullish on the metaverse, so much so that he told Motherboard he recently sold an investment property in the real world and invested the proceeds into the booming digital land market. The 32-year-old small business owner believes the investment could turn out to be a “very good play” compared to the physical housing market, which he sees as “​​extremely inflated” right now. 

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“I got a great return on the house,” DeCastro told me, “and saw an opportunity to take that when it was at its peak and invest it into something that could be, you know, ground level.”

DeCastro’s new digital land represents, depending on who you ask, an enviable early investment in the future of the internet or misplaced hope in one of most overhyped marketing schemes in the history of U.S. capitalism. What’s less in dispute is that he is one small part of a growing population engaged in an intense digital land grab—buying, selling, renting, and building in the so-called metaverse in hopes of making a buck. “We're all speculating at this point,” DeCastro admitted. 

Many blockchain-based metaverses that link digital property to non-fungible tokens, including Decentraland and The Sandbox, have decided to establish a fixed quantity of land—“We won’t expand it,” The Sandbox’s CEO has said—under the justification that limitless land would lead to “abandoned” areas while a finite amount would lead to clustering, upkeep, and social cohesion. 

But it’s also a prime reason why prices have risen so quickly and so high. Still in their early years, the virtual worlds have spawned true believers, hype artists, and complex economies in places like The Sandbox, Decentraland, Somnium Space, and other metaverses, all of which are vying to become dominant players in the supposedly decentralized space. Virtual real estate companies are building music festival stages and Rodeo Drive–like digital neighborhoods; 3D architects are constructing villas and shopping malls; and digital landlords are renting out land to singers, artists, and NFT creators. Some enthusiasts go so far as to contend that digital land could serve as a wealth-generating replacement for the physical housing market that so many millennials and zoomers have been priced out of. 

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“Since October, everything is a metaverse,” said the chief operating officer of a metaverse-focused company.

And yet, the artificial scarcity coded into many metaverses has frustrated some blockchain purists who want the new digital world to create a truly fairer, more decentralized version of Earth. It can instead feel, at times, like an even more commodified and consumerist version of the reality humans naturally inhabit, in which a few power players are already dominant, and passion and hucksterism can look the same.

“Domino's is selling pizzas in Decentraland that are delivered right to your door. It's simple, but it's revolutionary,” said Evan Buckman, the chief operating officer of Realm, which hopes to allow users to develop personalized worlds known as “microverses.” (As goes with many things in the metaverse, the truth is a bit less straightforward. Domino’s is not selling pizzas in Decentraland, a spokesperson told Motherboard, but a developer did create a digital kiosk to mimic the pizza’s old branding and interact with the company’s ordering systems, leading to the delivery of a pizza.)

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The ever-growing number of avatar-filled virtual worlds selling digital land, bucketed under the term “metaverse,” share several philosophical and technological similarities. They are mostly enabled through the use of cryptocurrencies and non-fungible tokens, keen to describe themselves as decentralized, and quick to promote the prospect of users making money. But they are often distinct and in different phases of development.

Both The Sandbox, the SoftBank-funded metaverse spinoff of the hit mobile games, and Decentraland empower (or will) decentralized autonomous organizations, or DAOs, with decision-making power. But what actually makes up the “metaverse” on these platforms has been underwhelming to some, and familiar to anyone who’s played video games in the last 20 years. Most actual virtual spaces are Roblox-level, graphically, and generally reminiscent of Second Life. Nor are they compatible with virtual reality headsets right now.

“Many things which are not necessarily good or useful to people—or even working—are getting a lot of attention,” said one metaverse CEO.

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Some metaverses are, including the 3D-focused Somnium Space. But while Somnium Space’s land parcels and digital assets are on the blockchain—“We love decentralized”—it sheepishly admits on its website that decisions are made by a centralized team because, according to the company, “a project of our size and vision needs to be curated and decisions have to be made quickly.”

To some people in the industry, the level of boosterism emanating out of certain corners can feel like an overcompensation for a lack of a viable product. “It's all futuristic hype,” Chris Bell, a digital landlord within the virtual reality world of Somnium Space, said of another metaverse. “The underlying value for each parcel is not there.”

