Texas man puts life savings into buying virtual property
AUSTIN, Texas (KXAN) — Buying property is a big investment, but some people are investing in virtual properties.
Justin Reed says he paid $18,000 for the Khorum Coast, a piece of virtual land in the Entropia Universe, an online virtual reality game.
“I know it sounds like a lot, and it’s a crazy thing to tell someone that, you know, I’m a virtual landowner, and I put my life savings into it. But I believe in Entropia,” said Reed, whose avatar name is David Joker.
That’s because Reed has been playing the game for nearly 20 years. Along the way, he cashed out $5,000 from the game to help pay for college.
Now, he hopes to make a return on this virtual land investment in four years.
“I get a revenue based on everything that a player finds out there. If they go out on doing their mining, I get a 3% tax revenue on that. And that’s how I get my income,” he explained.
He said he pays $60 per year to keep animals stocked on his land but no land taxes.
“It’s not like if I bought a business or a property down the road, and all of a sudden the taxes and the property value goes up, and I can’t afford it,” Reed said. “I will always own Khorum Coast, and all it’ll ever cost me is $60 a month for my creatures.”
Entropia calls itself the world’s longest-running metaverse. It launched in 2003.
“If you like the risk, and you’re willing to gamble, which is basically what’s happening in this digital world, you know, it’s a good place for gambling,” said Paul Toprac, Game Development and Design Program associate director at the University of Texas at Austin.
Toprac said these types of worlds are getting bigger with more companies buying in.
That could mean more non-gamers start playing on all platforms, like Entropia. Or it could mean more folks gravitate to the recognizable names, like Meta, formerly Facebook.
“Well, Meta is going to come out with their thing, and Apple’s going to come up with their thing and Microsoft. And now, these same users are going to all migrate to these other platforms, in which case, you’ll have very few people on playing in this space,” Toprac explained.
He said eventually, we will likely see virtual reality and reality mesh even more. But he advises starting small when investing in the metaverse.
Reed made around $1,200 since investing at the end of March.
“How many times do you start a business, and you make money almost immediately on your first month?” he said.
He admits it was nerve-wracking at first but he still thinks he made the right choice.
“I would say anything can be a bad investment. I could have went out and started a bakery with my money, and no one could have bought my bakery rolls,” he said. “With this, I just feel that I have more control.”
Reed eventually hopes money from the metaverse will allow him to retire from his retail job.
“I mean, as long as this game doesn’t eventually go under and go kaput, I will always, always have my land, and I will never be unemployed the rest of my life,” he said.
Toprac reminds people they still have to claim earnings from the virtual world to the IRS. That means once you cash in your virtual money for real money, you get taxed.