Imagine you wake up and open your news feed. The first thing you see is the headline “Free Space Pod”. Reading on, you see a company is offering free space pods which would allow you to live on a new space station under construction. All you need to do is show up and claim one. You consider it, but no thanks. You think to yourself – no one is ever going to live in space.
You wake up four years later to read “VISA Buys Space Pod for $150,000”. You are amazed to read the space pods you could have had for free are now selling for incredible prices. As it turns out, this is a true story. Just replace “space pod” with “avatar in the metaverse”.
In 2017 a company called Larva Labs developed 10,000 avatars and gave them away for free. The collection was titled “CryptoPunks” and was inspired by the, at the time almost unheard of, crypto art and NFT (Non Fungible Tokens) movement. Now huge companies such as VISA, are paying big money for them. The current value of all 10,000 is worth at least 3.5 billion dollars.
The million-dollar question, quite literally, is what creates the value? Why would someone pay so much for an avatar? The key to understanding their value is to understand they are truly unique pieces of art with a guarantee of authenticity. All 10,000 are different as not one is identical to another. Furthermore, only one person can own each original version. The ownership is guaranteed as the avatars live on the Ethereum blockchain. The blockchain creates an unbreakable link between the owner and the avatar.
Like all art, the value is in the eye of the beholder. The wonderful and astonishing thing is the blockchain creates this security of ownership, which allows those values to be discovered. It creates a thriving market for new unique art, and it seems the sky, or the moon, is the limit.
I intentionally use the unusual analogy, comparing ‘space pods’ to ‘avatars in the metaverse’, as most people are about as equally confused and intrigued by the metaverse as they are with outer space. Furthermore, owning something in the metaverse seems about as foreign as owning something in space. Despite this, it is quickly becoming a place where people and companies are buying up ‘real estate,’ and the prices are going up fast. A clear signal that some significant players intend to be a part of the metaverse.
Buying avatars allows a company such as VISA to create a digital image and brand in this space. If one thinks of the metaverse as a vast real estate development set to open, big players are buying offices and storefronts. A clear signal they feel there is plenty of profits to be had in this futuristic world.