Updated: Jun 22, 2022
I have a few friends who bought virtual real estate with NFTs. I still don’t have a complete understanding of how this works. I can see how NFTs are usable to mark ownership on land, but I am not sure if my idea confirms the reality! So I want to research this topic.
As I do more research, I notice that NFTs are used for both digital and physical real estate purchases.
Physical vs. Virtual Real Estate NFTs
As we all learned, NFTs allow users to document and track exact ownership history of a given digital asset. I can see how this concept is useful in tracking ownership of physical real estate properties!
For example, you can have the ownership of a house (and land) in Tokyo by owning NFT of that house (and land). The benefit of tracking the ownership history with NFTs is how efficient it makes the document process to be. Right now, in order for someone to acquire a piece of property in the physical world, there would be a lot of required paperwork just to track the record of who owns that particular property. Thanks to NFT technology, this complicated process can be shortened via tokenization.
For physical real estate, NFTs can be linked to these assets in two ways. One is simply for an entire property (Entire Asset Tokenization (EA)) and another is for a fraction of the property (Fractional Ownership Tokenization (FO)).
NFTs are used to claim ownership of digital assets. So you may be asking how can NFTs be linked to physical assets? Some legal implications that are relevant to this discussion are too detailed that we don’t have to go through them now. In short, this is achieved by turning this property into a legal entity (LLC) and creating an NFT that represents the ownership in that entity. So one can sell the NFT of a property as an LLC. For EA, the system can be explained easily if we compare this concept with crowdfunding. We described the concept of DAO in another blog post when we spoke about the structure of Web 3. The FO is similar to DAO in the way that multiple people can jointly invest in a virtual property. FO lets investors own a fraction of a share in the property.
Now let’s talk about NFTs for virtual real estate. The virtual real estate NFTs allow owners to claim ownership over digital space in Metaverse like Sandbox.
What is Sandbox?
The Sandbox is a gaming Metaverse developed by the game studio Pixowl.
It started as a gaming platform and now people are buying ownership in a piece of land that is included in this universe (Metaverse).
The Metaverse property describes it as:
The Sandbox is a community-driven platform where creators can monetize voxel ASSETS and gaming experiences on the blockchain
From conference or commercial spaces, to art galleries, to family homes and hangout spots, Metaverse Properties offers land in premium locations in Sandbox for individuals, enterprises and institutions. You’ll find our land in Sandbox below that spans all sizes and locations.
The properties can be only bought with $SAND which is the currency used in Sandbox Metaverse. The land can be purchased in the official Sand Land Sales, or some third-party sites like OpenSea and Rarible.
Is this such a crazy idea? Perhaps, not! An article from VentureBeat talks about The Sandbox Metaverse ( and by the way, this platform is still in its beta) hitting 2 million users as of March 2022. A lot of this attention also came from the fact that brands like The Walking Dead, Snoop Dogg, and Adidas own pieces of land in this Metaverse. In short, these 2 million users now can go to Sandbox Metaverse and create their games, events, or services: In one sentence, Sandbox is a lot like a user-generated content Metaverse world. So owning a piece of land in this Metaverse means that you are a property owner of this digital space and other developers and creators who want to open their digital events, services, and shops can come to you to sell or rent this space!
How much does a piece of digital land cost in Sandbox?
Today, (June 20, 2022) the cheapest priced land in Sandbox is listed as 1.74 Eth which is equivalent to about $1992. The Sandbox map will look like this image below and will tell you which land is owned by who and which land is available for sales.
Buying land in the physical world is the oldest investment method in the world. Before stocks, FX trading, crypto, or anything there was real estate investment. Maybe this is also the beginning of how the investment will look like in the future.