The market value of JJ Lin's Metaverse real estate plummeted? Can digital assets be trusted? | Digital Literacy

Audit expert: Zhu Guangsi

Member of Beijing Science Writers Association

This year, the news broke on the Internet that the Metaverse real estate that JJ Lin spent $123,000 to purchase in Decentraland two years ago had plummeted in value. The news showed that in early April this year, the value of those properties was less than $10,000, with a net loss of 91%, which can be said to be a complete loss. As soon as this matter came out, it immediately caused heated discussions on the Internet, causing JJ Lin himself to post a Weibo, joking: "It seems that many people want to help me manage my finances." Of course, my friends must know that this money is just a drop in the bucket for JJ Lin himself, and the loss of money is just a small topic of conversation after dinner for both JJ Lin and netizens, and they will forget it after laughing. However, why the "Metaverse" that once caused a stir on the Internet has fallen to such a state is worth talking about.

Why is Metaverse real estate suddenly worthless?

The concept of metaverse originated from a 1992 science fiction novel called Snow Crash. The National Science and Technology Terminology Committee defines it as "a virtual world built by humans using digital technology, which maps or transcends the real world and can interact with the real world." In 2021, Facebook CEO Mark Zuckerberg began to promote the concept of metaverse and made the first metaverse game - Horizon Worlds. In order to build momentum, Zuckerberg even renamed Facebook to Meta (short for metaverse).

Source: Baidu Encyclopedia

All of a sudden, countless people were attracted by this concept that sounded full of science fiction, and joined in. Some top technology companies such as Microsoft and Intel also joined in and began to build their own metaverses. It was at this time that JJ Lin purchased three pieces of land in the metaverse. In the metaverse at that time, the prices of some top "real estate" were even as high as millions or tens of millions , which made many people who did not have time to join in regretful. However, although the concept was hot, when users really began to experience the so-called "metaverse", they couldn't help but complain, and even mocked it harshly. It turned out that as a game used to develop the metaverse, its picture modeling was rough and the experience was poor , which made users question the sincerity of mate.

Source | bkvc

As expected, this shoddy and purely perfunctory Metaverse product, apart from some discussion after Facebook changed its name, has not received much attention from the audience, especially after the great success in the field of artificial intelligence this year, it has become unnoticed and its market value has plummeted . In the final analysis, the reason why Metaverse real estate will become worthless is that as a concept belonging to the future, the current technology and user scale are far from supporting its realization , and people lack confidence in it. In addition, the formation of the Metaverse means a new type of market, which is not only immature in itself, but also lacks a strong regulatory system.

Digital Assets

In addition to the Metaverse, other things that have been hyped and attracted countless people's attention include Bitcoin, Dogecoin, and NFT. These things have one thing in common - they are all digital virtual items, also known as digital assets. Digital assets are virtualized assets based on encryption technology and blockchain technology. They can be created, stored, and traded in digital space, and have the characteristics of decentralization, editability, and non-replicability.

Source | pexels

Now, with the development of the market, the scope of digital assets has become broader, and some digital artworks, virtual real estate, virtual avatars, etc. have also begun to join the ranks of digital assets. Most people think that these things are illusory and unreliable. The facts seem to be true. These so-called digital assets are either too conceptual, making people feel unreliable; or the mechanisms are very complicated, making it difficult for people to understand .

The current situation where no one is interested in the Metaverse and the fact that the market value of Bitcoin has shrunk by 70% from US$1.274 trillion in November 2021 to US$450 billion in July 2022 have made more and more people suspicious of these so-called assets that are purely based on information technology - things that are essentially a string of codes.

Performance of major cryptocurrencies since Bitcoin hit all-time high

Source | The impact of digital assets on financial stability[J]. New Finance, 2023, No.408(01):43-49.

Digital assets are non-replicable, which is an important feature that allows them to maintain their rarity. Therefore, some digital assets are very expensive, but they cannot be associated with real life . Previously, NBA player Curry spent $180,000 to buy a digital avatar, and many netizens expressed their incomprehension, wondering: "What's the use of this?"; JJ Lin spent $120,000 to buy three plots of land, but he could not build a real villa on it, and there was no "location advantage" in real life.

Source | ymtyc

Some people point out that since digital assets have no cash flow, their basic value should be zero. Even so, there are still many people willing to spend considerable capital to purchase these assets. Except for a very small number of people who really value the collection value of digital assets themselves, most of them are speculators who want to make a fortune. These speculators believe that in the future, more people will spend more capital to purchase these assets and expect to generate cash flow in the process, so that digital assets will generate value. Similar phenomena are called the greater fool effect in the capital market. The person who suffers the most in the process of greater fool is the person who buys the thing in the end. Summarizing the development history of some digital assets, it is not difficult to find that due to the lack of a complete establishment of the relevant market supervision system and the lack of strong market supervision, the ecosystem of digital assets is very fragile and there are many unpredictable risks. In this era of rapid development, many things will ascend to the altar overnight, and will become worthless garbage in the next second. In the face of all kinds of so-called opportunities and outlets, we must open our eyes and avoid becoming a "victim" involved.