In the “Truth Is Stranger Than Fiction” Department, it seems some people are spending huge sums of money to purchase ‘real estate’ within imaginary virtual worlds online.
According to the NY Times article, “What’s All the Hype About the Metaverse?” published on January 19, 2022, the metaverse is the convergence of two ideas that have been around for many years: virtual reality and a digital second life. It is an online alternate reality where people can live their lives, work, do commerce, and socialize.
In February 2022, TerraZero Technologies issued what may be the first-ever mortgage in the metaverse. The mortgage was issued on the purchase of a $45,000 parcel of ‘property’ in Decentraland, a metaverse with approximately 92,000 parcels. Other than this being a two-year mortgage, the other terms (such as the interest rate and loan amount) were not disclosed. The firm followed a traditional real estate mortgage vetting process, self-financed the purchase, and today holds the NFT, or non-fungible token to securitize the mortgaged ‘land.’
According to Dan Reitzik, TerraZero’s CEO, “We get hundreds of inquiries a day from people asking if we can help them buy property. At first, we thought, ‘That’s kind of crazy,’ and then we were like, ‘Why not?’ Everybody wins. Young people can’t own properties in the real world right now, but they can certainly own properties in the metaverse.”
In my mind, the question begs to be asked, “Why would anyone spend tens – if not hundreds of thousands of dollars on real estate properties in the metaverse, when you can’t actually live in it?”
There are likely certain benefits to the metaverse – recreation and otherwise. However, I believe the addictive-like draw on many people to become further immersed in an online virtual reality which allows them to avoid the real world is unhealthy for those individuals, as well as for the greater society. Further, I think it’s ridiculous to spend real money on virtual clothes, toys, vehicles, or real estate within this realm. Do you agree or disagree? Let me know what you think below.
Warren Goldberg is President of Mortgage Wealth Advisors, a Certified Mortgage Planning Specialist®, and a published author. His interviews include Blog-Talk Radio, Newsday, The Daily News, Anton Press, and the Long Island Herald. Since 1992, he’s been sharing his financial knowledge and wealth-building strategies, including how to properly use your mortgage as a financial tool. His clients regularly express their trust and appreciation by recommending friends and family call when in need of mortgage, real estate, and financial guidance.