Believe it or not, metaverse land can be scarce after all

Just recently, Yuga Labs, the team behind the world-famous bored nonfungible token (NFT) primates, nabbed some $300 million with its sale of Otherdeed NFTs, a collection of land plots in a soon-to-be metaverse. Indeed, NFTs, the blockchain industry’s primary method of creating digital asset scarcity, have emerged as the preferred way to handle virtual land ownership for most metaverse projects, including Decentraland and The Sandbox. All of this has prompted an interesting question in the community: In the metaverse, a vast, near-endless digital space, how can digital land ever be scarce? Well, let’s dig in.

First and foremost, let’s address the elephant in the room: The metaverse isn’t real. I mean, the Ready Player One-style metaverse, a seamless virtual reality-based rendition of the internet as we know it. So, while you may don your VR helmet for a rave in Decentraland, the device will hardly stay on for your daily dose of Instagram or a news feed surf.

In other words, what we have right now is a growing number of relatively siloed metaverse projects, which offer users an array of project-specific experiences and functions as opposed to the browse-whatever of the larger web. This in itself hints that scarcity is a valid concept to consider in as much as their lands go, even if we consider their value through the same prism as real-world land.

Related: Sci-fi or blockchain reality? The ‘Ready Player One’ Oasis can be built

The laws of the land

In the real world, the value of a plot of land is a product of a few quite clear-cut variables — i.e., natural resources, from oil or mineral deposits to forestry and renewables, access to infrastructure, urban and logistical centers, and fertile soil. All of this can come into play depending on what you are planning to do with this land. Purpose defines value, but the value is still quantifiable.

Value, for its part, often goes hand in hand with scarcity, and land is no exception. The planet’s total surface area is 510.1 million square km, but more than half of that is under water, which works for oil and gas pipelines and submarine cable lines, but little else. So far, we have modified about 15% of the available land area, and yet, at the end of the day, land is finite. Factor in the value and financial feasibility considerations (an investment has to be worth it), and the pool of land that actually makes sense to acquire goes even slimmer.

Let’s take The Sandbox as an example. What’s the value of getting there? Again, value comes from purpose. If you are a fashion brand, for example, you would probably benefit from being in a similar digital space as Gucci. What’s more, if you are looking to compete with this brand, you would want your plot located as close to its own as possible to try and cut into its footfall with the stunning exterior of your own outlet.

This is where scarcity comes back into play. There are only so many NFT plots that you can buy next to the Gucci store. In a digital realm, distance as such may seem arbitrary, but it’s not entirely correct. Distance comes down to how this specific metaverse handles space, objects and movement — the crucial, foundational components of its design. After all, you probably want your own metaverse store to be an actual 3D store a buyer can explore, which demands a 3D spatial grid and at least a basic physics engine. Sure, it’s probably possible to play with non-Euclidian geometry and other smart design features to make the space bigger on the inside than on the outside, but this would amp the workload on the backend and affect the user experience.

As we see, technological constraints and business logic dictate the fundamentals of digital realms and the activities these realms can host. The digital world may be endless, but the processing capabilities and memory on its backend servers are not. There is only so much digital space you can…