The ever-eccentric John McAfee might be offering $100,000 for a tract of digital real estate. The piece of property inside of Somnium Space is a replica of the Grand Canyon and is (because of course it is) backed by blockchain.
@SkarredGhost on Twitter spotted the news.
Now, I don’t have an opinion about Somnium Space itself.
But the concept of digital real estate isn’t new to me. And the idea that someone would buy a digital Grand Canyon in a virtual world isn’t far-fetched.
And it’s a reminder that the value of digital “property” will have profound implications (including ethical ones) in augmented reality and the AR Cloud.
Animal Crossing, Mortgages and Your Digital Home
Do you have a mortgage in Animal Crossing?
Have you ever decorated a virtual home or room in IMVU? Built a “home base” in EVE Online? Did you know that a space battle in that same virtual world caused $200,000 of damages in ‘real-world’ value?
The concept that virtual and game worlds can have actual value is now, perhaps, a given. The idea that we have creative and emotional attachments to our virtual homes has been obvious since we first set out a shingle on Geocities: sure, it was a flat 2D “world” but it was our own.
Edward Castranova wrote what was perhaps the first truly seminal piece on the economies of virtual worlds in his book Synthetic Worlds. In it, he helped to lay out the case that virtual economies could, one day, become not only significant, but competitors for those in the “real world”:
In Synthetic Worlds, Edward Castronova offers the first comprehensive look at the online game industry, exploring its implications for business and culture alike. He starts with the players, giving us a revealing look into the everyday lives of the gamers—outlining what they do in their synthetic worlds and why. He then describes the economies inside these worlds to show how they might dramatically affect real world financial systems, from potential disruptions of markets to new business horizons. Ultimately, he explores the long-term social consequences of online games: If players can inhabit worlds that are more alluring and gratifying than reality, then how can the real world ever compete? Will a day ever come when we spend more time in these synthetic worlds than in our own? Or even more startling, will a day ever come when such questions no longer sound alarmist but instead seem obsolete? – Goodreads
(Later, he tried to extrapolate these concepts to making the real-world more game-like in his book Exodus to the Virtual World, with less success – although perhaps it’s time for me to revisit his thinking).
In fact, it might be that in this particular moment in history, when people have more time at home than work, that Animal Crossing is producing more value than some real-world economies. Sure, the value is in tarantulas and bells and the little sushi joint you opened, but it’s value nonetheless.
Property and Scarcity
But having a virtual home isn’t the same as property. Everyone can take out a mortgage for a home in Animal Crossing.
But property is partly a product of scarcity. When there’s only so much virtual land to go around, the value of that “land” can go up or down. If you’re at a popular intersection, if your land is as beautiful as the Grand Canyon, if you’ve got an ocean view – all of these seemingly ephemeral things can have an impact on the value of your land.
Second Life was perhaps the first place this concept took hold in a meaningful way. The business press wrote breathlessly about virtual real estate tycoons taking in thousands of real-world dollars.
Business Week profiled Anshe Chung, who had created a massive real estate business.
Anshe Chung is still operating. ‘She’ isn’t raking in as much as she once did. And the portfolio has expanded beyond Second Life into other virtual goods.
Her success was based, in part, on the value of property and scarcity. Now, the amount of ‘land’ that could be created in Second Life was actually limitless. But land that was “packaged” beautifully, easy to get, and with the right ocean views and nearby woodlots were not always easy to find (or create).
Virtual property had its avatar.
The Geeks and the Citizens
Second Life was hobbled by all kinds of issues. It wasn’t ready to ‘scale’. It was built at a time when on-demand cloud services meant setting up your own rack of servers. It had a horrible new user experience and “discovery” was difficult.
And yet it had two concepts which speak to the genius of Philip Rosedale, its founder: “property” and copy/mod/transfer. The latter allowed you to create digital objects and decide how they could be distributed.
When these two things were combined, they created an instant pop-up economy of dress designers, landlords, architects, and consumers.
