Over the last couple of years, bitcoin and digital (crypto) currencies, in general, have continued to move towards main street adoption, drawing an ever-increasing number of investors and media attention worldwide. A recent study published by market and consumer data provider Statista shows the number of blockchain wallet users worldwide jumping from less than 6.7 million in Q1 2016 to over 34.6 million in Q1 2019.
In 2018 and 2019, a different kind of digital asset has been making headlines and has even been featured in a segment on the BBC. People are now buying parcels of digital land in virtual worlds.
Some people hope to profit from getting in early and holding the land until a future day when they hope it will be much more valuable. Others are interested in the short-term prospects for profiting by flipping virtual parcels. Still, others value digital land primarily for its purpose within the virtual worlds which, ultimately, are games meant to entertain and delight, not merely a means to financial gain.
Want to learn more about where and how people are buying and selling land online? Read on.
Digital Worlds with Land for Sale
At least four games or virtual worlds offer digital land for sale. Here’s a rundown, along with how players can use their land within each game.
Decentraland is the biggest name in this space, with millions of dollars invested and a relatively high transaction volume. This social virtual reality game powered by the ethereum blockchain is playable through a web browser or VR headset.
Players use the in-game currency MANA to buy the game’s digital land. LAND parcels can be monetized within the game by building property on them and charging people to use that property. For example, players might pay to play in a virtual casino or go on a virtual amusement park ride.
Axie Infinity is similar to CryptoKitties in that it’s based around acquiring and breeding digital collectibles. In this case, they’re called Axies, and unlike CryptoKitties, they can also be nurtured and battled. They live in an associated universe where players can purchase and develop land.
In addition to raising Axies on the land, players can build on their land, and when other Axies travel through a player’s land to go on their missions, they can drop valuable resource parcels there.
NEOLand is reminiscent of Sim City. Players have avatars, buildings need renovating, and factories require maintenance. Players earn the NEO cryptocurrency in exchange for in-game activities like building a business or having a job. Unlike Sim City, the game (and all the others described in this article) is decentralized, and NEO has value outside the game as well.
Using NEO, players can buy land parcels in NEOLand, which is just one continent in the larger NeoWorld virtual world. Different lands have different characteristics and different resources, such as stone, steel, and lumber, that players can accumulate.
Also unlike Sim City but similar to Decentraland, NEOLand allows for user-generated content that can be sold within the game.
Cryptovoxels might be the simplest of these games with the lowest barrier to entry. Land parcels are cheap, available for purchase with ether. Anyone can start exploring the world right away on their browser without having to download anything, own cryptocurrency, buy land, or even create an account. But players who do buy land can build on it in the game’s blocky, grayscale style. The world is a bit of a ghost town, but it’s a low-risk environment to learn in. With the in-game currency $COLR, players can add color to their creations.
How Digital Land Is Sold
Digital land is sold in several ways.
Auction: The game’s developers can hold an online auction to sell parcels to their first owners, which helps raise money to further develop the game. This process is similar to an ICO, but people are buying nonfungible tokens instead of fungible tokens.
Bidders may first need to acquire the game’s native currency, such as MANA for Decentraland, or they may be able to use a variety of cryptocurrencies. Axie Infinity, for example, doesn’t have its own currency but supports fiat, ETH, MANA, and others. Once they have an accepted currency, users can buy land.
Auctions are often held in stages so that one quadrant of the game’s land is sold in each auction, with auctions held several months apart. Land may be cheaper in earlier rounds, similar to how a token sale or initial coin offering works. Auctioning land in stages allows one part of the virtual world to become developed, interesting, and useful before another, empty section of the virtual world opens up—not unlike how cities are built in real life.
Marketplace: Some games provide their own marketplace. In the Decentraland Market, players can find LAND up for resale. In AxieInfinity, people can purchase brand-new parcels directly from the game’s website. Parcels from this first sale will become tradeable on May 22, 2019. NEOLand has an in-game portal where users can trade land parcels. Cryptovoxels land is for sale on OpenSea in exchange for ether.
