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Here’s why ‘virtual land’ NFTs are selling for millions of dollars on Ethereum

Japanese videogame maker Atari says it plans to launch its own non-fungible token (NFT)-based virtual world, as per a report on news outlet Reuters today. Atari would soon announce details.

Frederic Chesnais, head of Atari’s blockchain division and the company’s former CEO, said that online environments and ecosystems were going to be “very very big” regardless of the price movements or adoptions of other cryptocurrencies like Bitcoin. “NFT real estate could one day fetch millions of dollars,” he said.

For the uninitiated, NFTs are blockchain-based representations of tangible or intangible assets that prove that the holder is the true owner of the underlying asset. The latter can include but is not limited to, digital collectibles, crypto art, and real estate…to just about anything.

The next NFT hype

Virtual land on Ethereum and other blockchains has been around for years. However, the recent surge in the NFT space has rekindled their allure, with projects like Decentraland, Cryptovoxels, Somnium Space, and The Sandbox seeing both their token prices and virtual land valuations hitting record highs.

In the past few months, Decentraland (MANA) has seen more than $50 million in total sales on the many lands, avatars, usernames, and wearables it offers in its universe. One such piece of land—a plot measuring 41,216 virtual square meters—sold for $572,000 on April 11, a self-proclaimed record.

Another Decentraland plot sold for $283,567 on March 21, while one Somnium Space estate sold for half a million dollars on March 16 last year.

The rationale behind these big-money purchases is simple: Buyers say early projects (and early virtual lands) are akin to early internet domain names. This means that if blockchains like Decentraland and Ethereum become bigger than the internet industry in the future, a handful of people would stand to reap the benefits of the earliest virtual relics on those platforms.

Another reasoning is that as more users and players jump into these virtual environments, the plots of land in central locations will be highly sought-after, similar to what happens in the real world.

“All of virtual land and these virtual spaces are basically real estate on which experiences will start to centre, on which attention will start to focus,” said NFT investor ‘Twobadour,’ in a statement. They added:

“That’s where all of the attention is and that’s monetisable in a million different ways.”

Companies in on the virtual land trend

Virtual land investors are already selling to companies, as per Samuel Hamilton, community and events lead at the Decentraland Foundation.

As per Reuters, Atari has already licensed a retro arcade within Decentraland and is due to open a casino, while an area called “Crypto Valley” is home to various crypto companies.

Decentraland, on the other hand, has hosted a virtual fashion exhibition in collaboration with Adidas where several designs were auctioned as NFTs. It is also seeing surging interest from musicians who can perform in virtual arenas, sell tickets to fans, and distribute merchandise on virtual storefronts.

“We’re going to have several well-known global festivals all doing stages, and when we get to that point we expect hundreds of thousands or even millions of people,” explained Hamilton.

Meanwhile, the concerns remain and linger. The broader crypto market is in a strong uptrend and could soon represent a price bubble, leaving ‘land’ investors with illiquid pieces of mere online fantasy.

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