A Step-By-Step Guide on How to Buy Real Estate Crypto
If you think that cryptocurrency is still too risky then you’ll want to stay far away from real estate crypto. But, if you have no problem taking speculative financial risks then this article is for you.
Buying real estate crypto is one of the most speculative investments that you can make. It involves buying up digital plots of land in different real estate crypto projects (AKA metaverse project). If that metaverse ends up taking off then it could be like buying land in Manhattan back in the 1700s. Of course, it’s hard to tell if your digital land will end up being in “digital Manhattan,” “digital rural Wyoming,” or abandoned altogether.
Digital plots of land are backed by non-fungible tokens (NFTs). NFTs are digital tokens that can represent just about anything. They are normally used to represent images, video or audio. In this case, they represent parcels of digital land. NFTs act like the digital certificate of ownership that proves you own that land.
A handful of investment firms are investing heavily into real estate crypto projects. In fact, the DeFi company Everyrealm recently made headlines by spending $4.3 million for a single plot of metaverse land. This is the single largest purchase by an investor so far.
As you might have guessed, you can’t exactly use PayPal to buy digital land. Instead, you need to buy real estate crypto. With that said, let’s look at a step-by-step guide on how to get started.
Step No. 1 Choose your Project
The first thing to point out is that there is no single “metaverse.” Lots of different companies are in the process of building their own metaverse. For example, the company formerly known as Facebook is creating its own digital world. But it hasn’t really delivered anything tangible yet. CEO Mark Zuckerberg has said that it might not deliver a metaverse for up to a decade.
Companies like Apple, Google and Microsoft are in similar positions. They’re undoubtedly working on creating a metaverse behind the scenes. However, there’s nothing that’s consumer-ready.
Luckily, there are still a few metaverses where you can buy digital land. The two most popular are:
- Decentraland (MANA)
- The Sandbox (SAND)
These are just two options and there are new real estate crypto projects popping up every day. To do more research you can also scroll through the NFT marketplace OpenSea. This is a good way to quickly browse through different projects.
Another real estate crypto project to keep an eye on is Yuga Lab’s Otherside. I’m highlighting this project in particular because Yuga Labs is the owner of Bored Ape Yacht Club, CryptoPunks and Meebits. It has a lot of momentum in the web3 space and there’s a good chance that its metaverse will be instantly popular.
So, once you’ve settled on a project, how do you actually buy real estate crypto?
Step No. 2 Open and Fund a Wallet
As I said, you can’t exactly use PayPal or your credit card to buy digital land. Instead, you’ll have to open and fund a wallet. The most popular choice is Metamask. This is a good time to point out that your deposits are not FDIC-insured. If you somehow lose your crypto or get hacked, there isn’t really anyone to complain to. Welcome to web3!
With that said, your deposits are protected on the blockchain. Buying cryptocurrency is different, but it’s really no more risky than carrying a wallet of cash. When you think about it, there’s always a small chance that you can inadvertently lose your funds.
Metamask is one of the most trusted wallets and has 21 million users globally.
Step No. 3 Buy your Real Estate Crypto
After you fund your wallet, you’ll need to buy the token that powers your metaverse project. For example, let’s say you want to buy land in Decentraland. First, you need to buy the token used in Decentraland, which is called MANA. It’s a little bit like converting your dollars to euros when you visit Europe.
Once you’ve got some MANA, you can visit Decentraland’s marketplace and start browsing. The cheapest plots of land are currently selling for around 3,600 MANA. The conversion rate for MANA is approximately $2. This means it would cost you around $7,200 to buy the cheapest plot of land. But, there are a few things to remember:
- It’s (digital) real estate. You can always bid and negotiate for a lower price.
- Metaverse projects rise and fall in popularity quickly. The price for a parcel of land could fall drastically if the project loses steam in the next few months. On the other hand, it could also rise drastically.
- The price of cryptocurrencies are constantly fluctuating too. At its peak, MANA cost just under $6 USD. But, in early 2021, it cost about $0.10.
Don’t get too concerned if a minimum of $7,200 is out of your budget. Decentraland is one of the most popular real estate crypto projects. There are plenty of other cheaper projects where you can buy land.
Should I Buy Real Estate Crypto?
Buying real estate crypto is not for the faint of heart. It’s highly speculative and should only make up a small slice of your portfolio.
Most of the main digital land investors are investment firms that have money to blow. They buy digital land with the full understanding that the land might become worthless. It’s a little bit like investing in startups. Venture capital funds will invest in ten different startups at once. Of these ten, they expect nine to fail and hope that one will go on to become the next Uber, Doordash, etc.
However, that doesn’t mean that you shouldn’t buy real estate crypto. Just make sure that you are doing so with money you can afford to lose.
Another way that you can get started is by just buying the real estate crypto token itself. This is like dipping your toe into the water instead of doing a cannonball. For example, instead of buying land in Decentraland, you could just buy and hold MANA. The same is true for SAND, APE and other real estate crypto projects.
If these projects do end up taking off then their tokens will probably increase in value. If they don’t then it will be much easier to unload your token than a parcel of land. This is one way to reduce your risk while still getting exposure to real estate crypto projects.
I hope that you’ve found this step-by-step guide to buying real estate crypto to be valuable! Please remember that I’m not a financial advisor and am just offering my own research and commentary. As usual, please base all investment decisions on your own due diligence.