AI Wealth Truth (57): Why "Metaverse Real Estate" May Be the Most Absurd Speculation in History

I. In 2021, someone paid $2.4 million to buy a piece of virtual land in Decentraland. In Sandbox, virtual plots were traded at hundreds of thousands of dollars. Media called it a gold rush for the metaverse era. Let us test this logic.

II. Why does physical real estate have value?

III. First, physical scarcity. Earth's surface area is limited. Manhattan will not get larger. You cannot copy another Manhattan.

IV. Second, location is not replaceable. Near the CBD, near schools, near metro stations. These advantages cannot be manufactured. Location determines value.

V. Third, it has real use cases. You can live there, run a store, rent it out, or use it as collateral. Physical real estate has real utility. It is not only for speculation.

VI. Does virtual real estate have these properties?

VII. First, virtual space can expand without limit. Decentraland can add more plots. Or you can create Decentraland 2, 3, 4. Scarcity is defined by the platform and can be changed at any time.

VIII. Second, location advantage is fake. In a virtual world, you can teleport instantly to anywhere. There is no meaningful concept of distance. What does it mean to be "near" a popular spot? It means nothing. Location value does not exist in a virtual world.

IX. Third, the use value is close to zero. What can you do on a virtual plot? Show some 3D models? Open a virtual shop that almost nobody visits? Real transactions still happen in the real world. The practical scenarios for virtual land are extremely limited.

X. So how did virtual land prices get pumped up?

XI. First, narrative. "The metaverse is the future!" "In the future everyone will live in virtual worlds!" A good story can temporarily support irrational prices.

XII. Second, early movers create a wealth effect. Early users buy cheap and sell to latecomers. Latecomers see people make money, and more people flood in. This is a classic Ponzi-like structure.

XIII. Third, celebrity and brand effects. "A celebrity bought land in the metaverse!" "A brand moved in!" This is treated as "validation". Celebrities can do foolish things, and brands can pay for marketing.

XIV. What happened after 2022?

XV. Metaverse land prices crashed by more than 90%. That $2.4 million plot might now be worth only a few thousand. Many platforms are almost empty. The bubble burst, but the bag holders are still trapped.

XVI. Why is metaverse real estate more absurd than crypto?

XVII. At least Bitcoin has narratives like "store of value" and "medium of exchange". Virtual land does not even have that. You own a plot in an empty virtual world. How is that different from owning a blank sheet of paper?

XVIII. In the AI era, virtual worlds will be even easier to create.

XIX. AI can quickly generate 3D environments, virtual buildings, and NPC interactions. Creating a new virtual world gets cheaper and cheaper. When virtual worlds can be copied infinitely, the "scarcity" of virtual land becomes even more laughable.

XX. So where might the real opportunity be?

XXI. Not in virtual land, but in tools and services for virtual worlds. Building tools, content-creation tools, social services. Like selling shovels in a gold rush.

XXII. Also, virtual spaces that people actually use at scale. Game worlds (Roblox, Minecraft) have real users. But those worlds usually do not sell "real estate" as an asset class. Virtual worlds with real users are usually not metaverse real-estate projects.

XXIII. How do you avoid the metaverse speculation trap?

XXIV. 1. Ask basic questions. What is the use value? Is scarcity real, or defined by the platform? If you cannot answer clearly, it is speculation, not investing.

XXV. 2. Be wary of "future scenario" narratives. "In the future everyone will use this" is the most common bubble script. The future may have virtual worlds, but not necessarily the one you invested in. A future vision is not current investment value.

XXVI. Metaverse real estate may be one of the most absurd cases in speculation history. Fake scarcity defined by platforms, near-zero use value, and pure dependence on narrative and late buyers. When the tide goes out, the naked swimmers are exposed. In the AI era, creating virtual worlds gets easier. That means more virtual worlds, not that land inside one virtual world becomes more valuable. The logic runs in the opposite direction.