For those interested in NFT, it will help you to read this

Are NFTs the future of real estate?

What are NFTs or NFTs?

They are short for non-fungible tokens or non-fungible tokens meaning they are unique and cannot be exchanged for something else. For example, Bitcoin is exchangeable, i.e. exchange one for another currency, and you will get exactly the same thing, but for NFTs they are digital assets, each of which has a different value that cannot be exchanged for other assets.

At a very high level, most NFTs are part of the Ethereum blockchain. It is a digital currency, like Bitcoin or Dogecoin, but its blockchain also supports NFTs that store additional information that makes it work differently than, say, ETH. It is noteworthy that other blockchains can implement their own versions of NFTs

You may have already heard of NFTs, the "non-fungible tokens" that have been disrupting the digital world lately. But what you don't know is how NFT will change the rules of the game in the real estate industry.

And NFTs ultimately affect the design of physical assets in real life. But it won't stop here. NFTs will fundamentally change how goods and services are exchanged and marketed. Here's how NFTs are beneficial to the real estate industry considering some of the downsides.

NFTs and Metaverse

NFTs and metaverse are largely related. NFTs can be viewed or used in the metaverse such as buying an item of clothing for your avatar via NFT or a house/land via an NFT property code. For example people may sometimes buy land directly instead of buying it as an NFT.

Virtual properties in the metaverse are allocated parcels within space. There is a limit to the number of packages available on each platform which leads to a shortage of land just like real estate in real life. For example, Decentraland has 90,601 individual contracts that are each traded as a type of NFT called LAND and are purchased using a digital currency called MANA.

Advantages of NFTs

Unlike digital currencies, NFTs are non-fungible tokens which means they can be used to identify unique items in the digital world. Essentially every piece of digital art or real estate in NFTs is attached to a unique number that is stored on the blockchain. Each token can then be sold to pass ownership of the digital asset. Not only that, but NFTs enable you to continue to benefit financially by reducing any future sales of NFTs. With NFTs, every virtual asset has a collectible value that makes it easy to undergo partial ownership.

Similar to real estate crowdfunding platforms like SmartCrowd in the metaverse you can sell your property to a large group of investors by issuing tokens on the blockchain. Investors can then earn rental income by holding these tokens and splitting the capital increase profit on sale.

The metaverse has a huge advantage over physical spaces in the fact that they can reach more people. When you allow partial ownership of virtual property, the larger bloc gains access to real estate investing. So the metaverse is not only a virtual space for socializing with people from all over the world at any time but also a great profit potential for businesses.

Disadvantages of NFTs

Investing in any new technology or asset class usually carries a range of risks. It is important to always think about the negative aspects to avoid any losses. While NFTs offer an effective solution to unlocking capital in real estate there are doubts about the investor's level of control over the property. For example, some might argue that in cases where an NFT token holder has enough tokens, they can force people to sell their holdings. This puts property residents under extremely high pressure and risk of inadvertently losing ownership of the asset. But if you also think about it from another perspective can the people who live in this property reside there forever if the property is not under the control of any of the token holders?

Other concerns stem from payment issues such as non-payment of the NFT mortgage or the way payments are collected. The volatile nature of digital currencies can also lead to large fluctuations in the value of assets. So just like anything new, there are always some potential risks that you should be aware of as an investor.

How will NFTs affect our real world?

You can think of the metaverse as a space for customers' imaginations to roam freely that ultimately inspires real-life properties results. Be careful and try to learn from reliable sources about this new world in which we will be forced in the future to live and deal with.