REINCheck

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VO [00:00:06] You're listening to REINCheck with Andrea Rice, Contracts and Industry Specialist at REIN, where you get the latest member news and information delivered straight from the source, REIN MLS.

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Andrea Rice [00:00:20] Hello and welcome to REINCheck. I'm your host, Andrea Rice, and today we are checking in with journalist Kristi Waterworth. Kristi writes about real estate and the metaverse for The Motley Fool, and Kristi comes to us today with a wealth of knowledge about the metaverse and as a former realtor, is the perfect guest to help us understand the metaverse from a real estate perspective. So, Kristi, thank you so much for taking time to be here today.

Kristi Waterworth [00:00:44] Hey, it's great to be here.

Andrea Rice [00:00:46] Thanks. Yeah, and for those of you listening, I have to tell you that a couple of weeks ago, I was just combing the internet, looking for information about the metaverse and real estate and how does all of this work? And I come across article after article video after video and I felt like, ugh, do I know any more than when I set out on this journey? But I have to tell you, I came across some of the articles that Kristi has written for The Motley Fool about the metaverse and real estate, and I have to say, Kristi, you write it you write about this topic in such a way that it's so easy to understand. I mean, it's something new and exciting, but it's also kind of scary and what is this? And after reading your articles, I felt like the scariness was stripped away, but the excitement was still there. So, thank you for what you're doing and thank you for being here today. I can't wait to share your information with our members.

Kristi Waterworth [00:01:43] Well, I'm glad to hear that you guys are getting something out of it. It's always helpful when you get that kind of feedback.

Andrea Rice [00:01:52] Wonderful. So, let's just start with the basics. So, what is the metaverse and how do you access it?

Kristi Waterworth [00:01:59] So the metaverse, there are a lot of different definitions floating around out there right now. But for the purposes of real estate investment, we can think of the metaverse as a layer of the internet that contains multiple different virtual worlds. Otherwise, known as platforms like they're different kinds of essentially anything on different programs. It's a good way to think of it. So, you know, like if you wanted to buy land and example, Decentraland is one of the most popular and most consistently used for business. So that's a single site, and you can access it just with your PC. You can also some of these are starting to get like a phone support so you can use your smartphone. Some have VR headsets support, but none of those things are required. Those are just sort of like optional ways to access. So, when people ask me this question, a lot of times they get kind of bogged down in the details, and I'd like to just kind of compare it to exploring space. So, the metaverse is space, and all of the platforms are like different planets, and they've never been occupied before there's no one living. I mean, there are people there, you know what I mean? But there were never people there before. So, we're just going in and we're building everything from the ground up. We're building infrastructure. We're building things as mundane as billboards and things as exciting as like casinos and everything in between.

Andrea Rice [00:03:42] Interesting. And I think that's a good point that you make because before reading some of the articles you've written, I thought you had to have something beyond a PC to access the metaverse. And I think if I think that probably a lot of other people think that too. But it's not that difficult. You can get there.

Kristi Waterworth [00:04:00] Oh, yeah, absolutely. Decentraland, you just need to go to the website and click. You can even go in as a guest and look around. So, like, you don't even have to set anything up, you just go in and poke around, and then you can leave. Right inside your browser.

Andrea Rice [00:04:17] Awesome. And you know, when you start talking about the metaverse, then you start encountering a lot of these new buzzwords like cryptocurrency, blockchain, NFTs. And so, these are kind of new words to us. So, can you give us just on a very basic level? I'm sure you could talk for hours about each of these things, but can you just give us on a very basic level, what is cryptocurrency? What is blockchain? What is an NFT? And how does how do they play a role in the metaverse?

