Prices of blockchain-based virtual real estate (VRE) have grown by 879 percent between September 2019 and March 2022, according to a recent report by Chainalysis.
The spike can be attributed to the rising anticipation for the metaverse’s current and future utility, the study noted.
Chainalysis also uncovered big differences in land prices between various metaverse projects, with the primary determining factor appearing to be the underlying blockchain that the metaverse is built on.
The research found that in 10 out of 11 of the metaverse projects that they studied, users held their VRE NFTs for less than 25 percent of the time the NFT collection had been live, and in the majority (six out of 11), they held it for less than 15 percent.
According to Chainalysis, these figures indicate that the majority of VRE purchases are made for the purpose of ‘flipping’ — holding the asset for a short period with the intent of quickly selling it for a profit.
“Blockchain-based virtual real estate (VRE) offers both present-day and prospective benefits to the people who own it,” said Ethan McMahon, Economist, Chainalysis.
“Currently, the ability to create exclusive virtual events and communities is one of the major use cases that is translating into the sale of virtual real estate. Companies and individuals are also utilising these virtual spaces to set up digital galleries where videos, images, NFTs, and interactive objects can be showcased.”
Providing insight into the external factors that will determine the long-term value of virtual real-estate, McMahon added, “Because the metaverse is such a nascent space, most of these are hard to foresee. That said, we believe that a couple of drivers may be whether AR/VR systems are more interoperable or proprietary, and the pace of adoption of new computing technology.”
Tech giants including Meta, Microsoft, and Epic Games have recently formed the Metaverse Standards Forum (MSF) in a bit to open standards for all things metaverse, including AR, VR, and 3D technology.
McMahon forecasts that in the near future we will see the demand for blockchain-based VREs will be driven further by use cases such as renting and leasing, free airdrops of future VRE NFTs, and the integrations with virtual reality and augmented reality functionalities.
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“The more immersive and life-like the virtual experience, the more likely it is for NFT-based ownership to feel tangible to users. So, the faster VR technology grows, the better it is likely to be for metaverse land offerings,” he said.
