What do you do with a $ 69 million work of art that doesn’t physically exist?
This is the issue facing Singapore-based investor Metakovan, who headlined last month when he bought digital art “Everydays: The First 5000 Days” from American artist Beeple at Christie’s . Read more
The work is a non-fungible testimony (NFT), a new type of virtual asset that has its status of ownership and authenticity verified by blockchain. NFTs have exploded in popularity in 2021, and prices have skyrocketed. Read more
Metakovan, real name Vignesh Sundaresan, plans to show the artwork in four virtual world environments. He works with architects to design gallery complexes that the public can access using web browsers or virtual reality technology.
But art is just one part of a new blockchain-based virtual world economy where you can buy and sell land, buildings, avatars, and even names like NFT, often with hundreds of thousands of dollars. In these environments, called metaverses, people can walk with friends, visit virtual buildings, and attend virtual events.
Metakovan’s plans are an ambitious one, but he claims to be the largest NFT investor in the world. Its collection of NFT and other cryptographic assets, the Metapurse fund, is valued at $ 189 million, according to NonFungible.com, a site that collects data from the sales history of NFT markets.
“The current Cambrian explosion of NFTs you see has to do with acquisition: people want to buy NFTs, swallow as many of them as they can,” said Anand Venkateswaran, aka Twobadour, who runs the Metapurse fund with Metakovan.
“But it’s just the tip of the iceberg. The real explosion will occur when they’re able to … experience these NFTs as intended. If it’s virtual terrain, you should move in, have an immersive experience in it. “
In what will be one of the big names joining the party, video game maker Atari (ATAR.PA) told Reuters that it planned to launch its own virtual world based on blockchains and would soon announce details.
Online environments will be “very, very big,” regardless of bitcoin price fluctuations, said Frederic Chesnais, head of Atari’s blockchain division and former CEO of the company. NFT real estate could one day get millions of dollars, he added.
Investors warn, however, that as big money flows into NFTs, the market could pose a price bubble, with the risk of significant losses if the hype slows. There could also be privileged opportunities for scammers in a market where many participants operate under pseudonyms.
A VIRTUAL LAND PLOT: $ 500,000 +
The NFT frenzy has increased interest in blockchain-based online environments. The best known are Decentraland, Cryptovoxels, Somnium Space and The Sandbox, where virtual real estate prices are reaching new highs.
Decentraland has recorded more than $ 50 million in total sales, including land, avatars, usernames and wearable equipment as virtual suits. A 41,216-square-foot virtual lot sold for $ 572,000 on April 11, which the platform said was a record.
Another Decentraland plot sold for $ 283,567 on March 21, according to NonFungible.com, while Somnium Space said a property on its platform raised more than $ 500,000 on March 16.
Metaverse enthusiasts compare the rush to buy virtual land to the struggle for domain names in the early days of the internet. There are currently several thousand unique owners on each of the major blockchain-based platforms.
His theory is that as more people congregate in these environments, plots of land in central locations will be highly sought after for the amount of visitor traffic.
“The whole virtual terrain and these virtual spaces are basically real estate that experiences will start to focus on, which will start to focus attention,” Twobadour said.
“This is where all the attention is and it’s monetizable in a million different ways.”
So far, it is a relatively small number of people who raise land prices in these worlds.
In Decentraland there were 334 buyers in March, with monthly shipments of land in excess of $ 4 million, from $ 767,400 in February with 184 buyers and $ 246,134 in January with 111 buyers, according to NonFungible.com.
An NFT investor named Whale Shark, whose collection was valued at more than $ 20 million by NonFungible.com in February, said he spent 200 of the Ether cryptocurrency on the ground in Cryptovoxels and another 200 in The Sandbox in 2018 and 2019.
Those farms cost about $ 60,000 each then, but are now worth more than $ 400,000 per piece, he added, speaking on condition of anonymity.
Some virtual worlds have their own cryptocurrencies: Decentraland’s MANA has skyrocketed more than 3500% in the last year, according to Coinbase.
VIRTUAL FESTIVAL, ANYONE?
Some virtual land investors who bought early now are selling to companies, said Samuel Hamilton, community and events manager for the Decentraland Foundation.
Atari, ahead of its plans to open its own blockchain-based world, has licensed a retro arcade within Decentraland and is set to open a casino, while an area called “Crypto Valley” is home to several crypto companies.
Decentraland has hosted a virtual fashion show in collaboration with Adidas, where designs such as NFT were auctioned. It is also attracting the interest of musicians who can perform in the space, selling tickets and merchandise as NFT.
“We will have several well-known world festivals that will make stages, and when we get to that point, we expect hundreds of thousands or even millions of people,” Hamilton said.
Last year, American rapper Travis Scott attracted an audience of 27.7 million visitors to five concerts at Fortnite, the popular online game owned by Epic Games.
IS THE ‘CRYPTO WINTER’ COMING?
Sebastien Borget, co-founder of The Sandbox, described business activity within virtual worlds as a new nation and said the NFT-based economy would surpass that of the real world within a decade.
However, there are many in the fledgling industry who warn of the dangers for investors.
“I hope there will be a cryptographic winter in the next two months, the total explosion of NFT will explode and all the value will absolutely collapse,” said Ben Nolan, founder of the virtual world Cryptovoxels.
“Doing NFTs as an investment or as a way to make money is really unadvisable.”
However, he sees a future for virtual worlds and NFTs.
“I think most people will use virtual worlds? Probably not, but I think a lot of people will and I think NFTs are a big part of that growth,” he said.
“Walking with another person in a virtual space and watching art together is a very nice way to spend time,” he added.
Whale Shark said the vast majority of NFTs had no commercial viability and hoped only a small number could emerge victorious.
But some investors, such as Australia-based Mateen Soudagar, also known as DCL Blogger, have little interest in returning to real-world investments.
Soudagar says he has earned millions of dollars through cryptocurrencies and NFT, but instead of making money, he keeps about 75% of his money in cryptocurrency assets and believes many of his peers do the same. Aside from upgrading your laptop, it hasn’t changed your lifestyle.
“If you believe in movement, you believe the world will move into this space,” he said. “So when you put it in a Fiat, go back.”
Our standards: the principles of trust of Thomson Reuters.