OpenSea.io: This website offers a marketplace for all sorts of cryptocollectibles, from Major League Baseball players to digital art and, of course, digital land. Items can be purchased outright, through auction, or by submitting an offer to the seller, not unlike eBay.
Rarebits.io: Similar to OpenSea, visitors can buy digital land and other crypto collectibles here. Items for sale include CryptoKitties and artwork created in Decentraland. Visitors can also view lots of Axies, though they aren’t currently for sale.
Discord chat: Discord is a widely used app in the gaming community. By joining a game’s Discord channel, players can find other players who are reselling land. Through private messages, they can arrange a transaction. This method is risky since the buyer usually has to pay for the land first, then trust the seller to deliver.
Email: Some players will post their email address in the listing for the land they are selling. Players can establish terms of sale over email, with similar risks to making arrangements through Discord. Typically, the buyer must send payment to the seller before receiving land, so there’s a risk of losing money and no recourse if that happens.
Why People Are Buying Digital Land
Speculation, of course, has long been the reason why many people buy crypto. They hope that by getting in on a new virtual currency or crypto collectible in its early stages, they’ll reap the gains later when more people adopt the technology and its value goes up. Some buyers are excited about blockchain technology and its transparency and permanence. Others are excited about participating in an economy free from government regulation.
With Decentraland, Axie Infinity, and NEOLand, people are also speculating on and excited about the technology: not so much blockchain but the virtual and augmented reality experiences these games enable. Excitement about the game itself is also fueling land purchases.
Games are a huge industry, and people are excited about the creative appeal of building things on their digital land and playing within those worlds through an immersive, social experience. In Decentraland, for example, people from across the globe, via their online avatars, can attend a virtual gaming convention; gather in a virtual space to enjoy a real-world sporting event that’s streamed within the game, or pitch ideas to potential investors in a virtual Silicon Valley called Crypto Valley.
How People Are Profiting from Digital Land Flipping
A well-known player in digital land flipping is DCL Blogger (DCL is short for Decentraland). This Aussie, who goes only by Matty, says in his YouTube videos that his strategy is to buy cheap and sell cheap.
His goal is not just to buy at a good price, but to buy at such a bargain price that when he resells a parcel, he won’t be competing with any other sellers in the area. He aims not merely to list land at a fair price, but to list it at a price where buyers will jump on the opportunity and not go somewhere else.
Another strategy he uses is buying in bulk. He says it can be possible to get a discount this way because people value the ease of selling multiple parcels at once. If he sees that someone has one parcel listed for sale but owns multiple parcels, he might offer to buy several and see if they’ll accept his price.
He also looks for sellers who need to cash out. When someone repeatedly posts their parcels for sale in Discord’s Decentraland land trading channel (#decentraland-land-trading), it might be possible to get a bargain on their land.
One of DCL Blogger’s key pieces of advice is to value land not based on the price it’s listed for but on its sale history and on the sale history of similar parcels. He frequently visits Nonfungible.com and DecentraStats.com to learn what parcels are worth. This way, he can spot a deal when it comes up, he doesn’t overpay, and he is more likely to profit from flipping his virtual land.
Other players are betting on the longer-term viability of digital land. Gamer Sam Clare told the BBC he is holding his Decentraland parcel until it’s worth $10 million. To date, the most a parcel has sold for is $180,000.
Another player, Ali Bohlaiqah, told Marketplace he had spent $60,000 on LAND that had ballooned in value to $350,000.
Resale isn’t possible within AxieInfinity yet, so we’ll have to wait and see if it becomes profitable. NEOLand parcels are relatively cheap compared to LAND. And with low transaction volumes and low parcel prices, it doesn’t seem like anyone is getting rich with Cryptovoxels.
Will these games be sustainable after the initial buzz wears off? Will people continue to be attracted to these games? Most importantly, will they develop a critical mass that includes lots of people who don’t care about blockchains or cryptocurrency? That’s what these virtual worlds will need to truly be successful and to generate high values for their digital land.
The information in this article is for informational and educational purposes only. Investing in ICOs, cryptocurrencies, or tokens is highly speculative, and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.