How can I become a metaverse real estate mogul?

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This is the third chap­ter of a spe­cial Forkast series on cryp­to new­com­er Joel Stein’s adven­tures in the blockchain world. In Part 1, he opens a cryp­to wal­let and in Part 2, he dives into play-to-earn as an Axie Infin­i­ty gamer.

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I am over­whelmed with the com­plex­i­ty of cryp­to trad­ing, but I some­how man­aged to buy and sell a co-op apart­ment in New York City with my san­i­ty intact. So I fig­ured I should also start my Web 3.0 invest­ment port­fo­lio with real estate — in the meta­verse. More than US$500 mil­lion was spent on vir­tu­al real estate last year, and Cit­i­group fore­casts that the meta­verse mar­ket could be worth up to US$13 tril­lion by 2030. If I could cor­ner just .01% of that, I’d be a billionaire!

To get start­ed on shop­ping for my first vir­tu­al home, I went to Par­cel, which calls itself the Zil­low of the meta­verse. Par­cel sup­ports five meta­vers­es, which is four too many meta­vers­es for me. I’d had enough trou­ble pick­ing a house on one tiny speck in one real-life universe. 

Sens­ing that I need­ed help, Par­cel CEO Noah Gaynor asked me a basic ques­tion: What did I want to do with my vir­tu­al real estate? This was not a ques­tion I had pon­dered about any of the homes I’ve want­ed to buy before, since all I want­ed to do was live in them. 

But you don’t sleep or raise a fam­i­ly in the meta­verse. It’s a com­mer­cial space.

“Do you want to sim­ply buy land and hold it for 30 years and cash out one day? Or build an expe­ri­ence like a con­cert venue? Or sell a lot of ads and have a lot of bill­boards?” Gaynor asked.

All of those sound­ed like good ideas, but they also sound­ed like work, and I wasn’t look­ing for a job in the meta­verse. So I told Gaynor that I was lean­ing toward some­thing fun, like a social club for jour­nal­ists. He sug­gest­ed Mona, where each own­able space is your own per­son­al metaverse. 

Each Mona par­cel is an NFT that an artist has cre­at­ed. It’s like a video game with­out the game, just a series of streets or rooms or space­ships for your avatar to wan­der around in. In one NFT world, there were sharks fly­ing in the sky above me; in anoth­er, I was greet­ed by skele­tons in space­suits. Rang­ing in price from US$1,000 to US$30,000, Mona prop­er­ties looked like Roblox recon­ceived by the guys who spray paint­ed the sides of vans in the 1970s

Mona was a lit­tle too monas­tic for me though. I didn’t want a whole meta­verse to myself. I want­ed a com­mu­nal expe­ri­ence where I’d run into new peo­ple to make fun of skele­ton astro­nauts with.

Gaynor sug­gest­ed that I tour the two largest blockchain real-estate meta­vers­es. The Sand­box has that blocky Lego look where every­thing is made of vox­els (like in Roblox and Minecraft) and focus­es on gam­ing. Decen­tra­land has a more tra­di­tion­al car­toon look and is used for social­iz­ing, shop­ping for dig­i­tal art, watch­ing movies, and going to concerts. 

Decen­tra­land has clear­ly defined and zoned neigh­bor­hoods, includ­ing dis­tricts for gam­bling (Vegas City), music (Fes­ti­val Land), edu­ca­tion (Uni­ver­si­ty), and porn (Dis­trict X). 

Decen­tra­land dis­tricts resem­ble hous­ing com­mu­ni­ties with a home­own­ers asso­ci­a­tion, with “dis­trict lead­ers” mak­ing sure every­one sticks to the neighborhood’s rules and orig­i­nal intent. 

 “The dis­trict leader might not be thrilled that you’re squat­ting on land and not adding to the val­ue of the muse­um dis­trict,” Gaynor said. “It’s polit­i­cal. Decen­tra­land might want cer­tain things and the own­ers might want dif­fer­ent things.” That gave me pause — why come to the decen­tral­ized world only to have some func­tionary mid­dle­man tell me what I can and can­not do on my land? The set­up didn’t sound very decen­tral­ized or Web 3.0 to me.

