Recently, Yuga Labs, the team behind the world-famous Non-Fungible Tokens (NFT), was able to find about $300 million by selling Otherdeed NFTs, a group of plots of land in the soon-to-be Metaverse area. In fact, NFTs, the blockchain industry’s primary method for creating digital asset scarcity, have emerged as the preferred method for dealing with virtual land ownership for most metaverse projects, including Decentraland and Sandbox. All of this raised an interesting question in society: In the metaverse, a vast, near-endless digital space, how could a digital Earth ever be so rare? Well, let’s dig.
First of all, let’s talk about the elephant in the room: the metaverse isn’t real. I mean, the metaverse in the style of Ready Player One, a seamless show based on virtual reality for the internet as we know it. So, while you can wear your VR helmet to rave about in Decentraland, the device won’t stay on for your daily dose of Instagram or browsing your news feed.
In other words, what we have now is a growing number of relatively isolated metaverse projects, which offer users a set of project-specific experiences and functionality rather than browsing – whatever from the larger web. This in itself hints that scarcity is a valid concept to consider as far as their land goes, even if we consider their value from the same perspective as land in the real world.
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Earth Laws
In the real world, the value of a parcel of land is a product of a few quite obvious variables – namely, natural resources, from oil or mineral deposits to forests and renewable energy sources, access to infrastructure, urban and logistical centers, and fertile soil. All of this can come into play depending on what you plan to do with this land. Purpose determines value, but value is still quantifiable.
Value, for its part, often goes hand in hand with scarcity, and land is no exception. The total area of \u200b\u200bthe planet is 510.1 million square kilometers, but more than half of it is under water, which is what works in oil and gas pipelines and undersea cable lines, but little else. So far, we have modified about 15% of the available land area, however, at the end of the day, the land is limited. Factor in value and financial viability considerations (the investment should be worth it), and the less land it makes sense to acquire.
Let’s take Sandbox as an example. What is the value of getting there? Again, value comes from purpose. If you are a fashion brand, for example, you will likely benefit from being in a digital space similar to Gucci. Moreover, if you are looking to compete with this brand, you will want your plot to be located as close as possible to try to break into it with the amazing exterior of your outlet.
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This is where rarity comes into play. There are only so many NFT plots to buy next to the Gucci Store. In the digital world, the distance might seem like this random, but it’s not quite right. The distance is down to how this specific metaverse deals with space, objects, and movement – critical core components of its design. After all, you probably want your metaverse store to be a physical 3D store that a buyer can explore, which requires a 3D spatial grid and at least a basic physics engine. Sure, you’d probably play with non-Euclidean geometry and other clever design features to make the space bigger on the inside than on the outside, but that would add to the backend workload and affect the user experience.
As we can see, technological constraints and business logic dictate the fundamentals of the digital worlds and the activities that these worlds can host. The digital world may be endless, but the processing and memory capabilities on its back-end servers are not. There is only so much digital space that you can host and manipulate without your server stack on fire, and there is only so much creative leeway that you can get within that ramifications while keeping your business going. These frameworks create a system of coordinates that informs the way users and investors interpret value – and in the process, they also create scarcity.
