Previously, the majority of NFTs appeared to be amusing works of art and trendy alternatives to cryptocurrency investments. NFTs are beginning to penetrate other aspects of life as we learn more about how they work and what they can do; even major brands are registering merchandise on the blockchain and implementing functions and special features to give buyers more bang for their buck.
How it works
So, how does a digital piece of artwork or song accomplish all of this? You can program your NFT (or whatever it represents) to perform automated functions using an inbuilt smart contract.
But no one is going to buy a house like that, are they? They have already done so in a few successful transactions. The first real estate NFT was sold in 2017 and has recently been re-auctioned via Propy, a blockchain-based real estate platform. A shift in how we buy and sell real estate appears to be on the horizon. Here’s what you need to know about the real estate market’s likely direction and how it will affect your daily life.
Virtual Real Estate Versus Physical Real Estate NFTs
To begin, it is critical not to become perplexed by the terminology. Developers are creating virtual worlds where we can explore cities, participate in new social environments, and even buy and sell as the metaverse expands.
Virtual real estate refers to land or property that can be purchased within these environments or games. These digital environments, like the real world, are built with NFT houses, or you can invest in a single NFT apartment in an NFT building. Some virtual real estate NFTs are linked to real-world properties. Furthermore, when it comes to major brands and operations, the digital world and its premises are frequently replicas of real-world locations.
These digital assets are bought and sold as NFTs registered on a blockchain. A physical real estate NFT is created by registering a real-life asset (your house, office or business premises) on a blockchain.
Why would you do that? Well, it creates a record of ownership and every transaction that it’s ever been or will be a party to. They transfer directly and simply between peers and come with a host of features and advantages.
The Impact of NFTs On the Physical Real Estate Industry
The true beauty of an NFT is that it can be programmed. Each NFT’s smart contracts automate simple or complex actions, resulting in faster, more efficient operations. Here are a few highlights:
Irrefutable History of Ownership
Each blockchain ledger records every step and transaction for each asset. That’s a lot of details. If you buy an apartment with NFT asset properties, for example, you can check every previous buyer, investment, action, legal dispute, payment, and so on. It should be recorded as part of the NFT’s overall transactional history.
Secure, High-Speed Transfers
With NFTS, transfers of assets are secure and almost immediate. Imagine how you currently buy a property. By traditional methods, it can take weeks and even months to go through the complete process. Even with an agreement in place, signing and exchanging contracts can take a couple of weeks.
NFTs And Fractional Ownership
One of the key practical uses is how investors can organize multiple investor projects. Fractional ownership tokenization breaks down each property into tokens that operate like shares. Splitting a single deed into tokens offers advantages to joint investors but also for shared ownerships (e.g., joint mortgages between married couples or partners). Smart contracts can include various elements with their own rules and automation.