The future of metaverse is blooming and it is not going to be limited to just Ethereum.
If someone had said back then last year: "I'm going to sell you a virtual plot of land for 1 ETH", most of us would have told them to kick the sand. Now, a year later, most of us find that we are stepping on sand, not virtual sand in a sand pit.
Everyone on the blockchain wants to be ahead of the curve. For anyone who thinks you've missed the latest blockchain gold rush, virtual land, think again. A more efficient and scalable future for the interface between blockchain and real estate is being built – and it's not limited to the Ethereum blockchain. The future of NFTs (technological standards for unique digital assets such as artwork or virtual houses) is a multi-chain, more diversified path that will break the limitations of the Ethereum blockchain and increase its use to present previously unimaginable possibilities. touched many aspects of Culture and commerce.
In this future we will see tremendous opportunities and many uses in the many chains made possible by alternative chains like Solana, Tezos, Polkadot, Kusama, Cardano and many others. These chains provide answers to scalability, network congestion, and the ability to truly share properties, making irreplaceable tokens (NFTs) in the metaverse – beyond traditional digital collections – potentially usable and transferable in the real world. Even if you don't immediately associate the centuries-old real estate industry with today's technological advances in blockchain, the potential for modernization and efficiency of this industry is tremendous - in fact inescapable.
Anyone who has ever bought or rented a property knows that the process is complex, time-consuming, and expensive. There are contracts to sign, payments between landlords and tenants, real estate agents and often legal intermediaries too. This setup requires a lot of transactions, time, and money. With virtual real estate in an open meta universe, we can perform peer-to-peer transactions and automate and accelerate these legal processes with the help of smart contracts. Smart contracts can be programmed to trigger immediate actions and execute commands as needed. This allows assets such as buildings, stocks or funds, as well as debt or equity, to be automated in new ways and executed in minutes, not weeks or months.
Virtual real estate can unlock liquidity through decentralized global marketplaces enabling marketable assets and enabling the use of the metaverse as collateral to drive innovative lending methods in decentralized finance (DeFi). What we hope is an increasingly open metaverse, where consumers can one day move digital assets and NFTs in and out of the virtual world. Maybe their digital home can be used as loan collateral. Imagine if you could borrow a valuable virtual plot of land to buy physical land? This world, which is still populated, will almost certainly have to be built on something more than Ethereum, the dominant network for smart contracts.
Since the launch of Ethereum in 2015, smart contracts have grown in popularity in terms of functionality and innovation. The ERC-20 token is the most widely used standard for tokenization. This token encodes the property rights in the code. The more modern ERC-721 and ERC-1155 standards - the technical standard for NFT - create digital scarcity. There are various protocols and tokens on Ethereum that form the basis of the open metaverse.
However, the industry is growing rapidly and the development of Ethereum is on other blockchain networks. While Ethereum's Layer 2 solutions (add-ons that help the network process more transactions) are working well, new blockchains have grown exponentially and promise fertile uncharted territory. Creative creators are looking beyond Ethereum and the exorbitant network fees.
Therefore, the challenge of the industry today is to achieve interoperability between different blockchains. By eliminating the “silo effect” in the blockchain industry, we can finally achieve “mass absorption”. Polkadot, the blockchain I am financially interested in, is one alternative chain for this type of interoperability. Due to its sophisticated ownership structure, it can allow direct transfer of ownership to another address, grant or prohibit third party use rights for exhibition purposes, and facilitate the exchange of deed or trusteeship agreements.
Today there is a real gold rush in the Metaverse, with young people and celebrities like Snoop Dogg investing millions of dollars in virtual real estate. Fortune magazine called it a "multi-trillion-dollar opportunity." It is possible for a new generation to buy their first home (or unique piece thereof) on the Metaverse. There is no doubt that there is a lot of work to be done in this area to make that future a reality. Critics seem to say that today's high-profile virtual real estate sale is more of a novelty driven by noise and speculation than something truly unique. Others argue that real estate - virtual or physical - requires a certain amount of care to maintain security and trust between buyers and sellers.
There will also be concern and criticism from the traditional real estate industry, which may see no value in destroying their outdated, even lucrative, models. However, NFT real estate promises the ability to democratize property, a space that has historically excluded much of the world. GoBankingRates cites a research analyst from Grayscale Investments who found that past real estate values were strongly influenced by proximity to attractive stores, services and neighborhoods. It remains to be seen if this can happen in the Metaverse, where players can "teleport around the world, making travel instant and irrelevant for scoring goals".
Will greed for profit affect the development of virtual earth over time? Will expensive properties in Sandbox or Decentraland retain their value? Will people outside of crypto NFT see it as a powerful new ownership tool even if they can't sleep on the computer? In its current form, NFT infrastructure is still limited. This technology is not yet available to enable tokenization of truly unique properties (especially on Ethereum which is currently nearly impossible). To advance this sector, a new paradigm needs to be developed.
Next year the industry will invest billions in NFT infrastructure that supports alternative uses and enables viewable books that can be shared or expanded to facilitate the unique display of individual assets such as art and collectibles. Smart contracts need to be upgraded to enable speed, functionality and scalability. Much work is being done in several sectors - such as nesting NFT pallets, which enable complex ownership structures between fractional landowners.
Regulations are also a matter of discussion. As well as the traditional real estate industry fear that freely movable assets – which are not tied to any blockchain – can actually be compromised which can be used in both the real world and the digital world. There are social considerations for people to value digital properties. It's already happened. But this new world of tokens - this multi-chain future - will take time. Similar to building a house.