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Digital real estate and the digital housing crisis
- daenz 5y ago>What makes this all so strange is that digital land doesn't have to be like physical land, in fact you kinda have to go out of your way to do that on purpose. The fact that the author finds this "strange" tells me that they don't understand that the artificial restrictions are designed to make money. They go on to propose "solutions" for a "problem" that is not a problem to those who are making money. In fact, their "solutions" ARE a "problem" to them making money, because it lowers the artificial value of the digital real estate. If the people making boatloads of money were unhappy with the current situation, it would change.
- Talanes 5y agoI know that FFXIV, at least, does have actual constraints on supply. Square-Enix is having trouble getting more server hardware at the moment, so they can't easily add more instances.
- PHGamer 5y agois that because they can't or are unwilling because of some expensive constraint. the average person can get ahold of a gpu for example if they are willing to pay a premium. I wonder if perhaps SE is stuck a little in the past as japan is with their fax machines. they could have moved to the cloud temporarily but im wondering if their app and scripts are not setup for that.
- slickdork 5y agoIt's an interesting question. They literally stopped selling the video game due to a server shortage. I assume the money lost from lack of sales during the holiday season outweighs the cost of premium price on servers. "Since July 2021, in order to accommodate the significant increase in the number of new players, we have been working towards building a new logical data center and adding new Worlds. However, due to the effects of the COVID-19 pandemic, we have not been able to make any additions due to suspension of semiconductor production at manufacturing factories, decrease in production quantities, as well as a shortage of raw materials. Although we are investing much more money than usual, our attempts to alleviate the ongoing congestion situation are being delayed due to the physical shortage of server equipment." https://na.finalfantasyxiv.com/lodestone/news/detail/e7388986bc24d5a1337e0beed057f7b5b78b9bb3 https://na.finalfantasyxiv.com/lodestone/news/detail/e738898...
- deleted 5y ago[deleted]
- selljamhere 5y agoI think that the artificial restrictions designed to make money are kind of the point. The digital realm is being constrained as if it were physical. These systems are being built on blockchain which is supposed to bring trustlessness and decentralized authority. Instead, virtual land is turning into land grabs the same way physical land does. The players profiting may be different, but the game is the same.
- larsiusprime 5y ago> The fact that the author finds this "strange" tells me that they don't understand that the artificial restrictions are designed to make money. Author here! Of course I'm aware. > it lowers the artificial value of the digital real estate. If the people making boatloads of money were unhappy with the current situation, it would change. I'm making an argument about long term value versus short term value. Using digital real estate to make a bunch of short term cash? Excellent (if ethically suspect) business model. Using digital real estate to make a long-lasting UGC platform where you expect players to create value for you? Seems undercooked.
- ehnto 5y agoEspecially in video games, constraints are part of the gameplay. Without constraints it would be a sandbox without purpose. Now introduce money, and you've got yourself some pretty strong incentives to keep those constraints. That isn't to say there aren't problems to solve, squatting and speculating may genuinely be bad for moneymaking, because if gameplay suffers, the game dies, and no-one makes money. Not dissimilar from the real world, it's just that "quiting the game" isn't an option in the real world. Property speculating is ruining "the gameplay" for millions of people worldwide, but money is causing the incentives to be twisted so they don't patch the system.
- vanusa 5y agoHow anyone can call this a "crisis" is beyond me.
- dqpb 5y agoRead the article! > a period of exciting growth suddenly grinds to a halt once scalpers corner precious digital property and keep it out of the hands of those who actually want to play the damn game It’s a “crisis” in the context of the game, and it mirrors real life market dynamics.
- jl2718 5y agoWhat’s the difference? Nobody has a life or death need to be in Manhattan or San Francisco either.
- verdverm 5y agoHousing IRL protects you from the elements is one. It also serves as a place to store and cook sustenance. Moving IRL takes money, time, and effort. There are more physical connections and restrictions, or at least hurdles to moving IRL.
- vanusa 5y agoHousing has always been a "life or death" need for everyone, everywhere. Like the people who were already living in those places, long before you-know-who tried to move there.