Par­cel sent me infor­ma­tion on three parcels in the muse­um dis­trict they thought might appeal to me because the neigh­bor­hood had the intel­lec­tu­al vibe that could be help­ful to attract peo­ple to my salon for jour­nal­ists. Each 16-by-16 “meter” par­cel was sell­ing for around USD$8,000. This seemed like a bar­gain com­pared to the hun­dreds of thou­sands of dol­lars that oth­er vir­tu­al plots of land have sold for — until I real­ized the “real estate” here is only a bunch of com­put­er code. Plus, once I had my emp­ty green square of vir­tu­al land, I’d have to buy NFT trees and NFT lawns and NFT sofas to keep up with the avatar Jone­ses, and NFT secu­ri­ty guards to stop any­one from steal­ing all those NFTs. 

The oth­er prob­lem was, it was hard to tell what and where I was buy­ing. I had to look at a map on Decen­tra­land to see where the land was, but then go to OpenSea to buy it as an NFT based on the X and Y axes on the map. The prices were list­ed in MANA, Decentraland’s own cryp­tocur­ren­cy. Because OpenSea has a fair amount of con artists on its site, and there is no title insur­ance or escrow to pro­tect buy­ers of meta­verse prop­er­ties, I found myself hav­ing to look deep into the seller’s blockchain to make sure that some scam­mer wasn’t sell­ing me fake vir­tu­al land that relies even more heav­i­ly on the imag­i­na­tion than real vir­tu­al land.

I thought I might be able to do bet­ter at The Sand­box. Despite not being ful­ly open yet, the com­pa­ny is already val­ued at US$4 bil­lion and has sold parcels to Adi­das, Atari and Warn­er Music. Some­one recent­ly paid US$450,00 to buy an area near the vir­tu­al man­sion of Snoop Dogg, the rap­per-cum-Sand­box pro­mo­tion­al partner. 

I still could not decide on a busi­ness that I would put on my vir­tu­al land. Jour­nal­ists, I real­ized, may not be the best cus­tomer base for a fee-pay­ing club giv­en how many have lost their jobs. But Sand­box CEO Math­ieu Nouzareth told me I’d have no prob­lem mak­ing mon­ey in the metaverse.

“We think there will be hun­dreds of thou­sands of jobs that don’t exist today,” Nouzareth said. “If I were an entre­pre­neur look­ing for an idea, being a ter­raformer is a great idea.”

But I had no idea what a ter­raformer was. 

“It’s not very hard, and there are a lot of com­pa­nies ask­ing for land­scap­ing,” Nouzareth explained.

And if I thought of some­thing more lucra­tive than plant­i­ng pix­i­lat­ed gar­dens, I could do it. The Sand­box lets users form their own neigh­bor­hood with­out the over­sight of appoint­ed dear (dis­trict) lead­ers. But a Libertarian’s utopia it’s not. There’s no gam­bling or hate speech allowed. “Also, there’s a lim­it on heights of struc­tures,” Nouzareth said. My fad­ing dreams of build­ing sky­scrap­ers in the meta­verse became vivid again when he added, “I for­got the limits.” 

To help me sift through all this infor­ma­tion, I turned to a meta­verse real estate agent. Nick Viv­ion is most­ly a com­mu­ni­ca­tions con­sul­tant spe­cial­iz­ing in Web3. But he’s also free­lanc­ing as a meta­verse real estate agent for a few brands, includ­ing the Sloomoo Insti­tute, an inter­ac­tive slime muse­um in New York City. He agreed to take me on as his first lit­tle-guy client.

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Nick Viv­ion, my meta­verse real estate agent, took me on neigh­bor­hood tours.

