Credit scores and mortgage paperwork could be swept away by a blockchain-verified system based in real cash assets in the form of NFTs
It’s been a tough time for the world of cryptocurrency and non-fungible tokens: prices over the past year have plummeted and fortunes have been lost. The OpenSea NFTs market has all but ground to a halt. Meanwhile, back in the real world with fewer ones and zeroes, real estate is in a crunch. Can you imagine what might happen when the ancient world of real estate and the up-and-coming world of digital tokens and payments collide?
Imagine this, you own several tokens in a real estate company that owns property all over the world. You live in Seattle but are looking at a temporary job in Boston and need to move for about a year. You plan to return to Emerald City, but need a place in Boston. In the future, you may be able to simple trade addresses with your tokens and move to a property in Boston and back again at the same rate, easily, seamlessly, and nearly automatically. No applications, no deposits, no waiting to meet a leasing agent/landlord.
That’s the future that NFT real estate companies are trying to create. Rather than own an apartment, house, or condo, you simply own part of a company that owns those things and move around freely using NFT tokens that you buy for the privilege. It sounds like a giant co-op that spans cities and countries.
NFTs have a few advantages. The blockchain is a ledger that records ownership and has a complete history of ownership of the token and therefore is more secure than more traditional means to track real property. In addition to that, NFTs can be easily transferred and sold. Let’s suppose that our above example goes the other way and our prospective person decides that they really like lobster and plan to stay in Boston, no worry about things back in Seattle. With an NFT property company, they can continue to rent or move yet again. Everything is kept track of in the ledger that is publicly viewable and cannot be changed without the entire blockchain network making the change. If a ledger doesn’t match up, then something has gone wrong. NFTs and their associated currencies could see real value being reflected in something that actually produces a return (rent/sale). This would be huge for something that currently has the value of tulips in 17th-century Holland.
NFTs are also entering the financing market. Homeowners can sell tokens to their house and take out equity and pay it back to the owners of the token over time. Real estate companies can fund new development by fractional investment in properties using tokens (although this already exists thanks to sites like RealInvest and Groundfloor). This market because it already exists, is heating up. NFTs and crypto offer an opportunity to invest in these properties in a decentralized way that has built-in protections for fraud. Indeed, while cryptocurrencies are still looking for a use case, tokens might have found something they can do well.
Is It For You?
It’s hard to decide the pros and cons of this kind of thing because it’s so new. But, real estate is a market that begs for innovation and disruption. Tech has its sights set on a market that hasn’t fundamentally changed since the invention of paper or possibly the movable type printing press. The days of credit scores, mounds of mortgage paperwork and other such oddities that one might only encounter in real estate could all be swept away by a blockchain-verified system that is based in real cash assets in the form of NFTs. There is the potential here for this to completely upend how real estate is bought, sold, rented, and monetized.
However, only time will tell if the bright predictions of today will become the standard of tomorrow.