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September 02, 2022

What Is Digital Real Estate and How To Begin Investing

In every area of our modern lives, the internet is a powerful force, not just in marketing and communication, but in business. New investment opportunities come and go with the tides, but the digital industry remains strong and shows no signs of slowing down — in fact, it's growing exponentially.

Digital versions of the real world are the next big thing — non-fungible tokens (NFTs), digital currencies, the metaverse, and seemingly much more every day. 

We're at the genesis of this transformation, and digital real estate is next at the plate. However, digital real estate is more than a digital “copy” of a physical space — it's a new asset class with unique characteristics and investment possibilities. 

Just as people can buy, sell, and invest in real estate, they can do the same with digital real estate.

What Is Digital Real Estate?

Short answer — digital real estate is a property that exists online. It's the digital equivalent of how you can own a physical piece of property, such as a house or a plot of land, and it can take various forms. 

For example, imagine you're an Etsy seller who makes handmade jewelry. Your business does well, you have a great product and a substantial customer base, and you're making a profit. You have pictures of your product on your website and social media, but what if you could do more? 

What if you could have a store where customers could come to browse and purchase your digital products? They could “walk around” your store, try that jewelry out, and get a feel for your brand without ever having to step foot in the physical world. That's digital real estate.

Or maybe you're a piano teacher who gives digital lessons over Skype. You could have a digital studio where students can come to take their classes, and if you own the space, you could rent it out for concerts to be held or events to be hosted in for passive income.

It might seem gimmicky at first. Who would want to visit a digital store or take digital piano lessons? But the thing is, we're already living in a digital world. 

We do our shopping online, socialize online, and work online. For many of us, the line between the physical and digital worlds has already blurred, and it will only become more so as time goes on. And as virtual reality (VR) technology becomes more realistic, we'll be able to step into hyper-realistic worlds that allow us to occupy digital spaces in ways that feel natural, just as Zoom calls and Slack messages are a norm for many tech companies with a remote workforce.

This virtual world, new in the mainstream lexicon but growing at an unprecedented rate, is what we call the "metaverse." 

While the metaverse is still in its infancy, many expect it to grow exponentially in the coming years as technology improves. It's not a replacement for the physical world, but a very prominent, high-traffic extension, and digital real estate will be a big part of that.

What Gives Digital Real Estate Its Value?

While digital real estate strives to fulfill the exact needs of the real world, we can't quite use it in the same way. So, where does this value come from? 

Top-Down Digital Real Estate Value

Real estate’s value in the real world comes from being in a desirable location — the middle of a bustling metropolis, close to downtown, or otherwise near a point of interest for recreation or business. Like in physical real estate, the value-add remains — location, location, location.

As the metaverse matures, megabrands like Nike, Apple, and more will use their massive marketing budgets to expand their influence into the metaverse, meaning real estate in high-traffic digital areas will be in high demand. 

Ultimately, the market will derive value from which worlds people want to visit, and the companies that exist in these virtual real estate locations will be able to generate a lot of money in the process.

Bottom-Up Digital Real Estate Value

This value can also work the reverse way. For a moment, let's go back to your digital storefront for jewelry. Fortunately, you bought your property early on in an underdeveloped location for a reasonable price. 

You've settled in your new digital spot for a year now, and thanks to your excellent design and progressive marketing efforts, your business is booming. You're the hottest new jewelry artist on the block in the metaverse, bringing in big crowds of customers every day. 

That's when Louis Vuitton strikes a deal to open a location near your store, hoping your customers will want to pair their new jewelry with one of LV’s luxury suits, dresses, or other premium products. But, of course, it works the other way, too. 

After leaving Louis Vuitton, a customer might decide to accessorize their new digital wardrobe with one of your watches. Suddenly, your business is in even higher demand, and your property is worth more than you ever imagined.

Digital Real Estate Democratizes Access and Opportunity

While this market dynamic doesn’t seem to disrupt megacorporations from expanding their ever-growing footprints meaningfully, it potentially democratizes access and opportunity for billions around the globe. 

Here's what digital real estate in the metaverse can do:

  • Allows access to anyone

  • Creates jobs and businesses

  • Eliminates physical barriers

  • Enhances work environments

  • Brings new revenue streams for artists and content creators

Allows Access to Anyone

Digital real estate and virtual land democratize market entry for anyone globally. They provide opportunities for people with disabilities who cannot participate in physical work or social environments.

Furthermore, it can create digital safe spaces for marginalized communities to gather in the metaverse and express themselves without fearing physical altercations.

Creates Jobs and Businesses

Digital real estate creates new opportunities for entrepreneurs and small business owners who might find it hard to get their start in the physical world. 

Furthermore, it provides a new way for people to generate income, which is especially important in developing countries with limited economic opportunities. 

Eliminates Physical Barriers

Digital real estate can eliminate the physical obstacles that might preclude new investors and prospective small business owners from getting involved in a new frontier. You only really need internet access and funds to invest, and digital real estate can be yours.

Enhances Work Environments

Digital real estate also creates more effective work environments. For example, digital offices can eliminate the need for physical office space, saving businesses money on rent and other overhead costs. 