Notably, Bell also does freelance work developing blockchain partnerships for Somnium Space, and not everyone shares Bell’s skepticism. 

“There’s plenty of people that also think Bitcoin’s a scam,” said Janine Yorio, the chief executive officer of Republic Realm, a metaverse real estate company separate from Buckman’s company. “Meanwhile, the crypto investors are driving around in Lamborghinis and living their best lives.” 

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Republic Realm CEO Janine Yorio says she is helping to create the infrastructure of the next generation of the internet with structures like this one.

To Yorio and many others, the oncoming dominance of the metaverse is an inevitability, regardless of what final form it takes. 

“We don't know exactly when it's going to hit. We don't know exactly who the winners are going to be,” Yorio said. “But the fact that this is the next evolution of the internet is 100 percent guaranteed.” 

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The concept of the metaverse isn’t new—author Neal Stephenson first used it in his 1992 science fiction novel Snow Crash—nor is the idea of spending real-world money on virtual land. In 2010, one gamer sold a digital asteroid in Entropia Universe for $635,000, according to the BBC. But for years, the industry was a somewhat quirky sideshow lurking in the shadows of Silicon Valley, slowly building momentum and interest as a result of two unrelated factors: blockchain and NFT technology, which provided a way for two parties to transact directly without a middle man using unique tokens, and the COVID-19 pandemic, which accustomed everyone to a life spent online.  “We've all sort of adjusted what we consider to be satisfactory social experiences, and this is now starting to qualify,” Yorio said.

Then, in October, following a string of critical Wall Street Journal stories that led to widespread criticism and congressional hearings, Facebook announced it was rebranding as Meta and planning to focus on bringing “the metaverse to life.” The decision lit a fuse within the digital real estate industry. “That really opened the floodgates,” said Yorio. Decentraland had been experiencing exponential growth in the months prior, but Facebook’s rebrand “just sent the whole thing into overdrive,” Sam Hamilton, the creative director of the Decentraland Foundation, told Motherboard.

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Within days, people were bidding on digital land like they were searching for gold in 19th-century California. A plot in the NFT-based world Axie Infinity went for a reported $2.3 million worth of cryptocurrency. The Metaverse Group purchased a 116-parcel estate “in the heart” of Decentraland’s Fashion Street district for a record $2.4 million. Republic Realm bested that by purchasing $4.3 million worth of land in The Sandbox, according to the digital land sales tracker NonFungible.com. It also sold what it called The Metaflower Super Mega Yacht for $650,000.

Suddenly, the metaverse was big business. By the final week of November, people were purchasing $100 million worth of metaverse land, according to data tracker DappRadar. By the final quarter, the volume of trading in the metaverse was “155% higher than the previous three quarters combined,” hitting $330 million, according to DappRadar. Real estate in Decentraland was trading for an average of $26,800 per transaction by December, up 154 percent from October, and land in The Sandbox was going for 500 percent more than in October. Grayscale, which claims to be “the world's largest digital currency asset manager,” estimated in a report that the metaverse now represented a “trillion-dollar revenue opportunity.”

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More traditional players took notice as well. Morgan Stanley’s Edward Stanley said that the metaverse could “fundamentally change the medium through which we socialize with others.” The investment banking company Jefferies Group went further, writing in a note that the metaverse “has the potential to disrupt almost everything in human life.” 

Decentraland’s Hamilton told Motherboard that a common “misconception” about the real estate boom is that Decentraland is making money directly off it, when, in fact, the non-profit organization that oversees it, the Decentraland Foundation, auctioned off all of its public land in 2017, starting bids at $20 per parcel. “All the sales that you see subsequently are people that bought the land then, as speculation, and are then selling it on the secondary market,” Hamilton said. 

In fact, according to Hamilton, Decentraland has not pulled in any additional revenue since it received $26 million during its initial coin offering in 2017. “We don't charge for anything. Even our creative services, when brands come to us, we do it all for free, which blows their mind,” he said, adding at another point, “We have funding for the next 20 to 30 years with the currency of crypto.”

