I recently saw an argument that “real estate in the Metaverse isn’t going to hold much promise,” and then I saw Drew Harry, current VP of research and data at Twitch, answer the argument this way:
“I beg anyone talking about the Metaverse to get to know the game Second Life first. Second Life starts with transportation hubs, then moves to teleportation, it has gated communities, HOA-like (Homeowners Association) entities, land speculation, harassment, IP theft…”
Some background: Second Life, a virtual world launched in 2003, has faced land speculation tensions for nearly 20 years. In fact, the problem of speculation in the virtual world goes back 30 years.
So, virtual real estate still exists today, which is nothing new. Even under certain conditions, virtual land may become too valuable, and this reality is nothing new.
So, how did early NFT-based virtual world projects avoid this trap and its more powerful implications? I think the implementation of land tax + citizen dividend is a promising solution. Allow me to explain!
I think of the Metaverse as a universe made up of metagalaxies, a set of interconnected individual virtual worlds.
Although recently we have seen a lot of large mainstream corporations as well as small independent NFT institutions and everything in between moving in the direction of the Metaverse, the full-fledged Metaverse does not exist yet.
On the other hand, those of us pioneering the Metaverse field today do indeed have decades of Metaverse archetypal history from which we can draw inspiration and, perhaps more importantly, take warning.
These older projects may not be as blockchain-based as the virtual worlds we are interested in, but they have accumulated lessons that our new explorers should pay attention to, and we can avoid repeating them.
Understanding the Virtual Land Crisis
While researching the history of Second Life’s land issues this week, I stumbled across an impressive article – “Land Speculators Kill Games ” by an indie game developer And gaming analyst Lars Doucet.
Doucet mentioned in the article that, historically, the crisis of digital land in games or virtual environments stemmed from making digital land behave too much like physical land. He points out that virtual land doesn’t have to be scarce, obey physics, or even necessary to experience the world.
Thus, if virtual land is modeled after real land, i.e. it is scarce, necessary or beneficial, and acquires value based on the context of its location – a project with sufficient popularity will eventually encounter problems such as “permanent landowners” class, rampant land speculation, sky-high housing prices, and blatant rent-seeking”.
Doucet went on to explain that if the virtual land is not the core of a project, then the problem is not too big, but if the land is the key to the virtual world, things can become more tricky. He then outlines several historical examples of the digital land crisis, including:
- Ultima Online – UO is a massively multiplayer online (MMO) game launched in 1997 that went through a land crisis due to player demand for houses.
- Final Fantasy XIV – In this game, in-game housing primarily provides entertainment and status advantages, but those advantages are enough to fuel rampant land speculation in the still-popular game.
- EVE Online — When EVE first launched in 2003, the game went through a real estate crisis as speculators stocked up on “factories” vital to the economy. Game developers have since introduced a “use it or lose it” fee, which saved EVE’s early economy by driving out speculators who didn’t want to maintain the properties.
Metaverse Land Tax
The EVE “factory” fee described above is actually a land tax. Doucet explained that the land tax introduced in EVE burst the game’s first real estate bubble, which lowered commodity prices for consumers, increased economic competition, and reduced wealth stratification.
Everything is fine, right? Yes, that’s why I agree with Doucet, who asserts that, for virtual world projects, “sticking to artificially scarce land, which is also necessary for production, and ‘Land Tax’ is the way to go. “
Of course, not all virtual world projects have the scarce land that is critical to production. For example, Webaverse is an NFT-friendly virtual world, and its land elements are not scarce, but open and highly customizable. So land tax is meaningless for such a project. However, for those NFT projects with scarce digital land, a land tax is a viable way to alleviate the plight of the digital land bubble.
What is the tax collected for? Teams can return income land taxes to their communities!
Civic dividends are like Universal Basic Income (UBI) paid through land taxes. Thus, virtual world projects can use digital land taxes to capture value for their active users rather than speculators. At this point, Doucet explained:
“Another thing to consider is – why is land value going up in the physical and digital world? In other words – who is creating this value? The answer is community.
[…] In dislocated economic systems (including systems that rule the physical world), this value is captured by private landlords and speculators.
[…] Since your player base creates the value from land prices in the first place, you should acquire land The rents make sense, otherwise these land rents will go to speculators and they will only hinder productive activity. Then you can share what that community creates equally among those who actually create that value (your entire player base) value.
A “digital land tax” isn’t the only way NFT-based virtual world projects can alleviate the land crisis, although it’s a compelling option in the toolbox, especially when combined with a civic dividend that rewards active users. As Doucet concludes in his article:
“In the digital realm, you can solve the land problem from speculators by increasing what everyone wants (increasing supply), reducing its hard and soft benefits (reducing demand), or by levying land rents. All of this It will increase the productivity of the digital economy by mitigating the negative effects of speculation and deadweight loss.”
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/one-article-to-understand-the-necessity-of-the-metaverse-land-tax/
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