Companies can also buy digital real estate to create virtual coworking spaces, facilitating collaboration and networking among digital nomads and remote workers.

Brings New Revenue Streams for Artists and Content Creators

Digital real estate also provides new revenue streams for artists, musicians, and content creators who use their digital property when hosting events, selling products, or generating income through digital advertisements. 

In this way, digital real estate functions as an extension, and helps build sustainable careers in the digital world.

How To Get Started in Digital Real Estate Investing

  1. Learn about digital real estate and digital assets. 

  2. Download a crypto wallet like Ember Fund in the App Store. 

  3. Research the top Metaverse projects. 

  4. Fund your wallet and invest in a Metaverse Index.

  5. Dollar Cost Average in to diversify your entry points over the volatility curve. 

If you're interested in getting started with digital real estate, here's what you need to do to get started:

1. Learn about digital assets. 

First, it's essential to understand the basics of digital currencies, blockchains, NFTs, and smart contracts. While you don't need to be an expert in these fields, having a general understanding of how they work will be helpful.

Ember Fund offers Ember University, where you can learn about crypto one educational article at a time. To sweeten the pot, you can even earn Bitcoin with Ember with our Learn-to-Earn program — just Download the Ember Fund App and log in daily to access an educational article and claim your reward.

Learning about cryptocurrency can be a rabbit hole; you can easily spend days, weeks, or even months reading about this stuff. But to invest in digital real estate, the basics will suffice.

2. Download a crypto wallet like the Ember Fund Wallet in the app store. 

Once you have a general understanding of digital currencies, you'll need to get a crypto wallet. A crypto wallet is a digital wallet that stores your digital currency. 

For digital real estate investing, we recommend using a software wallet that allows you to interact with web3 applications. 

3. Research the top Metaverse platforms.

Once you understand the crypto basics, you'll need to research the available digital real estate platforms and select one that best suits your needs. 

Here are the top three digital real estate platforms worth looking into:

  1. Decentraland: Decentraland is a digital world powered by the Ethereum blockchain. Users can purchase digital land in Decentraland with MANA tokens and use them to build digital experiences, games, and applications.

  2. Sandbox: Sandbox is a digital world builder that allows users to create, experiment, and monetize their virtual property. Sandbox uses SAND tokens to power its digital economy and to reward users for participating in the platform. In addition, Sandbox provides users with various virtual tools and assets to help them build their digital dream world.

  3. OpenSea: OpenSea is the world's largest digital marketplace for buying, selling, and renting digital assets. The platform supports various digital assets, including NFTs and digital real estate. OpenSea takes ETH tokens, SOL, USDC, and DAI.

4. Invest in a Metaverse Index that includes the top Metaverse projects.

After you've researched various digital real estate platforms, you'll need to purchase some digital currency to start buying and selling digital property and fund your wallet. 

It’s almost impossible to predict which metaverse assets to invest in as they all have various strengths and value propositions. The entire industry is still very much in its infancy so at this point, it’s anyone’s game. By investing across 18 of the top metaverse assets in a managed index, your chances of investing in a winner or winners increases . In addition, a metaverse index will rebalance automatically by market weight periodically so that your metaverse portfolio remains optimized despite great market volatility. Furthermore, it aims to capture fast-growing metaverse up-and-comers while excluding failing projects over time. 

5. Start investing, and invest at different points in the market by dollar cost averaging in. 

Dive in, do your research, and start experimenting. 

  • What metaverse communities can you find? 

  • What digital experiences can you create or participate in?

  • Don’t invest a large lump sum once – instead, dollar-cost-average tiny amounts on a periodic basis to capture various entry points in the market. Remember, crypto is extremely volatile so dollar cost averaging ensures you end up investing closer to the average price over time. You decide how much you want to allocate to the metaverse in a year, then divide by 12 and invest on a monthly basis.

Digital real estate is a nascent industry, so don't underestimate the power of network effects. Familiarize yourself with the digital real estate landscape, research, and see if you can find any unexplored niches.

Wrapping Things Up

Digital real estate is about creativity, passion, and experimentation. It's not for everyone. But if you're curious about the future of commerce, digital real estate promises the world. 

Whether it can deliver on its promise is anyone's guess. We're going through more rapid technological and economic revolutions than our predecessors, and we're just starting to unlock the possibilities. The value of learning about this emerging marketplace and its underlying technology is immeasurable, even if you don’t invest in digital real estate.

Ember Fund is acutely aware of how the metaverse could change the world. We believe that digital real estate will become one of the most important asset classes in the coming years, and we're committed to helping our investors get in on the ground floor. 

That's why we launched an index fund focused on the most promising metaverse assets : the Metaverse Index (MVI), a collection of the top 18 metaverse projects that our experts believe are well-positioned to make a splash. 

Ready to invest in the MVI? Get started with Ember and download the Ember Fund App here, or continue exploring what you need to know about cryptocurrency investment in the Ember Fund blog.

Sources:

What Is The Metaverse And Why Should You Care | Forbes

The Betterverse: Can The Metaverse Help Shape A More Inclusive Ad Industry? | The Drum

The Future of Cryptocurrency: 8 Experts Share Predictions for the Second Half of 2022 | TIME

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