How much would you pay for a string of ones and zeroes? How about a string of ones and zeroes that grossed you $200,000 a year? Jon “Neverdie” Jacobs made history by selling virtual property for a reported total of $635,000. Club Neverdie is a virtual asteroid in the online game Entropia. The Entropia Universe is rare among MMORPGs, because it has its own virtual economy that has a fixed exchange rate to the real world. When you make 100 PED (as the Entropia currency is called) you can trade it out for $10 USD at any time, and vice versa. Forbes’ Oliver Chiang did an amazing job researching Jacob’s record level virtual property sale.

According to Chiang, using Club Neverdie as a resort destination for thousands of Entropia players, Jon Jacobs was able to make $200k a year in revenue. Get a tour of the virtual space in the video below. With the sale, Jacobs is helping fund even larger virtual projects who’s worth is likely to be valued in the millions. Selling an imaginary playland for hundreds of thousands of dollars sounds crazy, but what’s really insane is how big this phenomenon has already grown.

According to MindArk, the Swedish company behind Entropia, the virtual realm’s economy has a GDP of $442 million USD! That’s more than some small countries. The fixed exchange rate for Entropia has allowed gamers to view it as a potential area for investment. Jacobs originally paid $100,000 for the property that would become Club Neverdie, and he did so by mortgaging his real world home. Within a few years Jacobs had paid off that debt and was making enough from Entropia to live comfortably. Others have paid tens or hundreds of thousands for Entropia Universe property. With each sale seemingly exceeding the last in size and ambition.

What could possibly be fueling this speculation in virtual property? To understand that, you need to take a look at Entropia itself. Users control avatars that allow them to enjoy a range of activities that are similar, but slightly more awesome than the things you can do in real life. There is hunting, fashion, dancing, exploring, farming, and much more, all with colorful environments and exciting competition. In other words, it’s a good time that people can really get enthusiastic about. Finding the next cool place to hang out or make virtual money (which, again, you can exchange for real money) is really important. To attract participants Club Neverdie has its own theme song and promotional video. Check it out:

The beautiful graphics and varied landscapes of Entropia distract from the seriousness of its economy. While it is free to join and play, all of the good stuff in the game costs money. You can either slowly earn PED by collecting virtual sweat (no joke) or you can just pay for a virtual object you want. Many players invest their cash because they know that virtual objects have a resale value. Not to mention the fact that they’re spending hours and hours in Entropia every week. Who doesn’t spend money on their favorite hobby?

From the millions of micro-transactions that occur in Entropia vast wealth can be created. Jacobs’ $635,000 is just one link in a longer chain. According to Forbes, the single largest buyer of Club Neverdie (it was sold in chunks) plans on revamping and investing more money into the property so that it can generate more revenue. Jacobs himself has started a development company, Neverdie Studios, that has raised $6 million in funding. What are they doing with that cash? You guessed it, making more virtual real estate. They’ve already launched Rocktropia, a music themed planet in Entropia that reportedly generates $10 per participating user per month. They are working with MindArk to launch their next planet, Next Island, soon. By all accounts, the economy of Entropia, and the empire of Jon Jacobs is continuing to expand.

I’m not sure if this is one of the most absurd financial bubbles in history, or the start of something big. MMORPGs like World of Warcraft have shown that game developers can make billions by attracting millions of people to come and play in their virtual worlds. Entropia, and other online games with fixed rate economies, are showing that the same money can be made by the players themselves under the right conditions. Yet it seems so counter-intuitive to be paying for objects, rights, and properties that don’t exist in the real world. I know some will argue that the only real difference between Entropia and the stock market is better graphics. You might be right to do so. Every investment, virtual or otherwise, has its risks. For now, Entropia has shown those risks are surprisingly low for some businesses. In the years ahead, we’re likely to see more money poured into virtual realms that have a reliable and growing fan base.

Investments like this, however, are making me question a lot of our current economic system. What other things do we pay for that are really just digital objects? Software certainly, but also music, TV, film, and books. Maybe the real story here isn’t how much a virtual property is selling for, but how much of our property is already virtual.