Nick set up a time to come to my house to take me vir­tu­al real-estate shop­ping. When I asked why we weren’t meet­ing up online, he explained that shared expe­ri­ences in the meta­vers­es require more band­width than our home WiFi and Mac­Books could han­dle. This seemed wrong to me, like not being able to vis­it the neigh­bor­hood you might move to with your fam­i­ly because there’s not enough air there for all of you. 

I did, how­ev­er, like that Nick doesn’t own a meat­world home. Or live in one. He and his boyfriend Beau live in an RV that they dri­ve around the coun­try so they can park and stay in dif­fer­ent cities. My meta­verse real estate agent was already liv­ing Ready Play­er One

Nick came over on a Sat­ur­day after­noon with Beau and their dog Rick, who they said was a chi­wee­nie, a chi­huahua dachs­hund mix. I opened a bot­tle rosé, and we went shop­ping in the metaverse.

The Sand­box was open for one of their test runs, so we got to walk around in a small part of it that looked like a town square. I was impressed that my avatar mag­i­cal­ly looked just like me, until Nick told me that was just the gener­ic avatar they give you — which meant I looked just like a gener­ic white cryp­to bro. 

Nick got excit­ed when we saw a blocky avatar of DJ Blond:ish, who mint­ed sus­tain­able NFTs and would be play­ing a fes­ti­val in Mia­mi the fol­low­ing week­end with Dip­lo. But no mat­ter how many times I tried, I could not get her to talk to me. I was amazed at how well The Sand­box repli­cat­ed real life.

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Just as it would hap­pen in real life, the avatar of DJ Blond:ish ran away from me when I got close and tried to talk to her in The Sand­box metaverse.

The expe­ri­ence was smooth, a lot like a videogame where I used the key­board to walk, jump and run through a blocky Roblox-like world, but instead of col­lect­ing gems, I walked past gems. 

I strolled by Farmer Smurf, who was brag­ging about hav­ing won some game; Negan, from the Walk­ing Dead, who insult­ed me by say­ing I had “a dead face,” and an auto­mat­ed avatar of Snoop Dogg singing his Sand­box-inspired song, “House I Built,” which — as soon as I stepped on the dance floor next to the DJ Deadmau5 — caused my avatar to do an awk­ward blocky dance. Again, I was impressed at how much like real life this was. 

When I expressed con­cern that, as a prospec­tive real estate investor, The Sand­box seemed too nar­row­ly focused on gam­ing, Nick told me I wasn’t pic­tur­ing gaming’s poten­tial. “What does McDonald’s do in the meta­verse? They’re a food brand. So what they have to start doing is games. Every­thing turns into a game,” he said. 

Soon, he pre­dict­ed, con­sumers will spend more mon­ey on dig­i­tal goods than phys­i­cal goods. You only need a few pairs of shoes in real life, espe­cial­ly when you nev­er leave your house. But you can floss like Imel­da Mar­cos in the meta­verse with thou­sands of dif­fer­ent NFT shoes, just like in she could do in real life. 

Not only was the future right on my screen, but today was a great day to buy. Yuga Labs, the cre­ators of Bored Ape Yacht Club, launched their own meta­verse that morn­ing, called Oth­er­side. It sold US$320 mil­lion in NFT real estate in the first three hours it went on sale, and the stam­pede of buy­ers —  burn­ing more than US$175 mil­lion in gas fees to get in on the deal — broke Ethereum for three hours. 

So The Sand­box was not the hot mar­ket right now. And prices had already been down since the boom that came when Face­book decid­ed to go all in on the meta­verse idea and changed its name to Meta. Plus, Decen­tra­land plots are sold on Ethereum, and that coin was also down in the dumps. Nick did a quick search of Sand­box parcels for sale in OpenSea’s meta­verse land market.

“This is crazy. At the begin­ning of Feb­ru­ary, the aver­age was 4.9E and now we’re at 1.3. Every­thing is just down, down, down, down, down,” Nick said, call­ing out prices in Ethereum’s Ether. “It’s a good time to buy right now.” 

