Although Decentraland is among the most popular blockchain-based virtual worlds, it is far from the only one of its kind: Somnium Space, SuperWorld, and the Sandbox are all variations on the same theme. Some have offered in-built rental functionality for years.
One virtual landlord, Chris Bell, who owns one of the largest portfolios of land in Somnium Space, says he earned $18,000 in rental fees in 2021. After cutting his teeth letting out condos in the physical world, he has created something of a virtual real estate empire, amassing 100 plots. The same set of golden rules—buy in a desirable location, invest in improving the property, and set the right rental price—apply in the virtual and physical domains, Bell says.
Sam Huber, CEO of LandVault, says the real money is in combining land rental with auxiliary services like virtual property design and development. His company, which aims to offer a simple “end-to-end” service for renters, is currently able to recoup the cost of purchasing a plot in as few as two months.
Although letting out virtual property is extremely niche, an entire industry has already been established around the concept. There are not only virtual landlords, but property managers and real estate agents to help them and developers to help design and construct the buildings they want to rent out. There are even investment firms that specialize exclusively in virtual property.
The idea that someone might be willing to pay to temporarily occupy a virtual piece of land is curious in itself, but even more interesting is what this says about the trajectory of these blockchain-powered virtual worlds and the social dynamics forming inside them.
Implicit in this arrangement, says Philip Rosedale, creator of Second Life, is the formation of a new “winner-takes-all” class system. The landed gentry sit atop the social pyramid and below them the professionals and tenants—the latter precluded by price from mounting the property ladder themselves.
The development of sophisticated industries might be interpreted as a sign of the increasing maturity of virtual communities. But it could also be a sign of disease, says Rosedale, whose own 3D online world pioneered the concept of virtual real estate in the early 2000s.
“The accumulation of wealth in virtual economies is of great concern,” claims Rosedale. Because there is no ongoing cost of ownership for virtual landowners, he says, there will be an “inexorable” and “destructive” consolidation of wealth in the hands of a minority.
Similar theories are raised by Roger Burrows, a sociologist and professor specializing in digital culture and social inequality at the University of Bristol, and Vassilis Galanos, a lecturer in sociology at the University of Edinburgh.
The evolution of virtual real estate is “profoundly political,” says Burrows. He sees virtual worlds as places where people go to cocoon themselves among others who share their political beliefs. In this case, so-called cryptonatives have constructed a world over which they preside, as owners of the land, built around the same suspicion of government and public institutions on which the crypto movement was founded. Nominally, anyone is welcome, but only as a tenant.