SMARTER STRATEGIES

Half-Million Sale Marks Largest Virtual Transaction Ever

Rebecca Kutzer-Rice | Date: 11-23-10 | Comments

In Entropia, a virtual world in which real money is traded for virtual cash, the largest virtual transaction ever was recently made: $635K for a virtual nightclub. This transaction symbolizes the success of the virtual world, a trend that continues to grow.

Entrepreneur Jon Jacobs recently sold his resort Club Neverdie, a wildly successful destination that included a nightclub and a shopping mall. Visitors flock to the club, where they can purchase various goods and services and attend exclusive parties. But Neverdie differs from most nightclubs in one key area: reality. The club exists entirely within the virtual world Entropia, where real-world money is used in virtual transactions. In the largest virtual transaction ever, according to Forbes, Jacobs sold Club Neverdie to several investors for a total of $665,000.

The virtual Club Neverdie was recently sold for over half a million dollars (source: Forbes).

Entropia Universe is the first virtual world of its kind. All items in the world have real cash value. To participate in the universe, users must exchange real-world cash for Project Entropia Dollars (PED), which can be redeemed back into real funds at a fixed exchange rate. The universe's business model, which has proved to be sustainable and profitable, generates revenues largely from activities within the universe, as well as from transaction fees.

Jacobs, whose Entropia avatar is "Neverdie," has become something of a real- and virtual-world celebrity. In 2005, Jacobs purchased an asteroid in Entropia for what was then the largest virtual transaction ever made�$100,000. According to Forbes, Jacobs had to take out a mortgage on his real-life house to make this purchase�a trade that most would ridicule.

Jon Jacobs' avatar, Neverdie, is one of the most famous figures in the virtual world (source: Forbes).

But Jacobs' business decision turned out to be a wise move. Over the past five years, he transformed the property into one of the most popular destinations in all of Entropia. Jacobs told Forbes that the business largely ran itself and had no other employees besides him�leaving him plenty of time to explore real-world pursuits like acting and music. Each year, Club Neverdie generated about $200,000, enough for Jacobs to support his family.

In the November sale, Jacobs sold the virtual property to several investors for a total of $665,000. The largest portion, $335,000, was paid by avatar John Foma Kalun.

The massive sale marks incredible success in what is already a growing trend. As we've written about on Smarter Technology, virtual worlds are likely the future of supercomputers and are lending a hand to soldiers suffering from post-traumatic stress. Virtual worlds are also becoming major meeting places for businesses.

Jacobs' prosperity in the virtual world means that many other entrepreneurs and companies will be soon taking advantage of this trend and that the lines between real and virtual will become more and more blurred.