- webkike 5y ago
- JohnJamesRambo 5y agoTime is a flat circle and humans will always recreate the same problems until they change fundamentally. This is why I don't look to Mars as some Utopia. You will have the same shit there but infinitely more expensive.
- PickledHotdog 5y ago- Michael Scott
- onion2k 5y agoI like to imagine that Musk might announce that his Mars colony will be a socialist society at some point - low-income workers like teachers, nurses, and garbage collectors are going to be needed there but they won't be able to pay to get there. The obvious solution will be a "tax"-based single-payer system where some extra people tag along with the wealthy ones who are funding everything. The reactions of his fan base would be genuinely hilarious.
- bruce343434 5y agoWhat would he gain from doing that?
- onion2k 5y agoNothing. I'm not saying he'll do it. I'm saying it'd be funny if he did.
- NikolaeVarius 5y agoIts fun seeing Snow Crash become reality. People getting rich selling property inside the Metaverse that technically has no restrictions. Just do an Eve Online and let people fight each other for it. Its a game, who cares
- rplst8 5y ago> Just do an Eve Online and let people fight each other for it. Its a game, who cares Yeah, at least then people might learn the lessons of war that society should already know.
- leetcrew 5y agoboth war and industry in eve are plain old fun for certain types of people. but at the corp/alliance level, the point of industry is to fuel the war machine and the point of war is to defend industry. this is broken up by some occasional massive (and surprisingly expensive in USD) fights that are just for fun. not quite sure what the lesson is there.
- jazzyjackson 5y agoIt may be that war is best played out virtually if it means we can scratch that itch without so much collateral damage, but I’ve also heard it said war is the ultimate “proof of work”, which branch of humanity can afford to burn more resources? Anyway, your comment reminded me of a song I haven’t listened to in some time: “is war as old as gravity?” “are there animals that like peace, and animals that like war?” “is making war an instinct we inherited from our hunting, or our farming ancestors?” “war is the best game and the worst life” - War & Peace, Ryuichi Sakamoto https://youtu.be/G6lVeiKtZ2k https://youtu.be/G6lVeiKtZ2k
- larsiusprime 5y agoEVE Online is referenced in this very article! They had a digital housing crisis and solved it with a digital land value tax (of sorts). That was a long time ago, though. The current state of EVE sees "land" (read: turf) apportioned by violence, which actually is a very crude (and violent) approximation of Harberger taxes! You must constantly pay something to defend your territory, and that scales with how valuable it is, because others will make escalating bids -- denominated in violence -- to acquire your land from you. So you want to pay enough to defend it without paying so much its no longer worth holding. I'm working on a policy paper about digital real estate and I'm calling this method "Blood taxes" with EVE as the central example.
- imtringued 5y agoPeople like problems more than they like solutions.
- 323 5y agoThere is plenty of space in USA too. Except that no one wants to be in the middle of nowhere. So it's not surprising at all that some digital locations will be much more desirable than others. In the metaverse people will want to live next to celebrities too.
- wmf 5y agoThe metaverse can have teleportation or something.
- larsiusprime 5y agoYou're talking about what are called Agglomeration effects, which are highly dependent upon transportation methods (this is covered in the article). If you can teleport any time to any place instantly for free, then where you are matters a lot less. If transportation has costs and limitations, where you are matters a lot more.
- chii 5y agoThe location adjacent to a celebrity is always scarce (assuming the dimension is 3D). This give it value, because even though you (an entity) can visit the location for free easily, the owner of adjacent locations are "associated" with the celebrity and this "association" is what is worth money (of course, this value is in addition to the Agglomeration value imho).
- TigeriusKirk 5y agoMeta will give out a couple billion free plots in their metaverse and this problem will evaporate.
- Marciplan 5y agoI get that headlines like this generate clicks, but, come on, what complete nonsense
- chpatrick 5y agoI think if you eliminate the scarcity the valuable thing online will be topology - it will be expensive to be adjacent to a celebrity's land or some frequented area, but you and your friends can connect infinite amounts of space however you like.
- thehermit 5y agoI've probably given Square Enix multiple hundreds of dollars at this point paying for a FF14 subscription during months I would have otherwise canceled it for the sole purpose of keeping the house I own.
