What do you do with a $ 69 million work of art that does not exist physically?
This is the question with which the investor in Singapore calls himself Metakovan, who made headlines last month when he bought the digital artwork “Everydays: The First 5000 Days” from the American artist Beeple at Christie’s. read more
The work is a non-fungible token (NFT) – a new kind of virtual asset that confirms its ownership status and authenticity through blockchain. NFTs increased in popularity in 2021, with prices soaring. read more
Metakovan, real name Vignesh Sundaresan, plans to exhibit the artwork in four virtual world environments. He collaborates with architects to design gallery complexes that the public can access via web browsers or virtual reality technology.
But art is just one part of a new economy of blockchain-based virtual worlds where land, buildings, avatars and even names can be bought and sold as NFTs, often fetching hundreds of thousands of dollars. In these environments, called the metavers, people can wander around with friends, visit virtual buildings, and attend virtual events.
Metakovan’s plans are an ambitious venture, but he says he is the largest NFT investor in the world. Its collection of NFTs and other crypto-assets, the Metapurse fund, is valued at $ 189 million, according to NonFungible.com, a website that collects sales history data from NFT markets.
“The current Cambrian explosion of NFTs you see is all about acquisition – people want to buy NFTs, devour as much of it as possible,” said Anand Venkateswaran, or Twobadour, who co-manages the Metapurse fund with Metakovan.
“But that’s just the tip of the iceberg. The real explosion will happen if they are able to … experience these NFTs as they were intended. If it’s a plot of virtual land, you have to move in it,” an immersive experience in it. ‘
In what will be one of the biggest names to join the party, video game producer Atari (ATAR.PA) told Reuters he plans to launch his own blockchain-based virtual world and will release details soon. make.
Online environments are going to be ‘very, very big’, despite the fluctuations in the price of bitcoin, says Frederic Chesnais, head of Atari’s blockchain division and former CEO of the company. NFT real estate could one day fetch millions of dollars, he added.
However, investors warn that although big money is flowing to NFTs, the market could be a price bubble, with the risk of big losses as the hype diminishes. There may also be the greatest opportunities for fraudsters in a market where many participants operate under pseudonyms.
A HERITAGE VIRTUAL LAND: $ 500K +
The NFT frenzy has increased interest in blockchain-based online environments. The best known are Decentraland, Cryptovoxels, Somnium Space and The Sandbox, where prices for virtual real estate reach new highs.
Decentraland showed more than $ 50 million in total sales, including land, avatars, usernames and wearables such as virtual outfits. On April 11, a piece of land of 41,216 virtual square meters was sold for $ 572,000, which according to the platform was a record.
According to NonFungible.com, another $ 283,567 plot was sold for $ 283,567 on March 21, while Somnium Space said an estate on its platform fetched more than $ 500,000 on March 16th.
Metaverse enthusiasts compare the rush to buy virtual land to the scramble for domain names in the early days of the internet. There are currently several thousand unique landowners on each of the major blockchain-based platforms.
Their theory is that as more people congregate in these areas, plots in central locations will become very popular due to the amount of visitor traffic.
“All the virtual land and these virtual spaces are basically real estate on which experiences will start to focus, on which attention will start to focus,” Twobadour said.
“This is where all the attention is and it can be earned in a million different ways.”
So far, it is a relatively small number of people who are raising land prices in these worlds.
In Desentraland, there were 334 buyers in March, sending monthly sales volumes of more than $ 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 owns 200 of the Cryptocurrency Ether on land in Cryptovoxels and another 200 in The Sandbox in 2018 and 2019 spent.
The estate cost about $ 60,000 at the time, but is now worth more than $ 400,000 apiece, he added, saying on condition of anonymity.
Some virtual worlds have their own cryptocurrencies: according to Centralbase, Decentraland’s MANA has shot up more than 3500% in the past year.
VIRTUAL FESTIVAL, SOMEONE?
Some early virtual land investors who bought in early are now selling to companies, Samuel Hamilton said. Community and events lead at 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 businesses.
Decentraland hosted a virtual fashion show in collaboration with Adidas, where designs were auctioned off as NFTs. It also arouses the interest of musicians who can perform in space and sell tickets and merchandise as NFTs.
“We’re going to hold several famous world festivals that all do stages, and if we get to that stage, we expect hundreds of thousands or even millions of people,” Hamilton said.
Last year, American rapper Travis Scott drew an audience of 27.7 million visitors to five concerts at Fortnite, the popular online game of Epic Games.
IS ‘CRYPTO WINTER’ COMING?
Sebastien Borget, co-founder of The Sandbox, described the commercial activity in virtual worlds as a new nation and said that the NFT-based economy would outgrow the real world within a decade.
However, there are many in the new industry who warn about the dangers facing investors.
“I expect there to be a crypto winter in the next few months, the whole NFT boom will explode and then 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 nonsense.”
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 do it, and I think NFTs are a big part of the growth,” he said.
“Actually walking around with another person in a virtual space and watching art together is a great way to spend time,” he added.
Whale Shark said the vast majority of NFTs have no commercial viability, expecting only a small number to emerge as winners.
But some investors like Australia, Mateen Soudagar, or DCL Blogger, have little interest in going back to investing in the real world.
Soudagar says he has earned millions of dollars through cryptocurrency and NFTs, but rather than paying out, he keeps about 75% of his money in cryptocurrencies and reckons many of his peers do the same. Except for upgrading his laptop, he has not changed his lifestyle.
“If you’re a believer in the movement, you think the world will move into this space,” he said. “If you put it in a fiat then you go backwards.”
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