What's up guys and welcome back to wall street millennial on this channel, we cover everything related to stocks and investing over the past few months, the so-called metaverse has been one of the hottest areas of the stock market. Investors think the metaverse will revolutionize the internet and create a multi-trillion dollar opportunity. Facebook changed their name to meta platforms and they plan to invest 10 billion dollars to hire 10 000 new engineers to make their metaverse vision a reality. Stocks, including roblox and nvidia, have seen their share prices skyrocket over the past few months, as people expect both companies to be big metaverse beneficiaries.

Investor euphoria around the metaverse is epitomized by the growing industry of virtual real estate. People are paying hundreds of thousands or, in many cases, millions of dollars on virtual properties that they hope will eventually become valuable. As the metaverse scales in the last week of november, the top four projects sold over 100 million dollars in virtual real estate. The buyers of this real estate include venture capital funds that exist solely to buy digital assets of this nature.

In this video, we'll look at what the metaverse is, why people are willing to spend hundreds of millions of dollars on digital real estate and whether it will ever live up to the hype. So what is the metaverse? The basic idea is a virtual world where people can interact with each other online instead of in person, think of it kind of like a roblox server, but instead of just going there to play video games, you can also log into the metaverse to visit. Friends. Go shopping or even just go to work.

Currently, the two leaders in the space are roblox and facebook. Just a few weeks ago, facebook released their horizon world's oculus video game, which allows users to fully immerse themselves into the virtual world, while facebook and roblox are centralized platforms run by corporations, there are competing metaverse startups that run on the blockchain. This is where most of the hype is and people spending millions of dollars on digital real estate, the one that has gotten the most interest is a platform called sandbox. Sandbox was originally a video game developed by a san francisco-based company called pixal in 2012..

In the beginning, it had nothing to do with the metaverse of cryptocurrencies. It was playable on mobile phones and on pcs via the steam platform. It allowed users to build their own game levels in pixel art, mostly, reviews on steam are negative, and users complain that the game crashes, frequently after the price of bitcoin skyrocketed in 2017, a hong kong-based venture capital fund, called anacoma brands, saw an opportunity and acquired pixar For about five million dollars, they created the current version of sandbox, which is an online metaverse where people can buy virtual land, create their own games and develop their own nfts. They created a cryptocurrency called sand, which you need to buy properties on the sandbox platform after facebook changed their name to meta.

In late october, the value of sandcoin increased eightfold and now has a market cap of almost six billion dollars. They started selling pieces of land in 2019. It was an almost immediate success, as they had heavy hitting promotional partners, including snoop dogg. To date they have sold more than 211 million dollars worth of land in primary offerings.

So why are people paying so much for digital real estate within the game? You can create your own nfts, which you can sell. You can also build your own video games on top of your virtual land. You can then monetize by creating pay-to-play games where players have to pay you in sand tokens. You can think of sandboxes similar to roblox, with the main difference being that you have to pay to build a sandbox game and everything is run off.

Their sand cryptocurrency for the people, paying hundreds of millions of dollars to buy virtual real estate on sandbox or similar platforms, they're, obeying that they will eventually be able to develop games where they can monetize and make back their investments. And even if they don't have the technical expertise to develop the games themselves, they can sell the land to a developer in the future once the metaverse becomes mainstream and investors are expecting sandbox to make a lot of money by selling sand coins in virtual real estate. They recently raised 93 million dollars in a funding round, led by venture capital giant softbank. There are now real institutional investors getting behind the virtual real estate craze.

For example, there's a penny stock company called tokens.com, which has shifted its focus to primarily target digital real estate. Nfts and other crypto related projects. They recently bought a 70 stake in another company called metaverse group, which is basically an investment fund that focuses on digital real estate. In november, they bought a virtual tower in another digital real estate, world called decentral land.

They plan to turn this tower into a shopping mall and generate revenue by renting out spaces to real world brands. The idea is fashion. Brands can use these virtual worlds to sell their virtual nfts brands, including, but not limited to dolce and gamana gucci. Balenciaga and ralph lauren have made millions of dollars selling nfts of various gifts and images, to the extent that companies like tokens.com can buy virtual real estate and generate real revenue by renting them out to actual brands.

