As part of the evolution of decentralized protocols, Decentraland (CCC:MANA-USD) makes sense if you separate the crux of the matter from the noise that permeates this space. From relatively simple peer-to-peer transactions to smart contracts to virtual landscapes that undergird MANA-USD, computer programmers have taken prior innovations and built atop of them novel groundbreaking solutions.
At first, the platforms associated with the first cryptocurrencies focused on borderless, frictionless peer-to-peer (P2P) transactions. Once it was proven that intermediaries were unnecessary to transfer virtual currencies between two anonymous parties that had no reason to trust each other, programmers then went on to tackle other functions that could benefit from decentralization; hence the rise of smart contracts.
With Decentraland, the main concept isn’t so much about decentralizing functions and processes but rather reality itself. Through its virtual environment, users can be essentially whoever they want to be, a life outside of their real life. On one hand, it’s an intriguing concept. But on the other, I can’t help but wonder if MANA is simply a monetization of psychological struggles.
Please forgive my bluntness. However, when Reuters ran a story about a patch of virtual real estate in the Decentraland ecosystem selling for $2.4 million, I must question participating investors’ rationality. It’s not just that shelling out millions of dollars for virtual property is an eccentric idea. Rather, if the move goes wrong, it will be akin to burning money in a dumpster fire.
Therefore, I feel compelled to use strong language. Call me a jerk all you want, you absolutely cannot enter this space without performing due diligence up the wazoo.
Even then, it’s hard for me to have an opinion of Decentraland other than that it’s pure speculation on the madness of men.
Decentraland Euphoria Has Lost the Plot
While my thoughts about Decentraland probably run counter to what most ardent crypto proponents believe, I’m not naive to why MANA has soared up the ranks. Clearly, the ecosystem is part of what the cool people call the metaverse, or the supposed next evolution of the internet.
Back when connected computers became a thing, ideas traveled at the speed of light, opening hearts and minds. But our hind ends stayed planted in the comfort of our homes. But with the metaverse, it’s possible to transport ourselves — or at least the non-physical components that give us our personalities — across cyberspace.
And this metaverse thing is a big deal. It’s enough for the company formerly known as Facebook to rebrand itself as Meta Platforms (NASDAQ:FB). Naturally, the euphoria around the metaverse helped drive up more interest in Decentraland. (Editor’s Note: The ticker change for Meta Platforms stock to NASDAQ:MVRS is set for Dec. 1.)
Still, $2.4 million is a ton of money for what is a massive experiment, not only economically but societally as well. To be fair, online fantasy worlds like Second Life are incredibly popular. Moreover, people who tend to daydream may find benefits exploring their creative juices in virtual environments.
But as Scientific American pointed out, while a little bit of daydreaming can be helpful, people can become addicted to their fantasies. The problem I see with Decentraland and other metaverse-related platforms is that they end up exploiting — whether that’s the intention or not — those with mental or psychological challenges.
Now, I understand the free will argument. I also appreciate that the metaverse potentially offers an avenue to remedy or alleviate mental illnesses. Nevertheless, I believe it’s extremely debatable whether expansion of decentralized virtual environments should be encouraged.
The way I see it, we need more people to live in reality, not fewer.
MANA Can Still Rise Above the Criticism
Despite the objections against metaverse-related initiatives, Decentraland can still swing higher from here. If there’s anything I’ve learned during the post-pandemic years, it’s that you should never doubt the collective power of the masses.
And for full disclosure, I own MANA tokens. I acquired them a few years back, more so as a joke rather than a serious investment. Well, the joke’s on me, I guess. I should have bet the farm on it — and not a virtual farm but a real one.
Nevertheless, the $2.4 million digital land sale was a wake-up call. In my view, Decentraland and the concept of the metaverse have jumped the shark. I’m not saying that the two can’t rise higher at some point. But for now, the enthusiasm has gotten out of control.
On the date of publication, Josh Enomoto held a LONG position in MANA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.