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One of the central selling points of the many metaverses sprouting up—as well as Web3 and the blockchain more broadly—has been that it will wrest control of the internet away from tech giants like Google or, ironically, the recently renamed Meta, allowing the type of creators whose unpaid work built those companies into multibillion-dollar power brokers to profit off their time and energy, rather than post art (and content) for free to the corporation’s benefit. 

But for all the talk of a decentralized next generation of the internet, a number of companies have already sprouted up hoping to bet big on a few platforms and reap billions in profits as a result. Among them is the Metaverse Group, a leading digital real estate company that offers “a suite of virtual real estate–centric services,” including buying and developing land and property management. In the real world, the Metaverse Group is based in Toronto, but its virtual headquarters is located in Decentraland’s Crypto Valley. 

For all the talk of decentralization, a number of companies are betting big on a few platforms in hopes of reaping billions in profits. “There is only one Facebook,” one speculator said.

The chief executive of the publicly-owned blockchain company Tokens.com, which owns a significant stake in the Metaverse Group and bills itself as “one of the only companies providing public market investors with exposure to the metaverse,” has compared purchasing metaverse land to “buying land in Manhattan 250 years ago as the city is being built.

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But Michael Gord, the Metaverse Group’s co-founder and chief operating officer, said some digital land could prove even more valuable than a plot in modern Manhattan. 

“New York has 10 million people or 15 million people in the city at any time. And although New Yorkers like to say that New York doesn't sleep, actually New Yorkers do sleep sometimes,” he said. By comparison, Gord believes it’s “reasonably likely” that as many as 100 million-plus people could be inside Decentraland at all hours of the day and night, which “would make it the most populated city on Earth, and also perhaps the most desirable real estate on Earth.” He estimates the “growth opportunity” is “in the hundreds or thousands of X of ROI” and expects Decentraland to be not only “the next Facebook” but also “the biggest social network in the world,” which is why he believes his company’s investments to be financially sound. 

“There is the possibility for there to be millions of metaverses that are created,” said Gord, who spoke to Motherboard while in Dubai. “But there is only one Facebook. There is only one YouTube.”

Such excitement belies the true state of the metaverse, which often remains more an idea than a reality. Gord, for example, admitted when I asked him how much time he personally spends in the metaverse that the answer was “not tons.” That’s understandable. Wired has described Decentraland, which only opened to the general public last February, as “largely empty” and “reminiscent of an early-access game.” Talking through a desktop requires awkwardly holding down on the T key, and an Insider reporter described a recent “rave” as “a game without anything to do.” And while The Sandbox has registered north of $200 million in digital land sales—and at least two-thirds of its land had reportedly already sold by early November—the platform is yet to open to the general public, only temporarily previewing 18 experiences to 5,000 so-called Alpha Pass NFT holders in late November for a temporary trial that ran less than a month.

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VR-enabled metaverses don’t always seem to be faring much better. When Meta’s Nick Clegg performed an interview with the Financial Times in the metaverse, he had to awkwardly lift his head in order to drink his coffee while still wearing what he described as a “wretched headset.” 

“Many things which are not necessarily good or useful to people—or even working—are getting a lot of attention,” Artur Sychov, the founder and CEO of Somnium Space, told Motherboard. “The reality is a majority of them don't have the metaverse, they have maybe some pieces of some sort. But they don't have the place, the metaverse.”

The technology should improve. Decentraland is only available through an internet browser on desktop, but will soon release a mobile version and a downloadable desktop client, which will allow users to store aspects of the metaverse directly on their computer, improving performance and setting the stage for a VR headset-supported Decentraland, according to Hamilton. (He said his foundation is hoping to launch VR support in October.) But unlike in metaverses like Somnium Space, Decentraland’s goal is not to get people to put on VR headsets.

“The long-term goal is that it's accessible by everybody on any device, anywhere in the world, and can't be shut down,” Hamilton said. 

