Found this cool article on economic value in the metaverse on the business of fashion website, I’m going to paste it in here:
Economic value in the Metaverse
How does one create economic value within a limitless, digital world?
In the physical world, the value of an object is governed by a few key dynamics, among them, its authenticity, scarcity and ownability. Until now the internet has been, by its very design, fundamentally boundless in dimension and limitless in its supply of digital content. But it’s this same limitlessness that has commodified most digital products. After all, the internet was born as a means of file sharing, not of file buying.
For example, how much is a highlight video of LeBron James worth? Well, if I simply rip it from YouTube, not much. After all, there’s nothing inherently limited, authentic or unique about it. Anyone can download the same video but none of us can truly own it. Yet, at least one LeBron James highlight video is for sale for more than $230,000 on NBA Top Shot, a platform that allows fans and investors to buy, sell and trade officially licensed sports video highlights. For all intents and purposes, there is little difference between the worthless LeBron clip from Google and the $230,000 clip on Top Shot, with a few important exceptions. Top Shot authenticates every clip and assigns exclusive ownership of these one-of-a-kind assets using blockchain technology.
Likewise, by virtue of blockchain, any digital asset — be it art, clothing, a LeBron James photo or even experiences themselves — can now be authenticated as genuine, verifiably limited and exclusively ownable. For these reasons, these unique and limited assets, also known as NFTs, can indeed carry a value. Think about the example of Pokémon cards. The cards themselves have almost no inherent value. It’s only the rarity and authenticity of certain cards that drive their value to extraordinary heights. The same key tenants of value can now be applied to digital assets for the first time in history.
In fact, as I write this, almost half a trillion dollars has changed hands through the sale and purchase of NFTs. Today, most of this is represented by the sale of digital art and collectables.
For example, digital artist Mike Winkelmann, who works under the handle Beeple, had until recently never received more than $100 for one of his pieces. In late 2020 however, Winkelman sold an NFT of his work for more than $66,000 dollars. A few months later, the same piece sold for $6.6 million. And if that weren’t enough, in March of 2021, the artist sold a digital collage through Christie’s auction house for $69 million. Why? Because now, using a blockchain ledger, the authenticity, rarity and rights of exclusive ownership can be conveyed and verified.
Already these fundamental economic principles are cascading into other virtual goods including clothing, collectables and even virtual real estate — yes, real estate. Platforms like Upland are making it possible to purchase virtual real estate assets like the New York Stock Exchange, for example, which recently sold for $23,000. Who would spend that kind of money on a digital representation of the NYSE? Someone who assumes that as more people invest, and prime assets become scarcer, the price of such digital holdings may logically rise. Simple supply and demand.