Cryptocurrency is no longer on the sidelines; it has entered the global mainstream, directly impacting luxury properties. Multiple real estate developers have come up with property listings for payments in digital currencies like Bitcoin. Even several buyers have attempted to convert digital assets into actual properties. The cryptocurrency wave in global real estate has touched new highs in the last few months. There is sizable interest in purchasing and selling property via NFTs or Non-fungible tokens.
NFTs are digital tokens bought with cryptocurrency, and these give secure and complete ownership of any digital asset through blockchain. Ownership can then be monitored publicly and sold if the price increases due to speculation.
People are now buying digital music, art, collectables, and trading physical items via NFTs. Yet, it only works if the ownership title/contract links to the NFT in one way or another. Founder of TechCrunch, Michael Arrington, listed his apartment in Kyiv, Ukraine for sale sometime earlier in the form of a real estate-supported NFT via Propy, a well-known platform, after buying the same from Ethereum in the year 2017.
NFTs – The future of Real Estate
Cryptocurrency and the blockchain have made their way into many industries. And as more and more of our lives move into the digital arena, how we buy and sell products are continually changing. Real estate is seeing its own shift toward the blockchain by creating non-fungible tokens that represent physical properties. This technology will dramatically impact the future of the commercial real estate.
But just because NFTs are mainly used in the digital world doesn’t mean they can only be used for digital assets. NFTs can also represent ownership of physical items or real estate. An example of this could be fractional ownership. Homeowners could sell part of their property to a large number of small investors by issuing tokens on the blockchain. Investors could hold these tokens and receive a rental income for doing so, profit split on capital appreciation upon sale 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. This would open up the world of property investing to many more people and create better options for those that need to unlock equity without borrowing or moving.
In the past year, practical uses of NFTs have been popping up in the industry. Everything from building projects to lending is being tested as NFTs by various companies looking to improve processes and speed real estate transactions that the many layers of document verification can often complicate.