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Because the industry is still in its early days, land values have sometimes felt like they’re based on guesswork and created a sub-industry around marketing and promotion, which can be seen almost everywhere. “There’s a lot of hype, and it's not healthy,” Sychov said. Numerous people I spoke with, like Bell, implied that while they were trustworthy, other people were less so. Plots are described as “the Hamptons of digital real estate” without much elaboration. One artist I spoke with said one metaverse had the capacity to “change human civilization forever.”

The entrance of Meta has also diluted the meaning of the term “metaverse,” creating a flurry of marketing attempts to latch onto the buzzword in hopes of upping profit or attention, sometimes to the frustration of those in the industry. “Since October, everything is a metaverse,” said Buckman. When graphics card maker Nvidia revealed a new suite of creation tools last year, it slapped a metaverse bumper sticker on it; when Microsoft recently purchased Call of Duty and World of Warcraft makers Activision Blizzard, the media bizarrely branded it as a metaverse play. Chef Tom Colicchio has pushed the “massive opportunity for the Food & Beverage industry to penetrate the metaverse” while announcing the sale of ​​8,888 “delicious” but slightly puzzling pizza NFTs, and Applebee’s even claimed in December to have even created “the first Metaverse Meal.” (No word yet on how a metaverse meal tastes).  

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When Motherboard asked the CEO of Somnium Space to speak, his only request was that he be able to perform the interview using his virtual reality headset from inside Somnium Space to differentiate his platform from the broader hype. (Source: Somnium Space)

Sychov and Bell criticized some platforms’ own massive marketing campaigns, which they see as placing an emphasis on image before product.  So far, it’s worked. The Sandbox, for one, has partnered with brands ranging from The Walking Dead to Care Bears. In September, The Sandbox announced another “partnership” with Snoop Dogg, in which the rapper planned to recreate his “mansion” in the metaverse, along with the sale of 1,000 Snoop Dogg Private Party Passes, which will give owners “access to Snoop Dogg's lifestyle” (online). Such moments draw attention—and cash. In the case of Snoop Dogg’s mansion, nearby Sandbox “estates” sold for the equivalent of $450,000, $410,00, and $338,000 soon afterward, according to Decrypt, the Bitcoin and ethereum news site.  

(Asked if the platform paid for such partnerships, Sébastien Borget, the COO and a co-founder of The Sandbox, told Motherboard over email that “each partnership is different and we cannot disclose the details.”)

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“Sandbox is talking about the future, and they do it in a great way,” Bell said. “They show you a couple screenshots, and all of a sudden you imagine this thing that's going [to happen].”

Decentraland’s Hamilton believes building a decentralized Web 3 will need to be a collaborative effort in which platforms like Decentraland, The SandBox, and Somnium Space support one another. But he admitted some “friction” did exist between the various metaverses.

“I don't think it needs to be that way.  It's a difficult enough situation,” Hamilton said. He hopes, however, that now that “everyone's successful, it’s going to get much easier for platforms to work together.”

Republic Realm’s Yorio doesn’t shy away from the issues facing the metaverse. “Everybody's talking about the metaverse, but you go there, and there's nothing to do, there’s nothing to see,” she said. 

But she sees herself as part of the solution. 

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Republic Realm’s most successful product is a collection of 100 exclusive villas in The Sandbox called the Fantasy Islands collection. (Source: Republic Realm)

Early in 2021, Yorio launched an “experimental” metaverse real-estate investment vehicle after dabbling in the world on the weekends and “making a lot of money.” By July, she decided to build a company focused around the concept. A former partner at a private equity firm and real estate developer for Standard Hotels, Yorio said that she approaches the job with a “traditional venture capital mindset” while also checking what certain Discord communities are excited about. Republic Realm, her company, owns 3,000 plots of land in 25 different metaverses and is tracking 180 different worlds as of last month.

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“Everybody's talking about the metaverse, but you go there, and there's nothing to do, there’s nothing to see,” said the CEO of a metaverse real estate company that develops land.

“Having been in it for four months longer than everybody else, we actually had a huge head start,” she told me.  

