Digital Real Estate

Why Digital Real Estate Isn't Just The Metaverse

June 20, 2022
7 min read
Why Digital Real Estate Isn't Just The Metaverse

Article Summary:

  • Traditionally, digital real estate includes URLssocial media accountswebsites, and any site that takes up space on the internet. Think of these as Web2 versions of digital real estate.
  • Digital real estate has since been expanded upon with the introduction of Web3 PropTech companies and new technology such as NFTs and synthetic assets. A few examples of Web3 companies operating in this space would be Parcl and Propy, serving different areas of the real estate sector.

  • As of a few years ago, you'd struggle to find a way to invest $500 into real estate and make a worthwhile profit. Web3 arrived and changed all of that with synthetic assets and the speed advantages of blockchain technology.

  • Digital real estate isn't just buying land in the Metaverse; it's investing with innovative protocols and using the Web3 real estate companies to make real estate investing cheaper, easier and faster.

Metaverse Digital Real Estate

The Metaverse is expected to grow to an $800 billion market by 2024, and the number of operational Metaverse projects and virtual worlds will most likely continue to increase, which might make the market oversaturated and will eventually lead the sector to think of ways to possible connect the various worlds to ensure a friendly and optimized user-experience.

It's also going to become harder to find a quality virtual world with this influx of more metaverse projects; check out our blog post on what things to consider when deciding on a metaverse project to invest in.

As we've emphasized before, the Metaverse has greatly popularized the digital real estate industry and will most likely be the frontman term for the industry for years to come, but digital real estate is so much more than just the Metaverse.

If you don't have the time to DYOR (do your own research), you can check out our top five Metaverse project list.

The hype of record land sales in projects such as Decentraland is what drove people to the digital real estate sector so quickly. Such as the 500 square metered plot of Decentraland land sold for $2.43 million, making it one of the largest sales on record.

Once digital real estate started to sell for hundreds of thousands of dollars, digital real estate investing quickly became the latest investors' obsessions. Similar to that of the gold rush, this was more of a digital land grab.

Web2 Versions Of Digital Real Estate

Traditional and Web2 digital real estate is fairly similar. You'll buy the online property and hold it until the price appreciates in value.

Just like physical real estate, you can earn passive income from your digital real estate investment in ad revenue or affiliate income.

Improving physical and digital real estate will often increase the asset's value.

Below are examples of Web2 versions of Digital Real Estate:

  • Websites: Active affiliate sites, authority sites, blogs, eCommerce stores, etc
  • Domains: Website URLs not yet in use
  • Apps: Mobile applications for smartphones and tablets
  • Digital products: Courses, training classes, guides, membership programs

Real Estate NFTs

Non-fungible tokens are collections of data built into the blockchain that can be used as a way to verify ownership. Artwork, music, and much more are commonly minted into NFTs and sold on 3rd party marketplaces like OpenSea, MagicEden, and Solanart.

How are NFTs used in real estate? Considering that NFTs are non-fungible, meaning unique, there's no way to make an exact copy due to the underlying code built into the NFT.

This means that you can completely remove the issue of fraud amongst transactions as by making documentation into an NFT, it can be easily verified and trusted as it'll never be able to be altered.

Utilizing NFTs to purchase homes will provide a safer, trusted, and faster way to invest in digital real estate.

A project that's leading the charge on this is Propy, a real estate transaction management platform. Propy is built for brokers and property sellers to keep the entire transaction, from start to finish, on one platform, without ever needing to operate outside of it.

They recently hit the headlines with the world's first real estate NFT that sold for a whopping $650,000.

The Tampa property is the first of its kind and was listed initially to prove the concept of selling homes as NFTs.

Just a few days ago, Propy announced that it had selected the second candidate home to be sold as an NFT, another Tampa property. The starting price will be $185,000.

If you'd like to learn more about how NFTs will shape the future of the real estate market, check out our blog.

Parcl Digital Real Estate Investing

If you're a regular reader of our blog posts, you'll understand Parcl and our mission to make real estate investing accessible to all.

Previously, in order to invest a customized amount into the market, you often had to invest in a REIT or set up an account with a fractional ownership platform.

Both of these options can now be regarded as clunky and don't provide the best investor experience. At the time they first went on offer, they were revolutionary but now that better options have come about, they're just not as attractive anymore.

The main reason is the lack of control and opportunity they can offer to investors. Fractional ownership still relies on a steady stream of housing being listed on their platforms; without it, there aren't any investing opportunities.

REITs don't offer the investor control over where their money is invested; they have no decision-making authority over the REIT's assets, including which property they buy into.

Tokenized fractional ownership is pretty similar to its Web2 counterpart; although it tokenizes the property to make it cheaper for investors, it still relies on steady housing stock.

Whereas Parcl allows you to invest in the US real estate market by utilizing innovative blockchain technology.

We use tech such as smart contracts to relay data and information back to our price oracles, which takes data from across the internet and price the Parcl assets that we list on our protocol.

And the tech that allows you to invest in just small increments is called synthetic assets, a tokenized form of traditional derivatives. Essentially, they allow Parcl to offer physical real estate locations as a digital, tradable asset.

In theory, you're using digital assets to gain exposure to a physical market. Thus, you're investing in digital real estate.


Is It Worthwhile To Invest In Digital Real Estate

If we consider Parcl investing as a way you'd like to gain exposure to the real estate market, then yes. It's not just financially worthwhile, but it gives you freedom and is far less stressful than traditional methods.

With Parcl, we've worked day and night to ensure that the user experience of our protocol is a number one priority, which, if you've invested traditionally, you'll know is incredibly rare due to long processes, complicated systems, and regulatory issues.

We also offer an additional way for current investors to take advantage of market movements, which would have been relatively impossible to do.

With Parcl's method of investing, you'll be able to hedge against market movements like those we saw with Covid-19 or smaller, more isolated events such as neighborhood developments or state-specific regulations.

We're the new kid on the block, but we're here to show investors and the average person that we're an additional tool to help them take advantage of the world around them changing each day.


It's An Ecosystem

The best way to describe it is to think of it as an ecosystem of projects, protocols, worlds, and tools.

The collective is filled with projects like Decentraland and Sandbox, which are virtual worlds that offer users an experience to escape the real world and live a digital life. You can also make money from investing in digital real estate within these worlds.

It also includes investing platforms that utilize digital Web3 technology and innovation to make money from the real world, such as Parcl, Propy, and Lofty.

You then have digital asset technology such as property NFTs that make transfer and authentication of ownership easy, safe, and secure.

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