Kristi Waterworth [00:04:47] OK, let's try to approach this in sort of a stacked system because these are different layers of items that play a role in the metaverse. So first of all, everything in the metaverse is built on the blockchain. The blockchain is essentially a series of its essentially a way of recording information that is difficult to fraudulently alter and difficult to change without permission. I think that's the easiest way to explain it without getting into too much technical information. So, you can literally record anything on a blockchain. So that's why you have things like NFTs, which are essentially just digital deeds. We've kind of taken that word and used it quite a bit to shortcut it for like digital art that has a deed, which is essentially what an NFT graphic is, it's a piece of digital art that has a deed that's recorded on the blockchain. So, there's proof of ownership, and that's where digital real estate comes in because you do have a deed. When you go in and buy a parcel of land in Decentraland, Sandbox, or Voxels, you get proof of ownership. And property has it doesn't have what we would see as a legal description as such, but it has a legal description within its own system. Usually, it's a coordinate system or it's a parcel number. So, like you'll get these ridiculous names of parcels like land number 500 million thousand six hundred seventy-five for like nine or 12 digits. And but they're unique identifiers, and that's how we are able to grant. That's how they are able to grant a unique deed to them because they are unique properties. Now cryptocurrency is the is a type of currency. It's a digital type of currency that is used for all kinds of different transactions, not just in the metaverse. But it is what is used in the metaverse. Primarily, right now, you've got a few different kinds of cryptocurrency for our purposes because there are some other sort of pseudo metaverse platforms that don't have real estate, but our kind of metaversey. But we're not going to talk about those just keep this simple. So, for the point, for our purposes, the main cryptocurrencies you're looking at are MANA, which is what Decentraland runs on. It's their economies based on MANA. So just like our economy is based around the dollar, their economy is based around MANA. You have the Sandbox which their economy is called sand. Or I'm sorry, they're coinage called Sand. Makes it easy. And then a lot of them also run because they run on there are different blockchains. There's not just one. They run on Ethereum blockchain. You also can often find transactions that are possible in Ether, which is the native currency of the Ethereum blockchain. So essentially, it's just money. It's just a much more volatile form of money because there's a lot of speculation going on right now and a lot of there's a lot of the coins in the crypto market in general. You'll hear people say, oh, they're just totally worthless or it's a scam or whatever, and some of them are kind of pyramid schemey. And the whole. There's a term called pump and dump. And basically, what it is is when these crypto enthusiasts get in on a coin that is not good for anything, it doesn't have any kind of utility. It's just a coin, and they will convince people to buy it. So, the prices go up because it trades like the stock market. So, a lot of people are buying the price will increase. And if a lot of people are selling, the price will decrease just like the stock market works. So, with a pump and dump, they will encourage people to buy and buy and buy and especially crypto newbies who don't really know what they're doing. And they just keep telling, oh, this is going to be awesome. This is just a killer thing. And then once it reaches a certain point, these big-time holders, they call themselves whales, they will drop everything they've got. They'll just sell it all. And then the coin is virtually worthless at that point. So those are the ones that you want to avoid. The ones that we're talking about have actual utility and are quite a bit more stable because of that because you can use them to buy things, you can use them to trade. There are platforms built on them, you know that kind of thing. So, cryptocurrencies are scary in general. But if there's a utility for your cryptocurrency, the odds are much better that it will be safer and more secure.

Andrea Rice [00:10:09] Yeah, that's something that actually, you know, if you're going to start investing in the metaverse, like maybe you need to start there like really getting a grasp on cryptocurrency.

Kristi Waterworth [00:10:18] Oh, yeah, absolutely. I mean, you really need to understand how the coinage works because someone who's brand new to it will see a lot of ups and downs that are disturbing. But after you've been holding a while, you're like oh whatever, it just does that every Tuesday. You know, it's just not a big deal.

Andrea Rice [00:10:39] Awesome. So now I feel like we have a bit of a foundation on the metaverse. So, let's talk a little bit more about the real estate component. What is digital real estate and how does that compare to physical real estate?

Kristi Waterworth [00:10:55] Well, it's a really interesting question. It's one I get a lot. In a lot of ways digital real estate and physical real estate share so many, so many things, you know, like, for example, it's nonfungible, you can't, you know, it's totally unique. So, like we were talking about, every property has its own unique property description, has its own unique location, [inaudible], its own unique attributions. We don't have things like mineral rights or underground power lines or anything like that to have to deal with right now. No easements, nothing like that. But on a very simplistic level, it's it meets all the same criteria as regular real estate. You know, you can't destroy it. You can't create it. It's just it is what it is, and there's a limited number of parcels in each platform. And although there are multiple platforms, I firmly believe that there are only so many that are going to survive because what makes a platform valuable is the community. And if the community isn't buying into the platform, then the economy doesn't thrive and the whole world, whether or not it actually collapses and closes or not, it's virtually collapsing. Like it's just it's like buying land in a war-torn nation like you just don't want to do that. You know, it's not it's not a great investment because there's no community anymore, you know, communities been destroyed.