Back at its peak price in Novem­ber 2020, the cheap­est par­cel of land on The Sand­box was a lit­tle more than US$16,000. Now, it’s less than US$3,500. 

Nick zoomed out on the Sand­box map, and I was struck by the size of it, which was the exact same size as my Mac­Book Air screen. 

Next, Nick said, “We need to talk about neighborhoods.” 

Being Snoop Dogg-adja­cent would be expen­sive, and frankly, the mere thought of it revived unhap­py mem­o­ries from a pre­vi­ous Snoop encounter. 

Many years ago, for a mag­a­zine piece I was writ­ing, Snoop and I were sup­posed to cre­ate new slang words togeth­er. But it didn’t go over well. Snoop reject­ed my idea for call­ing win­some women “fig­gy pud­ding,” because, as his friend, a for­mer pimp, said: “the fig­gy don’t mean with the pudding.” 

Then Snoop kept throw­ing words at me like “bofus” so that I’d have to ask, “What’s ‘bofus’ Snoop?” — and he’d grab his crotch and shout at me, “Bofus dese nuts!” 

My time with Snoop end­ed with my eyes burn­ing with tears, both from my humil­i­a­tion and the mar­i­jua­na smoke that the for­mer pimp kept blow­ing into my face.

Nick showed me a plot far from Snoop in the low­er right cor­ner of the map that cost US$4,500. It was in the mid­dle of nowhere, but Nick said it could be valu­able once Sand­box fin­ished releas­ing all its land at the end of the year. “I liken it to buy­ing land in 1800 in Brook­lyn and there’s no Fifth Avenue and it’s all farm­land and you’re think­ing, ‘One day, there will be hip­sters here.’” 

As with Bit­coin, scarci­ty is arti­fi­cial­ly insert­ed into the meta­verse land econ­o­my. Scarci­ty by choice seemed like a leap of investor faith, espe­cial­ly in a real-life world where the real-life com­put­er code under­ly­ing these meta­vers­es could be end­less­ly copied to cre­ate more product.

Screen Shot 2022 05 20 at 6.43.39 PM

There seems to be a lot of danc­ing in the meta­verse. And Smurfs.

As I gave that some thought, Nick shift­ed his atten­tion to the upper right cor­ner of the map, near a huge area owned by the South Chi­na Morn­ing Post. Those seemed more like my peo­ple. The par­cel cost US$8,000 and was just nine plots from SCMP. It was called LAND (64, 147), and it was beau­ti­ful in the way that a tiny green square on a com­put­er screen is beau­ti­ful to behold.

It was also five plots from a giant area owned by Metakey, a com­pa­ny that’s try­ing to be the Amer­i­can Express Black Card of the meta­verse, grant­i­ng mem­bers priv­i­leges and dis­counts in both The Sand­box and Decentraland. 

“There’s a lot of tran­sit oppor­tu­ni­ties here. If the South Chi­na Morn­ing Post is rad and Metakey is rad, then peo­ple have to go back and forth,” Nick said. “You’d have this poten­tial chan­nel. I like the look of this one.” 

When I hes­i­tat­ed, Nick start­ed his hard sell, point­ing to my 13-year-old son Las­z­lo sit­ting near us and look­ing up from his Nin­ten­do Switch occa­sion­al­ly. “Let’s say he grows up and has kids. You could be the cool grandad with this awe­some meta­verse pad that the kids want to hang out in. Do you want to hang out with your grand­kids? That’s a pret­ty good val­ue prop.” 

After more than two hours of meta­verse real estate shop­ping, I told Nick I’d need to talk this over with my fam­i­ly and prob­a­bly open anoth­er bot­tle of wine. He, his boyfriend and their chi­wee­nie left, and I sat and stared at what could soon be my very own lit­tle green patch of pix­els. US$8,000 seemed like an awful lot. But US$113,000 seemed like a lot in 1998 when I bought a 475-square-foot stu­dio apart­ment in the Chelsea sec­tion of Man­hat­tan. My Sand­box plot might one day be worth mil­lions. And the love of my grandchildren.