Republic Realm isn’t a “corporate tycoon who just buys and holds,” she said. It’s building the infrastructure that it believes will help turn the metaverse concept into a reality. The company’s most successful product is a collection of 100 residential villas in The Sandbox called the Fantasy Islands collection, for which the company purposefully charged the “very high-end price point” of $15,000—“It connotes some exclusivity”—and which were going for $300,000 in the secondary market  when we spoke, she said. The plots are modeled after vacation homes in the south of France, sci-fi video games, and Central American ecolodges (“for surfing on the beach”),  and come with customizable add-ons, like a hot tub. She compared purchasing a home in the metaverse to creating the modern version of a Myspace page. “It's like having your own website,” she said.  

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One of Republic Realm's proudest creations is Metajuku, a 16,000-square-foot digital shopping mall in Decentraland designed to look like the Harajuku.(Source: Republic Realm)

For now, the most common selling point for joining the metaverse isn’t living, but shopping. One of Yorio’s proudest creations is Metajuku, a 16,000-square-foot digital shopping mall in Decentraland designed to look like the Harajuku, with stores where users can purchase digital wearables. “It's a social shopping experience where you don't have to leave your sofa,” she said. More and more traditional brands are poking around about such opportunities. Walmart recently filed trademarks suggesting it planned to sell virtual goods in the metaverse, and Ralph Lauren CEO Patrice Louvet said this month that the company is weighing whether to buy virtual land.

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“There are a lot of parallels actually between the metaverse and Ralph’s vision because we are not a fashion company; we are in the dreams business,” Louvet said.

Buckman, the COO of Realm, believes they’re smart to have interest, saying virtual stores where people can look at “photorealistic” versions of products could receive “hundreds of millions of impressions” and that just one could have the economic effect of 10,000 real-world stores without the hassle of “clunky infrastructure.”

“Pretty soon,” Buckman said, Realm users will even be able to pick up a Tesla in the Metaverse and “drive it around in our little racing game” to get the look and feel, click buy, and have the Tesla “self-driven right to your door.” 

“I mean, we don't actually have that built up today,” Buckman quickly clarified. “But conceptually and technologically, we're very, very close to these kinds of futuristic things being a reality.”

While Decentraland and The Sandbox are focused on creating bespoke, self-contained virtual worlds, other developers want to turn Earth itself into a giant plot of digital real estate.  

SuperWorld co-founder and CEO Hrish Lotlikar believes he is developing something akin to the “gateway to the metaverse.” A few years back, Lotlikar took an interest in the massive success of Pokémon GO, which had become “the most downloaded app in its first week ever” and “the fastest mobile game to reach $500 million in revenue.” After starting his career in real-estate investment banking and venture capital, Lotlikar became interested in augmented and virtual reality and founded Rogue Initiative, a Hollywood-based “film, television, gaming, and virtual reality” studio, with one of the creators of Call of Duty: Modern Warfare, and Michael Bay, the Transformers director. Discussing the success of Pokémon GO, he and his friend had a revelation.

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“We thought, ‘If we can't build the next Pokémon GO, what if we could build a world? What if we could build a place where the next 1,000 Pokémon GOs get built?’” Lotlikar said.

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SuperWorld’s website lists the Taj Mahal for 50 Eth (or $156,000). The Eiffel Tower is going for double that.  

The result was SuperWorld, a platform that uses augmented reality to create a digital overlay of the physical world, where users can buy virtual land and develop art and advertising on top of that can be seen with the use of augmented-reality goggles. He described SuperWorld as a combination of Pokémon GO (“You can put NFTs anywhere”), Foursquare (“Get paid for your data”), and Monopoly

“We've taken the surface of the earth, and we've divided it into 64 billion virtual plots of land all covering a city block of land approximately, each structured as an NFT,” he said.   

The selling point on SuperWorld’s site, however, is more simple: “Buy & Sell Virtual Real Estate.” Lotlikar hopes his product will allow SuperWorld users to “create, discover, and monetize anything, anywhere” by making the entire real world into a video game—a more complete commodification of human existence. SuperWorld pitches its real estate as a way for users to generate revenue, saying it has the “potential to become highly sought-after by advertisers.” The company sells land at the starting rate of 0.1 Eth, but the secondary market has already begun to boom (or, at least, people are already seeing if someone will buy their speculative investment). At the time of publication, SuperWorld’s website listed the Taj Mahal for 50 Eth (or $156,000). The Eiffel Tower was going for double that.  

