A virtual land with a token based economy? Meet Decentraland
Blockchain, games and virtual worlds
Before we start digging into what Decentraland is and how it works, let's look for a moment at how the world of video games has changed since its inception. First of all, the world of video games has gone from being a mere technological curiosity to a multi-billion dollar industry. An industry with more than two billion users worldwide and that is growing every year. The latter is precisely what has led game designers to create increasingly complex systems to the point of creating virtual worlds (metaverses), gaming platforms in which hundreds of thousands and even hundreds of millions of people participate and interact. And, like all interaction, these massive games lead to the creation of complex systems to sustain gameplay, one of those systems being economic systems.
For example, the famous game EVE Online, is a massive game with nearly 9 million users and has set several activity records. However, perhaps the biggest record of EVE Online has to do with its in-game economic system, a system so complex that the company has had to hire economists to program its performance and regulate it. In fact, the game's virtual currency, ISK, is used by its players as an exchange currency for real business. In short, there are people who play EVE Online, earn money from the game and use this money to exchange it for real services without major problems.
"Decentraland is a virtual reality platform built on the Ethereum (ETH) blockchain. It is a virtual world, in the style of an MMORPG (multiplayer online role-playing game), in which users can perform a wide variety of actions such as buying plots of land, building on them, and selling them to obtain MANA tokens.
Unlike other games of this style, such as "World of Warcraft," "Skyrim," or "Minecraft," "Decentraland" is not owned by the developer. Still, by the players themselves, as it is a public virtual world governed by open standards, no central organization imposes an agenda.
In this sense, the entire economy of the game is created and managed by the players themselves. That is to say that any player can buy and ultimately control the content of their land, generating income through construction. At this point, usually, it would be the developer company that manages the property and the economy; however "Decentraland" makes use of the blockchain to prove the ownership of a plot of land without the possibility of forgery.
Decentraland, the "city" created by programmers that has sold more than $28 million in virtual land. If you thought you'd seen it all, you've yet to learn that someone, somewhere in the world, just bought a piece of "virtual land" for $180,000. That "plot" is in downtown Decentraland.
In an auction, Decentraland managed to get several people to pay more than US$28 million for "land" that doesn't exist in real life, making it the most prominent virtual land purchase ever recorded. The city has 90,000 plots measuring 10m x 10m. On them, users can build whatever they want.
One of the buyers, Sam Clare, invested US$900 in "virtual land" in the city's northwest, telling BBC Trending. "Decentraland will be the same as Facebook, except you'll be able to see and hear each other in virtual reality. So it will be a bit more like a real experience," says Clare, who has the idea of creating a virtual art gallery on his plot, where he will set up a system to sell works by his artist friends "and then maybe I can get a commission (from the sale)."
MANA is the native token of Decentraland. Being an Ethereum-based token, it is an ERC-20. It is used to buy LAND parcels and pay for goods and services in the world of "Decentraland" or to pay for auctions in Genesis City, an in-game city created by a group of Argentine developers.
In the beginning, LANDs were priced at 1,000 MANA, as the development team itself sold them. Now, instead, they are priced from 11,750 MANA to several million. The most expensive Decentraland plot was sold in March 2018 and cost 2 million MANA, over $175,000.
In this sense, MANA tokens can be bought, sold, or exchanged on exchanges such as Binance or Bittrex and stored inside Ethereum wallets.
How does Decentraland work?
The spaces that users can interact with, i.e., the plots of land they can buy and build on or sell, are called LAND. These are nonfungible tokens (NFT) on which other games, applications, services of the game itself, or even dynamic 3D scenes can be created.
The LANDS are plots that measure 10 square meters. These pieces are not limited in height but are limited at the base. As a result, LAND is scarce, intended to increase demand and improve the user experience and the ability to discover content. Without this scarcity, most of the LAND would be abandoned.
To purchase a LAND, it is necessary to have MANA, the native token of Decentraland, used to buy these parcels. In addition, users can check the price of LANDs on the Decentraland decentralized marketplace website.
LANDs can be grouped into States or Districts. Districts are usually created by communities of players dedicated to a common theme. In this sense, the "Decentraland" team created the decentralized application "Agora" so that the members of a member district can vote on how to solve the conflicts that arise, the more LAND you own, the more weight the user's vote has.
Is it worth the investment?
Decentraland will work if it attracts people. David Gerard, a cryptocurrency expert, believes that "if people who don't give a damn about blockchains want to play the game, that will be the measure of whether this (Decentraland) will be a success."
To that end, themed neighborhoods are being created to attract visitors, such as Festival Land, Vegas City or even universities. "They have talented people involved and they are passionate gamers. I'm sure they're not going to create something boring," says Gerard.
For some, it's already a good deal. It's not uncommon to find plots that cost less than $1,000 being resold for $10,000. "I won't sell it until it's worth at least $10 million," says Sam Clare of his plot.
No man's land?
The creators of Decentraland highlight the advantage of the decentralized nature - as its name suggests - of the platform.
"It's usual for other virtual worlds to be operated by a major company, and all the land and all the content resides on their servers. So users run the risk that if the company goes out of business or decides to change the rules, they could lose all the content and creations they built," explained Ari Meilich, one of the leaders of the project, in an interview.
The programmers, who now act as mere maintainers of the platform, plan to get out of the platform entirely and leave the management of Decentraland to the "land" owners themselves. David Gerard claims that this lack of control can lead to "trolls" or experience saboteurs "ruining your game and eventually turning your social platform into a garbage heap."
However, Meilich says Decentraland has the option for people to filter content, and those filters "will be set by the community." Cryptocurrencies have proven to be a very volatile investment. That's why Gerard doesn't hesitate to say that Decentraland can be "the riskiest investment in the world [...] The best way to think of it is like a Kickstarter or something where you don't buy a product; you throw money at someone's idea because you want to make it happen."
The plan is for users to spend MANA on experiences and goods in this world when it's fully built. "Now, we have an economy of about a couple of tens of millions of dollars, and we hope to expand that to at least billions," said Esteban Ordino, another of the founders.