The Platform

Breno Assis

Digital real estate sales were initially selling briskly on virtual platforms like Voxels, Decentraland, Sandbox, and Somnium. There are a total of 268,645 parcels across these four platforms, all of varying sizes and prices. Some of that rush-to-buy has subsided.

To get an idea of the process, take a look at the Metaverse Group where you can buy properties.

Another marketing point site sells “properties” and has the price tags tied into the virtual locations. You can pay by credit card and need to have a digital wallet to accept their NFT (non-fungible token) that represents the property you purchased in return. A quick question becomes, which of these sites are legit?

Before you get all giddy like Ralph Kramden about making a fortune by buying into this new version of the cryptocurrency fad, think a couple of steps ahead of the game.

What happens when a state, or a country, decides to tax your virtual real estate holdings? What is the framework for taxing these “virtual” empires and properties you will be building?

Don’t think so? This looks like a perfect “virtual world” scam to start declaring and claiming tax assessments by government agencies and you better pay up because if you don’t, the state or whoever the virtual Sheriff of Nottingham will be, will come and take over your property by virtual eminent domain or virtual tax evasion charges.

Just like some cash-strapped states started to look at marijuana sales as a new source for tax revenues, do you really think they are going to stay away from the Metaverse? A McKinsey & Company report pegs the value of the Metaverse at $5 trillion by 2030. Citibank is hyping it by claiming it will reach $13 trillion by 2030.

This much innovative value will require a whole new 3D version of the IRS – or should I say VIRS? The Virtual IRS will have a lot more power because it can move a lot faster electronically, than the traditional IRS. I should be the first tax commissioner because I already have thought out the framework for a tax structure for the Metaverse.

From the Motley Fool: “This early in the growth of what is expected to become the Metaverse, there’s no way to really know which Metaverse platforms will hit and which will shrink into obscurity, but if you’re the betting type, or you have a business plan in mind that would benefit from a Metaverse presence, you definitely should give it a try.”

So, to read between the lines, it is still a big gamble just like picking out the right coin in the cryptocurrency market a couple of years ago. Funny how they make the comparison to the cryptocurrency market, but they fail to mention all the scams, failings, and frauds perpetrated on those who invested in the crypto market. The amount lost is in the billions.

From another section of the investing advice column of the Motley Fool: “Simply by holding that virtual property — even if it is, for now, just an empty lot or an art installation — they become investors, too. According to a Citi GPS report, by the end of this decade, the Metaverse can be expected to expand to as many as 5 billion users and a total addressable market of up to $13 trillion. The likely end result of such expansion is that many parcels of digital land will grow in value even if they’ve only been used for their owners’ enjoyment. As long as the platform you choose has a healthy community and is driven by a sense of collaboration, people will continue to make it their digital home.”

There are other claims when you do a Google search on digital real estate that entice you to “grab some spare money” and get planted in the Metaverse. “Stake your claim!” And of course, everything is “gaining value” just like cryptocurrencies did several years ago.

The promoters need to pull in all the wide-eyed, gotta-get-rich-quick crowd by telling them to “jump on the money train now before it leaves the station!” Millennials are attracted to those phrases like moths to a flame. They all thought cryptocurrency was the investment to have to be able to retire by 30.

The digital hucksters have spoken. And I am sure all the Ralph Kramden’s who lost money on cryptocurrency scams are looking at this and saying, “You can’t go wrong in real estate, Alice! Yeah, we bought off on some phony coins, but this is real estate! Real estate is a store-of-value.”

Well, “real” real estate is. All these virtual offerings are still speculative. Some major investors like Mark Cuban are very skeptical about the concept.

This virtual stuff is still in the proving stages. Will this fad fizzle? Maybe, but if it doesn’t, you can bet your last cryptocurrency that the tax man will come knocking on your door to collect some virtual property taxes.

James Carlini is a strategist for mission critical networks, technology, and intelligent infrastructure. Since 1986, he has been president of Carlini and Associates. Besides being an author, keynote speaker, and strategic consultant on large mission critical networks including the planning and design for the Chicago 911 center, the Chicago Mercantile Exchange trading floor networks, and the international network for GLOBEX, he has served as an adjunct faculty member at Northwestern University.