Everything you wanted to know about the metaverse, but were afraid to ask

Want to buy “land” in the metaverse, but don’t know where to begin? Here’s a guide. Look, I’m over the age of 30 and my phone confuses me. What exactly is the metaverse? The metaverse is what happens when the internet grows up. If social media was Web 2.0, then the metaverse is Web 3.0. It is the 3D version of the current 2D internet. There isn’t just one metaverse, but many metaverses – digital realms built for visitors to explore and meet up in. At the moment the platforms are a bit clunky, but some say it could become as sophisticated a reality as The Matrix. Facebook – sorry, Meta – believes we will be as happy meeting up in the ’verse as we would be in the pub. Either way, there’s likely to be a landlord. Right. So is that the same as the multiverse? No, you’re thinking of Marvel. Although, there are multiple metav… No, stop there. Let’s stick with The Matrix. Are businesses opening offices in the metaverse? Some are. PwC’s Hong Kong arm recently announced that it was opening an office in the Sandbox, a virtual world that hasn’t even launched yet. A new property search portal, MoveStreets, has also bought a plot in the Sandbox. And fashion brands are slowly building up a presence. So, what is this “land” then? And how is it land if it isn’t, you know, real? Real land appreciates in value because they don’t make it anymore. You remember the Mark Twain quote? The one everyone uses, thinking they are really clever, until they realise that everyone uses it? That’s the one. Metaverse land, in theory, is no different. Each metaverse has a limited supply of “land”. In the Sandbox it’s 166,464 parcels, and in Decentraland it is just over 90,000. Right. I think I’m getting the hang of this! Although each plot is actually an NFT built on the etherium blockchain. Wait, what…? The National Film Theatre? Non-fungible token. I thought that was something to do with mushrooms? Don’t be ridiculous. Almost everyone knows the term non-fungible token now, if only because it sounds silly. But the concept is pretty straightforward. If something can be replaced by another thing that is almost identical, then it is fungible. A pound coin is fungible, a grain of rice is fungible. And a fungus is fungible! Well, maybe. Actually, fungus is extraordinary. Have you read Merlin Sheldrake’s book? Would you just stick to the subject, please? This is hard enough to follow as it is. Sorry. If you can do a straight swap, then a thing is fungible. If not, it is non-fungible. Land is perhaps the ultimate non-fungible good. Swap it? You can’t even move it! A non-fungible token is a digital version of this. It is a way of using the blockchain to make something digital unique. A plot of digital “land” is an NFT – just like Grimes’ art and the funky pair of Nikes worn by your kid’s avatar in that game you don’t understand – only it’s pinned to a map and you can create things to go on it. Right. And that’s because of the blocked drains? The blockchain. Yes, exactly. And that’s bitcoin, right? Ten points for trying, but no. It is built on the blockchain, yes, but blockchain isn’t bitcoin. Bitcoin is a cryptocurrency that derives its value from the fact that they are scarce and hard to ‘find’ – there can only ever be 21m of them, and you have ‘mine’ them, which becomes increasingly difficult as you exhaust the supply. Like gold, really. Oh good! I understand gold. But other cryptocurrencies, like ethereum, are also based on the same technology, but not limited in number. Most of the bigger metaverses actually have their own currencies, built on the ethereum, blockchain. I think I’m getting a migraine. Go back to the blocked brain. The blockchain? Think of that as a virtual ledger. It contains all the information about a digital thing, embedded right there within it. And it is open to the public, and it can’t be edited or faked. So, what does all that have to do with this virtual land? It’s because of the blockchain that each NFT built on it – including land in virtual spaces – is unique. But can’t the person who created the metaverse just print more land whenever they wish? Well, no. Because of this set-up, the ownership of each metaverse is decentralised. It is, in effect, owned by everyone who holds the currency or owns its NFTs. Including land? Including land. Any attempt to change any of this would require the approval of every landowner and currency holder. You would have to get the turkeys to vote for Christmas? Exactly. The creators of these worlds can no more easily write a few lines of code and magic up 1,000 more acres than you could create a couple of new hectares in central London. No wonder the prices are rising. I’ve just seen a plot for $8,000. I’m going in. Where’s my cheque book? Not so fast. To buy land, you first have to change your fiat currency. As in cars? As in dollars, pounds or yen – into whatever currency is used within that metaverse. In Decentraland this is mana. In the Sandbox it is sand. And that becomes the land? Sort of. When you buy the land, the sand or mana – or whatever the ERC-20 token happens to be called – is “burned”, and converted into another ethereum-based token – an ERC-721, if you want to be technical. And that’s the land? Yes! Golly. Right. I’ve done that. I’m buying my slice of the future! The only way is up! If you get lucky. What?! Well, the only catch is, there is no limit on the number of metaverses. There are hundreds already, all vying to be the ones that people spend time in. And there are more every day. So, actually, there is a multiverse of metaverses. So they can just make more land? Yep. In much the same way that you could buy 50 hectares of desert and claim it’s a city. If you get enough people to buy into the idea, you’ll have a city. Well, that’s as clear as mud. Just one more question: is any of this actually “real” estate? Depends on which pill you take, my friend. See also: What the metaverse could mean for the commercial real estate market To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews Image © Decentraland