Young Koreans aim to make real money on virtual land

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(123rf)

(123rf)

Park Seol Min, 28, half-jokingly tells his friends that he bought a 10 square meter plot in the affluent Gangnam district of Seoul for less than 40,000 won ($ 34).

As you’d expect, given that apartments in the area are selling for over 30 million won per square meter, there’s a catch: the plot only exists in the virtual computerized world.

The park is one of a growing number of “virtual homeowners” who spend real money on real estate on metaverse platforms such as Earth 2, which presents users with a map of the world broken down into small plots of 10 square meters of land. …

But while the land may be virtual, the profits may be real.

“Before I bought digital real estate in Gangnam, in February I purchased small plots of virtual land near Gwanghwamun Square and the main buildings of the National Assembly in Yeouwido, which amounted to almost 170,000 won. Surprisingly, the (total) asset value jumped to 460,000 won in just two months, ”said Park.

“Considering that some people hit the jackpot by investing in cryptocurrencies like Bitcoin at the very early stage of coin trading, virtual real estate seems like a tempting long-term investment with little capital.”

As of July, the total value of the virtual land owned by Korean users of Earth 2 is estimated at 7 billion won, much higher than Japan and China, where 380 million won and 290 million won respectively were placed, according to trading data. Platform.

Asia’s fourth largest economy ranked third among the largest economies in terms of number of digital land purchases, which stood at 500,000 in that month, after the United States with 600,000.

“It was interesting that I could own real estate that is not for sale in real life, such as the road in front of the National Assembly and Gwanghwamun Square. If (Earth 2) adds features that allow people to build their own homes on their own land and trade them with others, which will ultimately form a virtual city, the platform will become a more promising place to invest, ”said Lee Hyun Ji. an office worker between the ages of 30 and 30 who bought a total of 575 virtual earth tiles on Earth 2 between November of last year and January, with their property values ​​increasing 107 percent over that period to 3.65 million won at the end of the year. January.

Chinese investors bought all the land around the presidential Blue House in Seoul, built in a virtual world represented by the global metaverse platform Earth 2 (courtesy of Earth 2)

Chinese investors bought all the land around the presidential Blue House in Seoul, built in a virtual world represented by the global metaverse platform Earth 2 (courtesy of Earth 2)

The growing demand for virtual earth has arisen against the backdrop of the emergence of metauniverses – virtual environments, often incorporating augmented reality technology, in which people from the real world interact with others through digital versions of themselves. It has become popular recently as the protracted COVID-19 pandemic limits personal contact.

Experts say a speculative fever similar to the one that has gripped the cryptocurrency markets has fueled a boom in metaverse ownership.

In the first quarter of the year, cryptocurrency trading volume was 1,500 trillion won. Industry data showed in April.

“The virtual money market has been fueled by asset bubbles in housing and stock markets, supported by abundant liquidity following the COVID-19 stimulus packages. The recent crypto boom has pushed local investors to invest in virtual real estate, ”said Jung Sung Min, professor of business administration at Gachon University.

“For millennials and Gen Zs or those born between the late 1980s and early 2010s who are frustrated by the overheated real estate market and find it nearly impossible to own land or buildings in Seoul, buying digital property can be an attractive investment. … activity.”

Despite the growing popularity of virtual real estate trading, some experts are skeptical whether it can gain further momentum like the current get-rich-quick crypto boom.

“In the real world, land prices are determined by how the land is used. However, in the current digital platform for virtual land transactions, investors cannot find economic use for their land, which casts doubt on the sustainability of investment activities, ”said Kim Sang Kyun, professor of industrial engineering at Kangwon National University. …

“An asset is something that can be measured or used for monetary transactions in real life. Unless the current virtual property deal is any different from online games where players buy glasses and buy in-game items, Earth 2 and other related metaverse platforms are unlikely to spark a boom among retail investors for an extended period of time. ”

By Choi Jae Hee (cjh@heraldcorp.com)



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