By Cheyenne DeVon
Buying digital land in the metaverse may not be the best use of your money, according to billionaire investor Mark Cuban.
Although Cuban is a well-documented cryptocurrency enthusiast, he called purchasing virtual real estate in the metaverse “the dumbest s— ever” in a recent interview on the Altcoin Daily YouTube channel.
Despite being an investor in Yuga Labs, which owns popular NFT collections such as Bored Ape Yacht Club that has sold digital land plots, Cuban said buying virtual real estate is “dumb.”
“It was great money for them, but that wasn’t based off utility,” he said.
In the physical world, real estate is valuable because land is a scarce resource. However, that scarcity doesn’t necessarily apply to the metaverse.
In these virtual worlds, “there’s unlimited volumes that you can create,” Cuban said during the interview.
The rise and fall of digital real estate
Last year, metaverse platforms experienced a virtual land rush as users collectively spent millions on digital real estate. Combined sales on four major platforms reached US$501 million in 2021, according to MetaMetric Solutions.
In some cases, virtual real estate went for as much as a physical house. Republic Realm, an investment firm that owns and develops virtual real estate, dropped a massive US$4.3 million on a digital property located within The Sandbox, one of the largest metaverse platforms, according to the Wall Street Journal.
A virtual plot next to Snoop Dogg’s digital mansion within The Sandbox was purchased for US$450,000 by an NFT collector who goes by the name “P-Ape” in 2021.
However, the virtual housing bubble may have popped.
As of August 7, the average sale price for a piece of virtual property on metaverse platform Decentraland was US$14,385.27, according to WeMeta. That’s down about 61 per cent from a peak average sale price of US$37,238.68 in November 2021, according to the site.
Given the unpredictable nature of the metaverse and cryptocurrency, financial advisors recommend only investing as much money as you’re prepared to lose. There are no guarantees that you’ll earn a profit from your investment.