But I often felt that Rosedale never quite bought in to his own creation. He seemed more interested in latency and his dream of creating superrealism in avatar presence. (He’s still at it and is retooling himself yet again).
The technologists saw code and an endless supply of pixels, The “citizens” saw their beach house or their dress shop.
Second Life rode the waves of hype, and while it still churns out revenue for Linden Lab (while its experiments in VR ended in failure), it could never fulfill its initial promise. The technology creaked along.
But I also think they missed the bigger point: the scarcity of “land”, the value of the economy in virtual goods, the ability to create within the world were the keys to its success. Allowing for disconnected private islands, allowing for mesh imports, and treating “governance” as a technical problem were all symptoms of the geeks often being at odds with the citizens.
Augmented Reality and The Next Property Boom
So what does all of this have to do with augmented reality?
The AR Cloud is the promise that the physical world will have a 1:1 digital “overlay”. Right now, we have maps of our world. But we don’t have large scale 3-D digital representations of space that allow us to locate ourselves (and objects) with precision.
We might have a floor plan for our local mall on our phone. But out phone can’t yet fully “see” the walls and ceiling, the shelves in the store and the objects on the shelves.
We can increasingly use object recognition if we point our camera in the right direction, but that’s not the same as a fully-detailed ‘scan’ of that space. And it’s definitely not the same as a digital representation that’s updated in real-time.
Augmented reality will be one of the ‘windows’ allowing us to see that scan. 5G, BLE and ultra wideband will facilitate delivery of the ‘scans’ and the content overlaid on those scans, and will help to position us within that space.
All of which gives us nothing more than a really detailed map. And a map that no one might ever see.
But when that map becomes accessible through AR devices that also provide superrealism, then the property wars will begin.
Because once we start to both believe in the places we’re standing in (or, believe that the places we’re standing in also contain whales or spaceships), and find those places to have plausible engagements, then the where of where we stand will start to have real value.
Pokemon Go and the Wisdom of Crowds
You’ve seen them in the weirdest places. A small group of people staring at their phones. Often standing in a little circle.
They’re on a street corner. In the middle of a park. Just to the side of the door to your local KFC.
The reality of their augmented reality is low fidelity. The maps are not much more than crude street maps with a few digital buildings thrown on top.
And yet Pokemon Go changed where we travel, where we congregate, and how far from home we’re willing to explore.
Not everyone will play games in augmented reality. But augmented reality might change how we travel through our well-worn spaces. A trip to the grocery store, a night out at the movies: all of those paths will become, thanks to the AR Cloud, valuable real estate.
The AR Cloud will have the power to re-craft what and how we see. And it will suddenly add new layers of value to physical space.
That blank wall you have on the side of your office building might become an obvious site for a 3D movie that “pops” out of the wall. Your local park might become an obvious place for a life-scaled Fortnite.
For someone who isn’t participating in this augmented reality, they might wonder why a thousand people have gathered in a parking lot to stare up at the nearby buildings, unaware that they’re watching a space battle overhead.
Who Owns a Building?
And so we come back to the digital Grand Canyon.
Maybe it’s location. Maybe it’s because it’s beautiful, surreal or superreal. Maybe it’s an attraction that people will walk miles to see. Or maybe it’s ubiquitous, with Pokemon gyms on every corner.
But is it just the digital content that provides the value? Times Square will still have traffic. So are the billboards more valuable than if they’re replaced by virtual buildings from King’s Landing?
Who will own the rights to this new digital real estate? Will there be bidding wars to own the rights to space in the AR Cloud? How will these rights be negotiated with the very real-world property owners who are now nothing more than backdrops to someone’s game space?
Sure, $100,000 for a virtual Grand Canyon in a world you’ve never heard of sounds eccentric. And maybe it is. But the day will come when companies are bidding millions for the right to display AR content on the field at halftime in the Georgia Dome. And we’ll know that the market for real estate was just getting started.