From Decentraland to The Sandbox and beyond.
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Late last year, someone paid $450,000 to be Snoop Dogg’s neighbor. That would’ve been a steal for a mansion in Los Angeles, but this property is located in The Sandbox, a virtual gaming platform where people can buy digital property with cryptocurrencies. Snoop made a major investment there last year with Snoopverse, his own digital world where users can experience the rapper’s lifestyle (including virtual parties and access to exclusive NFTs) with a private party pass, currently selling for the equivalent of about $1,000.
Investors are joining Snoop in the metaverse with hopes that it will lead to big rewards, even as most Americans are still trying to grasp the concept of the metaverse beyond Mark Zuckerberg’s rollout of Meta. The metaverse scares more Americans (32%) than it excites (just 7%), according to a poll from Axios and Momentive released in April. The term gets thrown around vaguely, but the metaverse is not just one type of tech or place. It’s a purposefully vague concept still being developed—both by Big Tech companies and futurists—but, broadly, it’s the blurring of the physical and digital realms through world-building, virtual- or augmented reality, and a new digital economy based on NFTs and cryptocurrencies. Author Neal Stephenson coined the term in his 1992 novel, Snow Crash. In January 2020, venture capitalist Matthew Ball defined what it could mean as the next iteration of the internet, something beyond the sci-fi world. Ultimately, Zuckerberg’s announcement in October 2021 that his company would pursue its future in the metaverse catapulted the idea to mainstream consciousness.
Facebook’s rebranding to Meta last fall sent investors rushing to buy virtual property, spurring $187 million in sales in four of the most recognized metaverse platforms with land that November. Many virtual worlds offer property in the form of NFTs, which are recognized on a blockchain, or a digital, public ledger. People can purchase plots of land using cryptocurrencies and develop them to live out their wildest dreams. Just like when dealing with IRL real estate, location matters: The most desirable platforms are the 3D gaming worlds Decentraland, The Sandbox, Somnium Space, and Cryptovoxels (now Voxels). Decentraland has customizable avatars with funky, bright hair colors and neon outfits. The Sandbox is where Snoop Dogg created his estate, a digital rendering of the elements of a music video that debuted in April (bathtubs full of cash, a stage with neon marijuana leaves). Somnium Space has a more realistic look and feel, reminiscent of The Sims, and Voxels is set apart by its pixelated aesthetic. Most activity is concentrated on The Sandbox and Decentraland. As of May 2022, some 20,000 people or groups owned 100,000 parcels in The Sandbox. Somnium Space and Voxels are smaller and have fewer parcels available.
But risk is plentiful in the speculative market. Those buying up virtual property are either securing a storefront on the next Rodeo Drive for a bargain or spending a whole bunch of money on nothing. One person’s dream of living in a virtual mansion next to Snoop Dogg’s avatar might be meaningless to other buyers–particularly if the rapper were to shut down the Snoopverse. For now, The Doggfather is busy at the virtual mansion. In the music video, he shows off an indoor pool where women avatars swim and a garage lined with fancy cartoon cars. His avatar, with signature shades and a pinstripe suit, bore an uncanny, albeit surreal and Lego-like, resemblance to the rapper. The music video, the first of its kind, opens with Snoop learning how his Sandbox investment has climbed from $300,000 to $4.8 million.
But it might be hard to recreate Snoop’s luck. Laws around “real estate” in the metaverse are more similar to contract laws than property ones, and laws governing physical real estate do not protect people who buy metaverse property. Value in the metaverse is measured in crypto, which is volatile itself (the crypto market lost a stunning $300 billion in value over just a few days in May). Much of the focus on metaverse land is driven by retailers setting up online stores and advertising, but there are opportunities for events, like concerts and sports. Ariana Grande has performed in Fortnite and Justin Bieber sang to fans through virtual entertainment company Wave. If the metaverse matures and becomes a go-to destination for entertainment, working, and shopping, then holding a piece of virtual land could become a very valuable deed. That’s the future Zuckerberg wants. But if the metaverse is just an absurdist, overhyped trend catering to the tech community, as its sharpest critics fear, millions in investment will be lost.