- gumby 5y agoSo in other words you didn't actually own it.
- leetcrew 5y agoI mean yeah, but try not paying property tax on your home IRL and see what happens. do you really own it?
- mellavora 5y agoTo expand, "ownership" is a social contract. It's yours until someone else thinks it is worth their trouble to take it. So there is no such thing as "really" owning something, it is only yours if sufficiently other people agree that it is possible to own and that you are that owner. Part of paying property tax is an acknowledgement that your "ownership" is a social construct, and the tax is your contribution back to that society. In theory, at least.
- TheGigaChad 5y ago
- thaumasiotes 5y ago> "ownership" is a social contract. It's yours until someone else thinks it is worth their trouble to take it. > So there is no such thing as "really" owning something, it is only yours if sufficiently other people agree that it is possible to own and that you are that owner. This argument seems to have some trouble with the concept of theft.
- 5y ago
- larsiusprime 5y agoOh hey! I wrote this article. Because some people seem confused what the point is -- the point is that right now there are a lot of blockchain/NFT/"metaverse" games that are making ridiculous bank by doing big presales of virtual plots of "land" on the basis that they are going to turn into big UGC-based platforms to rival Steam, Roblox, etc. I conduct an analysis that looks back over the 30+ year history of MMO's and find that anytime we see true "land-like" assets in multiplayer online games, we also tend to see digital "housing crises" that have a lot of eerie parallels to the ones we see in the real world, and they play out in ways that closely match the predictions of Adam Smith, David Ricardo, and Henry George. This is interesting for several reasons: - It suggests that these big blockchain/NFT/"metaverse" games are headed for trouble long term as their user growth stagnates - It gives us a place to learn lessons about policy interventions that might have something to say about the real world (Henry George's Land Value Tax was independently re-derived from first principles for use in EVE, and it ended the recession that plagued their early launch days) --- TL;DR -- virtual land presales are a great way to make a quick buck and leave your investors holding the bag, but they're not a great way to build a sustainable creator-driven UGC platform.
- thathndude 5y agoGreat article. Really enjoyed the analysis, the Ultima shoutout, and the writing in general!
- sebow 5y agoI don't see that as a problem, I see that as an opportunity for other people to offer something equivalent/better at lower price.Both the real and virtual worlds are and could be respectively big.If people try to "merch" the virtual lands so be it, it's one more reason to think of something more affordable for the masses.
- deleted 5y ago[deleted]
- rootsudo 5y agoSweet, get in early, sell the shovels. Thanks for 2022 financial advice! Never thought it'd mirror the past two centuries. The more we think we changed, the more similar things stay. Sigh.
- Animats 5y agoSecond Life has this problem. There are "land barons". These come in several types. The most useful ones are land developers. They buy new, empty regions from Linden Lab, which costs $375 plus $175/month, for a square 256x256 meters. There's no limit on growing the world this way. The landowner then subdivides, build some amenities, and resell. These areas are generally quite nice. It's a competitive market. The first person to own a million dollars worth of land in Second Life was Anishe Chung, who has a whole metaverse land empire.[1] The less useful developers buy up vacant "mainland" land, on the continents created by Linden Lab, and try to rent it out or resell it at ever-higher prices. That crowd is a problem. You can see their FOR RENT signs all over. They seem to be able to make more money by not selling land than by selling it. This results in declining neighborhoods with vacant lots. This works despite the substantial cost of merely holding land. There is a land tax, called "tier". That's what pays for the servers. Each 256x256 square of land needs about 1 CPU of a server. Beyond one such square, there is supposedly no quantity discount, although there are some "grandfathered" landowners with better rates. So it's not clear that a substantial land tax fixes this problem. If you can push up the price enough, you can still profit even with a big portfolio of unsold land. (Most of the things the "metaverse" crowd is doing were done long ago in Second Life. Even overpriced non-copyable objects.) [1] http://anshechung.com/ http://anshechung.com/
- larsiusprime 5y agoI'd be interested in knowing more about Second Life in particular: 1) Can new land be created in second life? 2) Is this an argument that a land value tax short of 100% of "ground rent" is insufficient in this case?
