3 Reasons Virtual Real Estate Will Weather the Crypto Crash

There's been a lot of dread about crypto assets entering a so-called crypto winter, a period where prices are low and stay low for a while. This definitely describes the environment we've been in for a few months now across the board (even in more-traditional asset classes).

Although there will certainly be some crypto assets that go down and stay down, virtual real estate probably won't be one of them. In fact, this might be a great time for those curious about virtual real estate to get in.

I firmly believe that virtual real estate holders, by and large, will come out of this crypto winter as fresh as new buds in the springtime. Here's why.

1. Virtual real estate has utility

Although artists' NFTs (non-fungible tokens) can be a lot of fun to own and collect, many lack any true purpose. They're simply art for art's sake. And while there's no sin in that at all, there is a significant risk when it comes to value. Art is great because it's beautiful and we like owning it. But it's not useful.

This is where art NFTs part ways with virtual real estate, which is also NFT-based. Virtual real estate has a purpose: It's there to help create community and to be developed. When you buy virtual real estate, you're buying a ticket into an exclusive community where you have a vote in the government, you have control over how the world functions -- and most importantly, you get to create something meaningful that can help your community grow.

For many people, that's going to be a business of some sort, whether it's an extension of an existing business (like a digital twin for business meetings in the metaverse), or a brand new business, like a concert venue or movie theater. The possibilities are endless.

2. Virtual real estate is still limited-edition

Even though there are a few new worlds in the metaverse, by and large, the bulk of digital real estate transactions are happening in three worlds: Decentraland (CRYPTO: MANA), The Sandbox (CRYPTO: SAND) and Bored Ape Yacht Club's (CRYPTO: APE) Otherside. Most of the action takes places among some 300,000 lots.

Because these lots can't be moved from their worlds, and their worlds can't accept or add any new lots, these 300,000 are literally all there will be in these early worlds as the metaverse gains traction. This is where the community is at, this is where the epicenter of the metaverse lies, and each one of those lots is wholly unique and cannot be replicated or removed.

3. Virtual real estate investors are just different

This isn't to say that investors in virtual real estate are better or worse than crypto investors, I don't mean that at all. What I do mean is that they're different. Where crypto investors often hold coins for very short periods, virtual real estate investors are showing us that they're in it for the long haul. Many who bought as far back as 2017 in Decentraland still hold their assets.

It's the same long-term outlook that real-world real estate investors take, and it's a very solid reason to believe that what we're seeing now is just a temporary dip. When everyone's holding, there's just not much for sale. For Decentraland, for example, only 0.28% of available lands were listed for sale as of June 23.

What's happening with the rest? It's being developed.

This month alone saw the opening of new experiences inside of Decentraland including the Mastercard (NYSE: MA) Pride Plaza for Pride Month, the Yahoo! City Experience Week by Apollo Global Management's (NYSE: APO) Yahoo!, and the Cretaverse by Hyundai (OTC: HYMTF)

Will the metaverse survive the crypto winter?

Yes, I have full faith that metaverse real estate is here to stay.

Because it's a limited commodity that's already allowing businesses to connect to a whole different kind of customer, both through direct marketing and via brand-awareness campaigns (as well as acting as a hub for businesses to connect to one another), we're finding all kinds of new uses for the metaverse all the time.

It may be a crypto winter, but in the spring, the flowers always bloom.

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Kristi Waterworth has positions in ApeCoin, Decentraland, and Sandbox. The Motley Fool has positions in and recommends Mastercard. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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