Non-fungible Tokens (NFT) have experienced a huge boom. It seems they’re everywhere in the news, and every celebrity and tech guru has jumped on the trend. With NFTs hitting their stride (an NFT was recently sold for a record-breaking $69.3 million), it’s only natural to consider the impact they’ll have on real estate.
What is an NFT?
NFTs refer to digital tokens. These tokens can be for physical or digital objects. It basically refers to something that’s one of a kind. Fungible means something is identical to something else and therefore can easily be replaced with another identical unit. 5 dollar bills of the same currency are fungible- one is just as good as the other. Non-fungible tokens then mean that they can’t be replaced- they are completely unique.
There are security measures automatically written into NFTs. They’re much better secured against fraud because of the ability to authenticate ownership. Because all the transfers of ownership happen through the blockchain, it’s also much easier to track ownership. This is ideal for real estate, helping confirm who buyers are purchasing from and the legitimacy of the property.
What Is an NFT in Real Estate?
Real estate NFTs is one of the times where NFTs refer to physical property. It’s essentially a reference to the piece of property. By having an NFT that represents a property, it can be bought and sold electronically, rather than being physically present.
Just like a normal NFT, real estate NFTs are bought with cryptocurrency (also called crypto, such as bitcoin or Ethereum) and stored in a virtual wallet. Once the time comes to sell, they can easily be sold.
Think of real estate NFTs as stocks. They represent parts of real estate projects. The more you own, the more you own the project. For example, if there are ten tokens from a piece of real estate like an apartment complex, and you own one of them, you would receive 10% of the total gain at the end of the income cycle.
Why Real Estate NFTs?
The most exciting prospect of real estate NFT is the ability to transfer ownership at the push of a button. Because NFTs are tracked and securely held on the blockchain, the transfer of ownership is very easy. The title or ownership contract simply needs to be tied to the NFT, and then when the NFT is bought, so is that property. Ownership can also be authenticated and tracked, meaning fraud is significantly decreased.
This simplicity eliminates the piles of documentation that need to be authenticated before a sale can go forward. Commercial real estate sales will be able to go forward much faster.
The Pros of Real Estate NFTs
- The value of the NFT market will continue to rise
- One of a kind items
- Security against fraud
- The simplicity of selling and buying
Are Real Estate NFTS the Future?
As NFTs continue to expand their grip and capabilities, it’s only natural that their clear advantages will be brought into the realm of real estate. The ability to sell and buy a property with the push of a button is extremely attractive in corporate real estate especially, allowing for a wider range of opportunities than ever before.
As more companies dip their toes into NFTs, the market will open online. NFTs are expected to become commonplace, and with them, real estate NFTs.