To find out how I could finance this pur­chase, I Zoomed with Ryan Berkum, the CEO of Teller, which gives out loans from a pool of peo­ple stak­ing their cryp­to. Some­one got a mort­gage on a US$680,000 house in Austin, Texas, using Teller. Maybe I could get cryp­to mort­gage for LAND (64, 147).

Berkum told me that a loan was def­i­nite­ly pos­si­ble. But not a fixed-rate 30-year mort­gage like I have on my house. “Because of the volatil­i­ty of NFTs, investors are look­ing at three-to-six-month loans,” he said. And it would be more like a buy-now-pay-lat­er loan than a mort­gage, since no one would want to fore­close on LAND (64, 147) if I stop pay­ing my loan. “A mort­gage in the cryp­to world is not about a home you can col­lat­er­al­ize. It’s about the atten­tion a cer­tain par­cel of space in the meta­verse gets. If it’s next to where Snoop bought, it’s going to get more atten­tion.” I got what Berkum was say­ing, but it sound­ed bofus to me. 

Worse, my cryp­to loan inter­est rate would be very high, maybe as much as 25% — so I might as well just put it on my cred­it card. Which would make my spec­u­la­tive real estate buy from a spec­u­la­tive meta­verse com­pa­ny in a spec­u­la­tive asset class even more spec­u­la­tive. Plus, the fear of falling behind on any cryp­to loans and hav­ing a decen­tral­ized autonomous orga­ni­za­tion send a gang of men­ac­ing NFT apes after me to hunt my avatar down in The Sand­box was just too much for me to bear.

But before going Chi­nese tycoon and offer­ing an all-cash deal, I want­ed to check out one more thing. Pri­or to buy­ing my cur­rent house in Los Ange­les, I knocked on the doors of a few neigh­bors to make sure none of them seemed the sort who would blow pot smoke in my face. 

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Prox­im­i­ty to Snoop Dogg rais­es the val­ue of meta­verse land, but I pre­fer being elsewhere.

So I put on a but­ton-down shirt and a blaz­er and dropped in for a neigh­bor­ly call via Zoom with the CEO of Metakey. Like many in the cryp­to world — includ­ing Mx. Satoshi Nakamo­to, the cre­ator of Bit­coin who start­ed it all — he prefers using a pseu­do­nym. The CEO goes by DCL Blog­ger. The “DCL” stands for Decen­tra­land, where he claims he is that metaverse’s largest trad­er in the world, hav­ing trans­act­ed near­ly US$30 mil­lion in vir­tu­al real estate. 

As DCL Blog­ger spoke, he held a cat, but not in a James Bond vil­lain way. More like a guy who just like cats. He’s a for­mer civ­il engi­neer who had just bought his first real-world house in Mel­bourne, Australia. 

When I asked if he likes to stay up late and make lots of noise, he explained that in the meta­verse, you want neigh­bors who throw big loud par­ties because they dri­ve traf­fic to your busi­ness. In Decen­tra­land, Metakey is thrilled to be neigh­bors with Metakoven, the pseu­do­ny­mous cryp­to investor who bought a Beeple NFT art­work last year for US$69 mil­lion. Metakey has 16,000 mem­bers on Dis­cord, so its par­ties are prob­a­bly going to rock hard. 

Metakey plans to use its prop­er­ty in The Sand­box to host con­fer­ences and cre­ate games. “We could build co-expe­ri­ences,” DCL Blog­ger offered. “Maybe I’ll make a vir­tu­al cat so she can come over to your space.”

I haven’t bought any vir­tu­al real estate yet, but if I do, I’m pret­ty set on LAND (64, 147). Part­ly because DCL Blog­ger seems like he’d make a nice neigh­bor. And also because I’d be half a cyber­verse world away from Snoop and his friends.

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