- deleted 5y ago[deleted]
- Animats 5y ago1) Yes, but not connected to the land of others. You have to teleport. 2) It seems to be insufficient. Holding large amounts of vacant land for price maintenance works as a strategy, even though it involves high land taxes, what SL calls "tier".
- wiradikusuma 5y agoThis is the part I don't get from "land rush" in digital worlds. Running out of land? Create new ones! Integer overflow? Build a new world! People can literally move across land/world just a click away, why the artificial scarcity? Yes maybe it's forced by the backing company for monetary reason (scarcity = higher value), but there are many other companies that can build the same.
- chii 5y ago> there are many other companies that can build the same. if facebook/meta grabs mindshare early, and fast enough, the network effect would mean that another startup cannot compete (without an extraordinary amount of luck or innovation i suppose)
- nikanj 5y agoHave you heard of NFTs? "Buy the receipt that says you bought this jpeg. It's only $13 million?
- fixthevoting 5y ago
- jrm4 5y agoThis strikes me as simple if you kind of reverse it, namely: The ability to do things like "land speculation" in online spaces is very silly but also perhaps harmless. When you see these patterns show up in real life, you should immediately begin thinking about how to kill them.
- goobergoo 5y agoHere's what Facebook META will do: Every person on Earth, using their country's Unique Identifier credentials (like Social Security Number, National Insurance Number) to identify themselves to Facebook, will be entitled to receive their "forty acres" of Metaverse land, at a going rate of $1000 per acre, a value of $40,000. Just for signing in to claim it! Everyone will rush to create Facebook accounts and claim their land. And/or sell their land to others. Meanwhile, Facebook has found a way to pretend that the "space" in their MMORPG is valuable, and will just be raking in the money, they'll need to hire extra guys with rakes. Whatever happened with Facebook "Coin" ?
- goobergoo 5y agoNovi digital wallet, without the Diem cryptocurrency, was supposed to be the cornerstone of the enterprise.
- mellavora 5y ago> Every person on Earth, using their country's Unique Identifier credentials what about people in countries which don't issue "Unique Identifier credentials"; noting the limitations on the Social Security Number in the US, which was given as the first example? I live in a country which has a large number of expats. I know multiple people who have 4 or more government issued "unique identifier credentials" Note: I suspect goobergoo's post has a high level of sarcasm; my reply is a criticism of META not of the post.
- salawat 5y agoThe wet dream of every authoritarian everywhere: Get people to accept a system of Universally Unique identifiers to facilitate population control as a DB query. Like we don't already have issues enough with people trying to do that. Libra or whatever was pulled after Facebook was put in the hot seat by Congress and regulators for non-proactive compliance with regulators. Turns out when your the 900 lbs gorilla in the room, the bar is still higher on expected due-diligence when unilaterally upending a regulated space that also happens to play into international policymaking and enforcement.
- nathias 5y agoCool article, virtual worlds have a way of spontaneously create very interesting enviroments like housing markets an currencies. But I don't agree with much of it, the scarcity isn't (necessarily) artificial. If you don't have an empty space with arbitrary points of entry proximity to game objects determines scarcity (much like in real space, space isn' scarce, location is). If it's a problem for that specific game the specific devs can think of mechanisms to fix it in a way that make sense for that context. I also don't see speculation as some evil for some unknown reason.
- pcdoodle 5y agoGo outside
- cblconfederate 5y agoWeird to not mention Second life which basically makes its money by selling land, (which itself is tied to compute resources so it kinda makes sense). There is no speculation though, that would be ridiculous. Decentraland etc, yeah they are major scams, but they 've already made their money.
- chiph 5y agoIMO the problem with these is that you're not a landowner, you're a sharecropper, living on the "land" at someone else's tolerance and server budget. I'd like to see self-hosted digital housing. You have your house on your domain, and you can allow people to visit. Your house can be as large or small as you want, looks how you want (you aren't building from a limited set of parts provided by someone else), and has the rules you want. We already have URLs to facilitate travel between them. We (just!) need a standard protocol for presentation & clients, like HTTP is to the web.