CHINA Real estate speculators get stuck in metaverse


Real estate speculators get stuck in metaverse


06:57, April 14, 2023

A property construction site in Hai'an, Jiangsu province. (Photo: China Daily)

Over the past few years, a group of people have plunged into the virtual world, buying houses and land, collecting art, but some ended up with nothing. Going from making 3,000 yuan ($436.3) in seconds to losing money, the good times seem to have been fleeting.

"Global Island for 40,000 yuan, Polar Wooden House for 8,200 yuan, Seaview Villa for 7,000 yuan, Glass Flower House for 3,200 yuan, and Mountain Village Cottage for 800 yuan."

This is a listing of real estate on the Honnverse app in December 2021. The price corresponds to the quality of the houses.

In December 2021, Ibe (pseudonym) drew an S-level house, which is a large villa by the sea with European-style decoration, a piano, swimming pool, and garden on Hoonverse. To his surprise, someone offered to buy his account for 3,000 yuan. Ibe made a net profit of 3,000 yuan with zero cost.

At present, Honnverse is operating normally, but there were fewer than 10 people in the main scene, and few people were speaking in the global chat screen.

The "office" scene, palace, and commercial district, which are the main scenes, are also sparsely populated. Customer service said that there is currently no channel for buying and selling real estate in the app now.

Moreover, virtual real estate platforms around the world are almost deserted. One year ago, the daily active users of Decentraland, a metaverse platform, were over 1,200 people, while The Sandbox had more than 8,800 people. Now, the daily active users of both platforms are only about 100 people.

"Metaverse real estate prices are essentially a disguised sale of computing power, and computing power prices are linked to costs.

However, some people have speculated on the prices of virtual spaces built with computing power, which will inevitably lead to a crash," said Pan Helin, co-director of the Digital Economy and Financial Innovation Research Center at Zhejiang University's International Business School, in an interview with Qianjiang Evening News.

In April last year, when metaverse was in full swing, internet companies were heavily investing in related products, causing digital collectibles platforms to emerge one after another.

On the digital collectibles platform Chin Verse, an image of a cartoon Rubik's Cube with each side displaying a colored pattern was priced at 199 yuan. A friendof Zhang Gui urged him to buy, saying it would be worth 300 yuan in just two days.

However, in early May, the lion picture Zhang bought suddenly plummeted from over a thousand yuan to 400 yuan, and within a few days, it was worth less than 100 yuan. Some said that the platform launched new products and the old ones were no longer popular, while others speculated that it was the manipulations of market makers behind the scenes.

Now, the Chin Verse app is no longer available for download, and the latest announcement on the website was updated in June 2022, stating that all forms of speculation are strictly prohibited, and there will be no matching transactions or continuous trading.

This year, some players went to Southeast China's Xiamen city to seek legal redress, only to find Chin Verse's operating company has disappeared.

"The door is closed, and the database may have been deleted. We have no evidence," said Zhang Gui. "Don't speculate on these pictures, or you will become unfortunate," Zhang said.

According to incomplete statistics by the Qianjiang Evening News, there are at least 15 domestic digital collectibles platform that have experienced a crash or are struggling to survive. The collections either lost all their value or refunded at selling prices.

"Most of them are junk platforms. The platforms only wanted to sell pictures to make money, without considering how to operate digital collections properly, and some even didn't have an official website," said a person who used to run a digital collection platform.

Meanwhile, many previously ambitious big companies have chosen to cut projects.

But some people also have a positive outlook on the long-term prospects of the metaverse. According to a report by McKinsey, global annual spending related to themetaverse could reach up to $5 trillion by 2030. There are still many places at home and abroad that are introducing policies related to the metaverse and investing in technology research and development.

"In many ways, the distortion of the metaverse is because it links tools with finance," says Pan Helin. In his view, venture capital and speculation are not the same thing.

China's regulatory authorities have a very strict attitude towards speculative trading in various commodities. The regulatory policies on transaction and operational rules for digital collectible platforms in China include many restrictions to prevent speculative risks, such as real-name authentication for transactions, prohibiting secondary market trading, prohibiting or conditionally limiting gifting, and prohibiting off-exchange trading. These measures are aimed at preventing various forms of speculative behavior and maintaining a healthy development of the industry ecosystem.

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