Using NFTs to Buy or Rent Real Life Property

Non-fungible tokens or NFTs are digital files stored on the blockchain. They signify a person’s ownership of something. And this ownership gets broadcasted to the wider community via the blockchain. The blockchain is a decentralized database not in control of any one single party. It is impossible to hack the database. This is because it uses a distributed set of computers and machines to update the state of the network. This means that we no longer need to rely on a third-party to register our ownership of items and objects. It is public and recorded on the blockchain. This is the reason why people say blockchains automate trust and ‘code is the law’.

Physical land and property are the foundations of the industrial economy. Metals (gold, silver, copper, aluminium, etc.) and our food come from property. Land and property form the base of our construction sector. For instance residential and commercial buildings. When communities morph into cities and states, valuations of properties rise. This is because of increased demand. Supply and demand of property happens in cycles. Likewise, there exists business cycles and technology cycles. Hence, today’s technology cycle means NFTs change the property market as we know it.

What are NFTs?

Non-fungible tokens or NFTs are simple to understand once we start with the basics. The basics involve us visualizing the world as sets of processes and information. Let us start with the internet itself. What is the internet? It is a network of computers and telephone lines connected to each other, and across the world. Humans and businesses exchange value with each other. The internet helps by increasing the speed and scale of human co-ordination. It does this by enabling us to exchange data and information from one part of the world to another.

All human civilization is a set of databases. Hence, the best database with the most quality data and analysis tools, stands to dominate. A single party cannot own a blockchain unless built with said property. It relies on a community.. Hence, when using social media to post, remember you’re contributing to their database. You gave them content for free. Using NFTs, you can tell the database that your post belongs to you. It is up to you to use it how you want.

Likewise, imagine everything that gets recorded on today’s databases. When it comes to property and land ownership records, we have to rely on an ‘authority’ to verify us as owners. In most cases, it is the local government which acts as the verifying institution.

NFTs in Real Property

So how are NFTs used to buy and sell real property? It is simple enough. There are many instances of NFTs and cryptocurrencies used to seal property deals.

Individuals look to diversify their holdings by buying properties using their NFT earnings. NFT and property enthusiasts are waiting to trade real property rights at a click. Property sales are not as liquid as the market for NFTs and cryptocurrencies. Yet, the possibilities of a global 24/7 property market on the blockchain is mind blowing.

For instance, TechCrunch founder Michael Arrington used Ethereum to buy a property in Kiev in 2017. He listed it as an NFT backed property on the real estate platform Propy, with the auction fetching a price of $93,000. The sale got marketed as “the world’s first real estate NFT”. The platform now allows sellers to convert their properties into NFTs.

This is so that they have another avenue for listing their properties.

Likewise, property developer Prometheus listed the ownership deeds of two luxury homes in Portugal as NFTs. They had sold it for the cryptocurrency Cardano. This is a precedent that is going to get followed across the world. After all, who can resist the urge of buying and selling property titles and deeds at the click of a button? The blockchain’s ability to verify property ownership is a turning point for NFT backed real property.

What’s Next?

Although property enthusiastic about NFTs in real estate, a caveat is the legalities. For instance, laws have always trailed behind developments in technology. In fact, a major part of judicial cases are owing to disputes related to land and property ownership. There is a trail of inefficiency in the way governments handle property rights and deeds. Hence, for now owners and buyers of NFT property must rely on their mutual understanding of technology. And to let legal teams work out the deal in the traditional old way.