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The company claims to have sold tens of thousands of properties. One customer is Robert Cumba, a crypto and NFT artist, who has purchased the SuperWorld land that makes up the well-trafficked areas of Sunset Strip in Los Angeles and Third Street Promenade in Santa Monica. (Cumba has purchased digital land in Cryptovoxels and Decentraworld as well.) In SuperWorld, Cumba envisions creating crypto art installations along the Sunset Strip. “It'd be cool to just put some shades on. All of a sudden, the whole street completely, you know, flips a switch,” Cumba said. But he also wonders if there are promotional opportunities on his real estate in the heart of Hollywood as well. “I'm an artist, but I'm also an investor,” Cumba told me. “Maybe the Sunset Strip will have a Marvel lane or Disney lane.”

When I asked him if he owned any real world property, Cumba said he hasn’t gotten into “physical space hoarding” yet, though his dream is to have a gallery in Los Angeles, where he grew up. In many ways, Cumba is the exact kind of person that metaverse boosters suspect the concept will appeal to should it gain mainstream traction—people who’ve been priced out of the real world. “Property prices in the physical world are unattainable for most people in Gen Z,” Lotlikar said.

By comparison, the virtual world utilizes NFT technology and cryptocurrency to provide a place for young people around the planet to lay claim to a piece of their own land of “virtually limitless” value, he argued. 

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“Property prices in the physical world are unattainable for most people in Gen Z,” said one metaverse CEO, who suggested buying digital real estate as an alternative investment.

To Lotlikar there’s truly no limit to what the combination of NFTs, augmented reality, and virtual reality can accomplish. For example, SuperWorld claims to have partnered with a DAO to bring together two indigenous Amazonian tribes to create digital art after 500 years of war. (Motherboard did not independently verify this claim.) Lotlikar also believes the popular blockchain concept of play-to-earn, in which people can earn money for playing games online, doesn’t go far enough in utilizing the blockchain.

“What about live-to-earn?” Lotlikar said. How do I get you paid to go on a run by Nike? How does National Geographic pay you to go on a trip?”

Sunny Aggarwal, the co-founder of the decentralized blockchain exchange Osmosis, believes in the virtual world just as much as Lotlika, enough that he currently has a bet that society will spend 50 percent of its time in virtual reality within 15 years—and all of its time soon enough. (When I asked him if this would be a good thing, he insisted that it would.) 

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But he worries that he’s seeing a lot of parties applying “very traditional economic models” to what he considers “a very different paradigm.” Particularly, he is confused why the concept of scarce digital real estate is gaining hold in a digital world where a beautiful coded view is replicable for everyone. “Do we want to go into [another] world where only a few people can have that view?” he asked. He believes “proximity shouldn't be this big constrained resource anymore.” What’s exciting to him about the idea of the metaverse is the exact opposite—the prospect of living in something more closely resembling a post-scarcity world, where everyone can look how they want, have a large house, and then teleport into the city. “I don't know if we need to have it be restricted in the same way.” 

“A lot of speculators aren't using the land that they're buying,” one digital landlord said.

Somnium Space addresses such concerns on its website, saying that while “there can be an unlimited amount of virtual land in theory… someone has to build a platform, devote thousands of hours creating, running servers, etc.” Plus, the company believes scarce land has benefits, creating an incentive to cultivate it into something worth spending time on. 

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The CEO of Somnium Space shows off a bathroom designed in his metaverse. (Source: Somnium Space)

The fixed amount of land in Somnium Space has already led to the rise of digital landlords, like Bell, who estimates he rents out about 30 parcels on the platform. He typically finds potential tenants through Discord or Twitter, where singers, artists, NFT creators, and token creators say they’d love to create inside the metaverse but “can't believe how expensive land is.” Bell, who had already been a landlord in real life, says he’s developed a “pretty good business niche” renting land each year for a year at a time. While some will find the idea off-putting, Bell considers the arrangement a “win-win” for all parties, as the renters have already figured out ways to make money off their land, and the digital platform becomes more vibrant as a result of its use. He considers himself one of the good guys. “A lot of speculators aren't using the land that they're buying,” Bell said.

