What is NFT and How it Can Affect the Real Estate Industry in the Near Future
The current pandemic has shed light on one single truth, that change can take place quite rapidly. The pandemic has accelerated digital transformation in all aspects of life. You are likely to obtain food via online ordering, shop online for your name brand clothes, and generally use technology to connect and entertain yourself.
But now we are seeing more digitization in the world of real estate and finance. A whole segment has popped up to disrupt finance as financial technology startups. But it is not merely startups that are disrupting; we also see non-fungible tokens and decentralized projects stepping in.
More people are aware of non-fungible tokens and the value they provide to many individuals. Hundreds of thousands of individuals have gravitated to the world of non-fungible tokens. These users see that NFT has a bit of richness that analog art does not have.
NFTs have taken over during the pandemic as more are turning to alternative investments to increase the value of their overall net worth. It is no surprise that NFTs have stepped in the real estate sector. These digital elements enable individuals to have ownership and to trade these assets at will.
For instance, we have seen how the Mars House that fetched a pretty penny on the marketplace, sold for $400,000.
Let’s find out more about NFTs and how they can make an impact in the real estate scene.What is an NFT?
An NFT is a non-fungible token.
But what is a non-fungible token and why does it matter to real estate?
The word non-fungible essentially denotes unique authenticity. It is that specific element and it cannot change with anything else. That is what is fantastic about it. It has its own respective properties.
An asset that is unique is unique; there are no replicas. You cannot exchange it for anything else to duplicate it. You might accept one dollar to trade it for another regular dollar. A unique trading card, like a Michael Jordan collectible, is special. In the same way, an NFT is special.How Do NFT’s Work?
NFTs exist because of the blockchain. These digital elements exist largely on the Ethereum blockchain at the present moment. While the Ethereum blockchain exists, many know it because it is a digital asset. But Ethereum has value because it serves as a decentralized world computer.
That is why you will notice that Ethereum supports gaming, various projects, and NFTs.
An NFT is a piece of information that is attached to a physical asset or good or a digital asset or good. Remember that NFTs can be anything from a unique set of pears, to socks, or digital animals.
How does it apply To Real Estate?
The elements of NFTs apply to real estate in that real estate is a physical asset. Remember that each piece of physical real estate is unique. The unique characteristics are defined by its coordinates, as land is precious and scarce.
More firms are looking at using NFTs to sell real estate because of its efficiency. But we are also seeing that there may be more demand for digital real estate. For instance, we see projects like Decentraland and even Cryptovoxels that note excessive demand.
The concept of NFT via the blockchain matters because it can show ownership, legitimacy, and tradability. The ability to quickly execute transactions via smart contracts digitally and show ownership will matter. It will be relevant in places like the United States and in Mongolia and Kazakhstan where land registry may be difficult.
The NFT or token will represent the association of an individual or entity to a good and it is etched on the blockchain. Indeed, everything is present in the smart contract via the blockchain.
It represents a potential step forward in the movement of real estate and various forms of real estate. As such, many are excited for this new technology.
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