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Decentraland: making blockchain-based virtual reality, a reality?

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I just caught a clip from the BBC about Decentraland, a virtual world where you can buy plots of land and next year become part of a virtual world. This world will be owned by its community, has no central authority, is completely decentralised and will flourish in the net. So far it’s users to buy 90,000 plots of land at a value of $28 million. Today, some plots of land are selling for almost $1 million each. Incredible. Here’s the clip:

It’s decentralised, but not built yet. It will depend on usage and usability and, from what I’ve seen in this clip, it looks terrible. I then went onto the company’s website, and it still looks awful, but there’s a few interesting nuances. For example, it’s described as “a blockchain-based virtual reality world”

You buy plots of land using a cryptocurrency called MANA, which currently has a total market value of over $72 million. In last year’s ICO of Decentraland, they raised $24 million in just 35 seconds, and here’s an abstract from the white paper behind that ICO:

Decentraland is a virtual reality platform powered by the Ethereum blockchain. Users can create, experience, and monetize content and applications. Land in Decentraland is permanently owned by the community, giving them full control over their creations. Users claim ownership of virtual land on a blockchain-based ledger of parcels. Landowners control what content is published to their portion of land, which is identified by a set of cartesian coordinates (x,y). Contents can range from static 3D scenes to interactive systems such as games.

Land is a non-fungible, transferrable, scarce digital asset stored in an Ethereum smart contract. It can be acquired by spending an ERC20 token called MANA. MANA can also be used to make in-world purchases of digital goods and services.

People are spending increasingly more time in virtual worlds, for both leisure and work. This occurs predominantly in 2D interfaces such as the web and mobile phones. But a traversable 3D world adds an immersive component as well as adjacency to other content, enabling physical clusters of communities.

Unlike other virtual worlds and social networks, Decentraland is not controlled by a centralized organization. There is no single agent with the power to modify the rules of the software, contents of land, economics of the currency, or prevent others from accessing the world.

It’s a neat idea, but is basically a reboot of Second Life.

I say that because the reason I clicked on the BBC link is because the headline read: The virtual land selling for millions. I've heard that before and yes, it was about Second Life back in 2006. Second Life launched in 2003 and became a phenomenon in 2006 when Business Week talked about the story of Anshe Chung, who became the first virtual world millionaire property investor.

The website grew from 100,000 registered users in December 2005 to almost 12 million two years later.

But it lost credibility when there was a hack on the largest virtual bank in Second Life and over a million real world dollars was lost. The controllers of Second Life said it wasn’t their job to regulate the system, and the users protested en masse. Millions of users abandoned the website as a result and, by the end of the 2000s, it had just a million users.

In other words, without a central authority, how can you trust people to deal with your real world money?

Second Life is still going a decade later, with around 500,000 active users, but it’s a failure. In fact, there are numerous virtual worlds out there, none of which are reaching the right levels of reality.

And this is the point. For virtual reality to really work, it needs to feel like reality. It needs to feel like the Holodeck on the USS Enterprise.

Now people are working on this, but it’s still a long way away, and needs the combination of AI and VR to make it happen.

One day, we will make it so.

Chris Skinner Author Avatar

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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