NFT is the future of the real estate

Blockchain and cryptocurrency are changing the way how the markets work. It isn’t far from today when fiat currency will be replaced by crypto coins. El Salvador has started using Bitcoin as a payment method and many countries will follow this pattern. Real estate is also a target of the crypto realm. NFT is going to change how real estate is dealt with now and if you are selling your real estate then go for NFT option as it is easy and less hectic.

Non-Fungible Token:

Before getting into the debate of how and why Non-Fungible Token (NFT) is going to be the future of reality, let me briefly introduce you to the NFT. NFT represents something unique, which can be anything from a piece of art, music to other collectibles. NFT provides a unique and unforgeable signature to these collectibles. The authentication of digital art and other things was almost impossible due to the non-availability of the NFTs.

NFTs are not fungible like cryptocurrencies such as BTC, ETH, etc. NFT tokens are also issued on the blockchain but with 100% rarity and uniqueness. The tokens like BTC and other crypto coins are identical and can be used interchangeably. But, NFT tokens are unique and they are used to identify any unique item, either of real-world or digital.

Virtual real estate:

The question arises here that where does real estate fits in the NFT universe. The contribution of the NFT in virtual real estate is mind-boggling. Let’s take an example of the virtual real estate named ’Mars House’ that has been sold for $500k. Can you believe it? If you are thinking that who buys these virtual land NFTs. A huge number of gamers, investors, collectors, and big institutions are investing in virtual real estate.

When I say big institutions are involved in NFT real estate then the name of the Dominos and Nike shouldn’t be a surprise for you. Dominos has set up a store and started selling pizza from their virtual store. I would say virtual real estate is the best alternative to the real world and people investing in this realm will earn a lot in the coming days.

The NFTs are becoming an invaluable tool in determining the authenticity, ownership, and conduct of online business. If virtual real estate is thereby the support of blockchain technology in the gaming industry, then who is going to stop these people from listing virtual goods for sale.

Physical real estate as an NFT:

If you are thinking can the physical real estate be presented as an NFT, then I have a big yes for your question. The crypto market is changing every market and physical real estate is no exception in this process. Ethereum has its NFT standard, ERC-721, for unique tokens. The Ethereum and other NFT standard are used for the frictionless and secure trading of the digital assets anywhere in the world. The thought that people will soon be able to buy a building through air rights and buy the virtual rights of any physical space, excites me.

The need of NFT in physical real estate:

There are two main reasons why physical real estate should be presented in the form of NFT. The First reason is that current transfer of property ownership is extremely labor-intensive and time consuming. The second main reason is that whole of this process is costly. The paperwork of this process is lengthy and hectic, so there should be an alternative of this.

This process can be avoided by tokenizing the property rights. The property owners can create NFT of their property and sell it without any third party interference. The investors can earn through many ways by using these NFTs.

Possible use cases of real estate NFTs in future:

The further benefits of using NFTs in the real estate can be:

• Fractional property ownership:

The owners of the property can their whole real estate or fraction of it by issuing tokens on the blockchain. There is no need of following the hectic process used in present time. Investors can hold these tokens and receive a rental income, profit split on sale of property or both. This could also allow people to buy and sell fractional ownership in rental properties, potentially in a liquid market without a middle-man.

• NFT mortgages

The NFTs in real estate isn’t just targeting the ownership but borrowing also. We can see in the future that anyone can borrow by issuing NFTs backed by the ownership of their property. The small investors will be able to buy NFTs representing a small part of the debt. Holders of the NFTs would then receive repayments via the blockchain in proportion to how much they lent out.

Downside of real estate NFTs:   

When a new technology is emerging then there are always some potential risk associated with it.  The first problem is that where would the legal right to control the property actually reside. The lost passwords or hacks of the smart contracts can be a problematic. Potential rules for NFT transfers in real estate should consider locking the money but not the asset itself to avoid unclaimed property rights.

Conclusions:

In my opinion, the NFT is the future of the real estate despite some of its shortcomings. The emerging technology is capable of solving the current issues and then it will alter the way real estate market works. Many platforms are working to bring the physical estate to the NFT universe and explore its aspects.