One concept that is developing with blockchain technology is that of NFT. Probably this concept seems difficult for you to recognize. Or maybe you already know it, but you don't quite understand its meaning. Don't worry, because in this post we are going to explain what an NFT is and its relationship with the Real Estate real estate sector.
The NFT Phenomenon
NFT stands for Non Fugible Token or non-fungible token. To fully understand this concept, let's first define what non-expendable property is.
If there are non-expendable goods, we can understand that there are also fungible goods. Let's define these two concepts:
- Expendable goods. They are the goods that can be exchanged, and their value is determined by their number, weight or measure. An example of this type of good is the one we have always known, money. It can be exchanged and its value depends on its number.
- Non-expendable property. They are unique goods, which cannot be exchanged because each one has a certain value and they have a creator. An example of this is a work of art. Each box has its own value and uniqueness, and cannot be exchanged for another that has the same value because they are not the same.
An NFT is a non-fungible asset collected in the form of a token, which is masked within the cryptocurrency business model. This concept gathers all the qualities of what is a fungible good, but within the blockchain technology.
Therefore, we can define an NFT as a unique asset that cannot be exchanged or modified for another with the same value, since no two NFTs are the same, just as no two works of art have the same value.
You can contemplate it in the following way: an NFT is like Da Vinci's Gioconda or Michelangelo's David, there are no two alike, each work of art has its unique value and its own particularities. Each work is located in a specific art gallery. If you want it, you have to get the original (if it were for sale), because a copy loses all the value of the real one.
Ok, now let's apply all this to blockchain technology. This technology works through a decentralized network, so it is not influenced by external factors or governed by an authority or intermediaries that establish rules.
Blockchain or block chain technology would work in this case as the art gallery where all these works are collected. Each NFT has a kind of digital certificate of authenticity, which works as a series of metadata that cannot be modified. These data collect who is the author of that work, the total number of transactions or acquisitions that have been made, its authenticity and its starting value.
This means that, if you acquire or buy an NFT, you will know from the first moment what its initial value was, and what you have paid to buy it at that time. Most of these non-fungible tokens are developed within the Ethereum network and its blockchain. This technology makes buying and selling operations and all transactions of this type of asset much easier, since it works through digital wallets.
NFTs in the Real Estate sector
We have focused on fully developing the NFT concept because it is going to be key for you to understand how this asset works within the real estate sector, specifically real estate.
Before we have used works of art as an example to demonstrate in a more practical way what NFTs are. However, an NFT can also be translated into other types of assets, such as properties or plots within the real estate sector.
Let's think about it this way: the art gallery where all these works are stored and put up for sale becomes a digital universe where owners who want to sell their land make it available to investors at a certain price. This digital universe or metaverse works thanks to blockchain technology, and the business or capital model through which all operations and transactions can be carried out within this platform are cryptocurrencies.
Now think about it, but with large-scale investments and million-dollar properties, we can already apply it to the real estate sector. This digital universe also known as the metaverse, which encompasses a large number of properties or plots with enormous prices that can go up or down every time, and where the main clients are investors who see a new business idea in this digital world.
It was at the end of 2020 when a digital work of art (Krista Kim's Mars House) sold for more than $500,000 during a Sotheby's auction. This property was considered the first NFT house ever sold. Thus, virtual worlds such as Decentraland have been created, where users participate in the same events in which they would participate in real life: going to work, shopping, investing in properties, and many more particularities.
New scenario for Real Estate
Thus, the phenomenon of NFT Real Estate began. In a scenario applied within the digital world, people can make large-scale investments in properties that are increasing in value, and that are becoming, according to many experts, the future of the real estate sector.
This phenomenon also appears to solve and approach the real estate world in a much more affordable and profitable practice for investors who do not have millions of dollars to invest in the real world real estate sector.
The world of NFTs is going to have to solve many problems that still exist in the traditional real estate sector. However, this industry is seen as a sector with a lot of potential, and one that can be very beneficial in the coming future.