Andrea Rice [00:12:30] Interesting, and, you know, I think a point that you make there, which was a confusing point for me up until, you know, I've read a lot of what you've written is just, I thought, oh, how do they have value? Because there's it's the metaverse. It's unlimited, right? It just it can go on and on. But like you're saying, it is limited. There are limited parcels for sale. There is a limitation to what can be sold. So, I think too, that's something I just wanted to point out because I was confused about that initially.

Kristi Waterworth [00:13:05] Yeah. Now I think it's important to note that although there is a limitation on how many parcels there are. If you're looking to buy, you need to really watch the platform that you're in because some platforms are still in the process of adding more parcels. They're still in the process of going well, we want to develop a little more, you know, real estate over here or there, whatever, because they're ramping up their processing power. Decentraland is one that I am really, really hot on because they have set the number of parcels they're going to have. That's all the parcels they're ever going to have, and they're owned by a nonprofit corporation. So, they are set up in such a way that they're not in it just to continue to farm money out. Like they've already gotten their money out and they're just running the system now.

Andrea Rice [00:13:56] Oh yeah, interesting. Good points there. And so, talking about real estate and parcels and buying within the metaverse, that leads me to our next question, which is when you're purchasing a parcel in the metaverse does it require that you use a licensed real estate agent?

Kristi Waterworth [00:14:19] Right now, it doesn't require anything. You just need to have a cryptocurrency wallet where your deed can be stored after you've purchased it. And enough cryptocurrency to cover your transaction. There are not currently like home inspectors. That's probably not even a necessary item, honestly. There aren't appraisers. There aren't really any licensed realtors. There are some banks that are starting to come online. And I have seen one company that claims to be doing appraisals, but their approach is not very real estate centric. It's very much and they're doing it very much in a way that they're basically leveling the field and assuming every parcel is the same. And kind of basing it on just data straight data without any of the sort of more subjective things that you look for when you're trying to figure out what a piece of real estate is worth. Like the neighbors, for example, because one of the things they're not really taking into account as far as what I understand, what they're doing is, you know, traffic. It depends again on the metaverse that you're looking at or on the metaverse platform that you're looking at because some of them everything, [inaudible] at once and some of them, nothing exists until you teleport into a certain block on a screen. So, what we're talking about, you know, in general, are going to be the ones where everything exists all at the same time. And in those spaces, it's really important that you also consider what's around you or what's being developed around you. Because, you know, if you bought a square way up on the far corner of the map and there's nothing near you, you know, people have to know where you're at to get to you. And it's easy to do that. Like you can program that into your website or whatever, it's like click here to go to our metaverse HQ. But you're not going to get people who are just out wandering around exploring the environment. Like if you build next door to Paneraverse, which is actually a thing that's coming, you know, you're going to get a lot more traffic because people are going to be at Paneraverse and they're going to be looking around going, oh, hey, you know, look, what's this thing over here? And they'll go over next door and see what's over there. So, these kind of things, I don't think they're really paying attention to and it's, you know, and it's fair because it's difficult right now to measure traffic and it's difficult to measure eyeballs and all these different metrics that we use both in real estate and in, like determining what digital content is worth. So, like, how many views we have, how many clicks we have those kind of things are very hard to determine right now, and they're just trying to work all of that out.

Andrea Rice [00:17:21] And so that'll probably evolve over time. But that's interesting. Thank you, Kristi, and thank all of you for joining us for part one of our two-part series on the metaverse. Kristi and I will be back next time with more in-depth information on the metaverse and real estate's role within the metaverse. Thank you and have a great rest of your day.

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VO [00:17:42] You've been listening to REIN check with Andrea Rice. Stay in the know from those who know. Delivered straight from the source, REIN MLS.