The Strange Parallels Between NFTs/Metaverse and Real-Estate

2022年2月3日

There's a strange similarity in the way people trade and talk about NFT/metaverse assets and real-estate assets -- they're both measured in terms of "projected wealth", not cash. Anyone who has tried to sell a house before knows that finding a buyer isn't an instantaneous transaction -- it takes some time and planning to find someone willing to pay for it.

Some people are arguing that despite cryptocurrency markets being down right now, the NFT market has largely remained untouched. Is this a bullish signal? Or is it just because we're in a holding pattern of people not wanting to lower their appraisals?

Some similarities and differences between digital and analog assets (i.e. real-estate):

Similarities:

- Both markets are "hot" right now, but a cool-down is likely to come soon (NFTs likely to follow the dip in the general crypto markets, real-estate likely to get hurt by interest rate hikes)
- The value of both NFTs and real-estate are largely "unrealized" until the actual sale
- Relies on appraisals and network effects (e.g. neighborhoods, communities) to determine its value
- Both assets are seen as a tool for building wealth/status

Differences:

- Real-estate has a better supply/demand dynamic (demand currently outpaces supply) but is largely concentrated in urban centers, which has been struggling to maintain its standards of quality and status in recent years (NFTs, on the other hand is an emerging status symbol with an uncertain trajectory)
- Real-estate has limited supply but is bound by physical locations, NFTs have an unlimited (but not infinite) supply but is ubiquitous

So What?

There is a competition going on right now between "analog" and "digital" assets, in the fight over which is deemed more "status worthy". Whether or not an NFT is seen as "cool" or an abomination largely depends on which circles you happen to be running with. Both markets are likely to shift very rapidly in 2022 so it's important to keep tabs on which way things are moving. (Real-estate is currently losing its ground as a status symbol, whereas NFTs are gaining.)

Crypto people sometimes joke that they're "NFT rich, cash poor", but there are plenty of homeowners out there right now who are drowning in mortgage and property tax payments that are in the same boat. A lot of the anti-crypto sentiments you see in public discourse seems to be originating from those demographics, currently. (It takes one to know one, after all.)