Some would argue that it's no different than a traditional real estate company buying properties and renting them out to tenants. Of course, there is one major difference for physical real estate in the real world. People rent out the properties to live or work in. You need a house to live in, that's why it has value to justify the hundreds of millions of dollars worth of investment in digital real estate.

People will have to start living a significant portion of their lives in the virtual world and it's still unclear. If this will ever happen, the idea of the metaverse isn't new by any means. In 2003, a small company called linden lab, launched a game called second life. Second, life was a virtual universe where people could create a second life for themselves, playing as an avatar and interacting with other people.

On the platform, the game was unique in that it wasn't really a video game. There were no bosses to fight or objectives to complete. It was purely a place for people to live their lives and can probably be considered the closest thing we've ever had to a metaverse. The game was successful and drew more than one million monthly active users at its peak in 2017., its user account has been on a declining trajectory since then, while they did make some money by selling in-game virtual currencies, it's a far cry from the trillion dollar opportunity That many metaverse bowls talk about as it stands now most people would prefer to live their lives in the real world.

The virtual world just isn't a viable substitute to live your day-to-day life, but, of course, technology is rapidly advancing soon. We'll have augmented reality, headsets and advanced graphics. That will be able to make the virtual world almost indistinguishable from the real world. The company that looks to be the closest to this goal is facebook.

They own oculus and recently released their first metaverse game facebook horizons. Additionally, they're going to invest 10 billion on new metaverse technology over the coming years. But now you have the likes of sandbox and decentraland popping up to build out their own metaverses. Today there are four significant crypto based metaverses sandbox decentraland cryptovoxels insomnium space, while they're raising money through crypto and nft sales.

They don't have anything near the financial firepower of facebook to invest in research and development, and the barriers to entry are very low to the extent that any of these crypto based virtual land economies are successful. Many new projects will try to copy them and also take advantage of the opportunity, while each one of these universes has a limited inventory of land, an unlimited number of these universes can be created as it stands now. These crypto based metaverse platforms are basically paid versions of roblox as a developer. Why would you spend tens, or even hundreds of thousands of dollars for a parcel of land in sandbox to develop your game when you could just build it on roblox for free mana, the cryptocurrency behind the metaverse platform decentraland has skyrocketed since the facebook meta rebranding.

This is despite them only having 300 000 monthly active users or roughly one tenth of one percent of roblox's monthly active users. The idea behind these crypto metaverse platforms, like decentraland, is that once you own the land, you're free to monetize it or otherwise use it in any way you want. If these platforms actually become mainstream, there is a possibility that the pieces of digital real estate can have real value, but to say that this is highly speculative would be an understatement. While they have a lot of hype from investors, very few people are actually using these platforms to live their day-to-day lives and if the metaverse does become mainstream, large companies like facebook and roblox will probably be the winners.

The stock and crypto markets are susceptible to price bubbles, for example, in the early 2010s, people thought that 3d printing would be the next big thing and they bid up the price of 3d systems. Corporations up 30-fold the company never lived up to the hype and proceeded to lose 90 percent of its value when the bubble burst. You also had a similar situation during the dot-com bubble in the late 1990s. Whenever there's a new technology, investors often get over hyped and bid up the prices to absurd levels inevitably leading to a crash in the case of virtual land.

A lot of these coins are skyrocketing 10 times just because facebook changed their name to meta and if anything, facebook's pivot to the metaverse could actually be a bad thing for them, because it means that they have a formidable new competitor. But it just goes to show how a lot of these virtual assets are driven by the news, flows and investor sentiment, not necessarily the fundamentals of the underlying projects. There is a possibility that some of these projects become mainstream and the digital land will end up having some value, but does this mean that you should spend millions of dollars on virtual land on platforms with very few active users today, only time will tell alright guys That wraps it up for this video. What do you think about virtual real estate? Do you think any of these crypto based platforms have a chance of building a mainstream metaverse? Let us know in the comments section below, as always.

Thank you so much for watching and we'll see in the next one wall, street millennial signing out.