The Fate of Decentraland Depends on What Happens in ‘Centraland’

Though it doesn’t seem like it at first, armed conflict in some ways bolsters the case for Decentraland (MANA-USD) and similar virtual real estate ecosystems. With a few mouse clicks and perhaps the benefit of a virtual reality headset, you can transport yourself to entirely different paradigm.

Decentraland logo displayed on smartphone screen, teal background behind the phone
Source: shutterstock.com/Piotr Swat

Unfortunately, we live in the real world — “Centraland” if you will. And in this paradigm, the rule of law only applies until some folks decide it should no longer apply. That’s the terrifying situation we find ourselves in. Strap on your headset and launch into Decentraland all you want.

To paraphrase The Matrix — the original, not the nonsense do-over — if you die in Centraland, you also die in Decentraland.

Decentraland is Entirely Dependent on the Real World

Following the aftermath of Russia’s reckless decision to invade Ukraine, the cryptocurrency sector was jittery at first and then it happened: digital assets shot higher.

Although the backdrop was (and still is) incredibly messy, U.S.-backed sanctions have so far crippled Russia’s economy. The difference between the current round of sanctions versus the original round — when Russia annexed Crimea — was twofold: the sanctions went deeper and they were supported robustly by international partners.

Naturally, the Russian ruble basically turned into rubble, with one ruble worth less than a penny at time of writing. In fact, as I look at the foreign exchange rate right now, one dollar will get me 124 rubles. Not that I’m interested in the exchange but prior to the attack, a Washington would only get me around 80 rubles.

Talk about devaluation. And talk about a rush to safety to cryptos.

But now that the initial round of panicked transactions appears to have somewhat subsided, cryptos are again printing red ink. Decentraland is no exception, with the MANA token losing 15% of its value over the last seven days.

For MANA specifically, I’m not really seeing how it could benefit from investors seeking cover from the madness. If the crisis in eastern Europe worsens, the very floor beneath us will give way to utter disaster.

Sadly, it looks like the situation will worsen. As multiple media agencies reported, Russian troops attacked the Zaporizhzhia nuclear power plant in southeastern Ukraine, causing it to temporarily go up in flames. Fortunately, it appears the situation is now under control. However, the implications are chilling.

At any moment, the conflict could get severely out of hand, leading to catastrophic damages. Who would want Decentraland after that?

Nothing Really Safe About MANA

To be fair, Russian citizens hit by a crippling loss of purchasing power would likely consider any asset of worth and significance to be better than the ruble. In that context, Decentraland might make sense.

As of 7:48 GMT today, MANA is at Number 31 in the top cryptos by market capitalization.

However, though 17.3 million Russians or nearly 12% of the population own cryptos, that still leaves the vast majority who have not dove into the sector. Thus, if you’re scrambling to protect your paper wealth and you decide to take the leap of faith into virtual currencies, you’re more likely to go with an established coin or token like Bitcoin (BTC-USD), which is synonymous with blockchain technology and crypto assets.

I highly doubt that you’d go for Decentraland. That’s not a knock on MANA — I own some MANA myself. Rather, I’m just speaking sociological truths. Familiarity breeds trust and confidence. Most folks just aren’t familiar with relatively obscure altcoins.

Ultimately, then, for Decentraland to get back to the swing of things, the situation in Centraland must normalize. It’s ironic perhaps that a decentralized protocol designed to be free of centralized concerns is now held hostage by the biggest threat of the modern (real) world.

But that’s the situation we’re in. And no amount of wishful thinking is going to make this go away.

On the date of publication, Josh Enomoto held a LONG position in MANA and BTC. 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.


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