When I asked Sychov of Somnium Space to speak, his only request was that he be able to perform the interview using his virtual reality headset from inside Somnium Space, where he appeared as his NFT avatar and showed me around. Sychov proudly told me that the “whole world” he was showing me was built by users. It was a beautiful and lush environment as well. He introduced me to a few of his friends, pointed out a beautiful sunset, and took me into a virtual dance club, which had a VIP area, bathrooms, and a pole for dancers. One day later, the club would be hosting a live DJ from Las Vegas who would be spinning in VR and a woman in Belgium who would wear full-body tracking and dancing on the pole in her home and, of course, in Somnium Space. He believes the only way to truly enter the metaverse is through a virtual reality headset, not a browser. 

I've been in virtual worlds since 1999. Ultima Online, Second Life, they were fun, but you're watching it on the screen.” Sychov said. “The magic is being inside the world.”  

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The CEO of Somnium Space introduces Motherboard to a few of his friends. (Source: Somnium Space)

The point of doing the interview inside Somnium Space was clear: Sychov wanted to prove that he doesn’t need to talk about the future of the metaverse, because unlike other members of his rapidly growing industry, he can offer a window view of the metaverse today. 

“You have to convince people by showing,” Sychov said. “Not by trying to push them in.”  

There was one small issue: Throughout the beautiful world, I only spotted a few actual (virtual) people.

Republic Realm’s Yorio believes the proof of the metaverse’s ascendance lies in online game platforms like Roblox, which recently said that more than half of U.S. children play its game. 

“The next generation is not going to be satisfied with a 2D scrolling social media experience,” she said. 

Still, the vision of a society dominated by people spending millions to spend time in make-believe luxury digital homes is not assured. For one, land on Roblox, the platform Yorio referenced, is free to build on and limitless, unlike many new metaverse worlds, according to a spokesperson. One recent poll also found that less than 40 percent of Gen Z—people born between 1997 and 2012—believe "the metaverse is the next big thing and will become part of our lives in the next decade.” The pragmatic concerns are clear too. “The one constant in this space is delays,” said Yorio. One of the primary issues she sees is a “talent bottleneck,” estimating the industry needs to onboard “another million blockchain engineers” and “half a million 3D developers.” Other questions about the treatment of women have cropped up. (Some female beta testers and users have already registered issues with groping and other uncomfortable situations.)

And then there is the more existential question of how many people, beyond those who stand to profit, actually want this at all.  Skeptics include Ken Kutaragi, the inventor of the PlayStation, who recently told Bloomberg he can’t see the “point” of the metaverse.”

“You would rather be a polished avatar instead of your real self? That's essentially no different from anonymous message board sites," he recently said. Plus, he added, "Headsets are simply annoying.”

But no matter how many doubters and obstacles the metaverse faces, the money being spent to get in early is real. Decentraland land that was going for an average of $1,180 per parcel last January had jumped to almost $14,100 by December, and land in The Sandbox had gone from $178 to $14,400, according to NFT data tracker NonFungible.com. Like those platforms, Somnium Space has had some people pay real money for its digital land—an average of $14,200 by the end of last year. Bell hasn’t bought as much digital land this year due to what he sees as the “high, high peak of speculation” that’s enveloped the entire technological world.

Sychov, for his part, believes such investments will have intrinsic value because users will be able to truly own the land without Somnium as an intermediary because of the blockchain. “For the first time ever, people can actually own things in a decentralized way,” he said. “They can sell the world. They can monetize it. They can rent it. And that's the revolution.” But he also believes that not all metaverse investments will pan out the same. 

“Behind those prices has to be a product,” said Sychov. “There has to be a reason for the price.”

This post has been updated to include a comment from Sébastien Borget, the COO and a co-founder of The Sandbox.