Virtual Real Estate's Potential Billion Dollar Boom
Forbes recently posted an article by Natalia Karayaneva entitled "NFTs Work For Digital Art. They Also Work Perfectly For Real Estate." In the article, Karayaneva quotes venture capitalist, Tim Draper, a venture capitalist best known for early investments in Hotmail (now Outlook), Tesla, Twitter, Robinhood, Coinbase, and many more. Draper seems to have a sixth sense, and he goes as far to say that NFT real estate will impact the real estate market in the real world.
“I am excited about how NFTs in the virtual world are going to be applied to real estate in the physical world. I suspect that people will soon be able to buy a building, buy the air rights and buy the virtual rights of any physical space. The future is awesome.”
What are Non-Fungible Tokens and why should I care?
Are you asking, what’s all the hype of a non-fungible token about? You may even believe that it is a complete waste of money. Since you are reading this, we'll assume you are interested . The important thing that many don't understand (including some investors), certain NFT's will have both virtual and real world applications. And early NFT real estate applications are already in existence.
NFT’s are electronic certificates that authenticate an asset's claim of ownership and enable it to be exchanged or sold. The certificates are backed by blockchains, which are used to construct Bitcoin and other cryptocurrencies. A blockchain is a decentralized database that can be used in place of a central database. Blockchains store an indisputable encrypted transaction ledger that is distributed through a network of online computers to avoid tampering or ownership disputes. As a result, they are useful for essential record-keeping. Confused? Let’s keep going.
One of the main reasons for smart contracts' presence is disintermediation. It gets rid of the person in charge of collaborating between two parties or the person who fills in for someone else. The bank is an excellent example of a centralized disinter-mediated party.
About Blockchain Real Estate Investment
Blockchain real estate, also called "crypto real estate" or "virtual real estate", could be the next billion dollar investment. There is already an entire virtual economy growing faster than virtual reality technology. To make a comparison with the real world, many people are essentially buying virtual property site unseen because it's flying off the market.
Virtual worlds are another application for NFTs. Decentralized virtual reality platforms enable customers to create, own, and monetize virtual land parcels and other in-game NFT products.
"The real explosion will happen when they're able to ... experience these NFTs as they were intended. If it's a plot of virtual land, you ought to move around in it, have an immersive experience in it."
Investment in virtual real estate takes place through the purchase and exchange of non-fungible tokens (or NFTs), a form of cryptographic token that symbolizes something special; non-fungible tokens are thus not interchangeable. This is in opposition to fungible cryptocurrencies such as bitcoin. Each NFT is distinct, indivisible, and non-interchangeable.
"The current method of transferring land ownership is highly labor-intensive and costly. Also, an equity line necessitates a considerable amount of documentation. It is much better to trade and maintain property rights when they are “tokenized."
With NFT’s, each property or plot can be assigned a unique value that can be used to pass ownership to a buyer almost instantly. Real estate can use programmable smart contracts to minimize operating costs and time, as well as introduce several other business-friendly functions.
Instead of a typical document or certificate, which is hard to carry, virtual real estate ownership is registered on a decentralized network through an NFT. In Somnium Space, a famous virtual marketplace, NFT’s can be interpreted as parcels of land in different districts. Holders own their digital products, even though Somnium Space is closed or neglected by the developers.
The scope of the market and the magnitude of some recent transactions better show the adoption of NFT’s as a proxy for ownership. Basically, NFT's are the parcel, contract, and proof of ownership, and that information is stored on the blockchain. (Confused by the blockchain? Read this article from Investopedia.)
“Combined with an in-world economy on the blockchain, it provides a next step towards a true metaverse experience.” It is much better to trade and maintain property rights when they are “tokenized.”
NFT IMPACT ON GLOBAL REAL ESTATE MARKET
“Global Real Estate would soon collide with Non-Fungible Tokens Technologies. The technology developed for gaming would ultimately find its way to real-estate applications.”
- Andreas Park, Associate Professor of Finance and Blockchain Technology
The real estate sector has a history of being reluctant to embrace modern technology. However, the essence of real estate makes it suitable for blockchain applications: it is immovable and readily findable by 3rd parties with blockchain-based claims on it, whether as collateral and otherwise.
Digital objects, property ownership, and sales records will be more readily accessible on the blockchain as digital products become more popular and the blockchain game ecosystem matures. The global real estate industry would want to get its hands on virtual land assets for sale as quickly as possible, and these markets are likely to be pretty valuable.
Industry experts are already saying that virtual reality is the future of home buying. As real-world real estate companies continue to step into a virtual space, it's easy to imagine that their infrastructure would make it easy for them to deal in virtual real estate as well. This would add further legitimacy and fuel to an already burning fire.
As a result, digital objects will be valued not only on the inherent benefits of blockchain but also on their sales numbers (number of transactions, online visibility, amount of information obtained, and more important data related to the Real Estate), resulting in a major increase in the valuation of digital assets (such as digital real estate.)
How to Invest in Blockchain Real Estate on OpenSea
"OpenSea is one of a few NFT marketplaces that have grown in popularity in recent times as collectors venture into the blockchain trading of non-fungible tokens."
Despite the vast potential, NFTs had been quite complicated for average users, similar to the internet in the time before the browser. There was no marketplace where creators and buyers could easily search for and access exclusive digital objects across several platforms, and there was no simple way to purchase them.
It was also difficult to learn about their origins and history. Except among those who are technologically minded and understand how to put together blockchain details, few seem to devote the time and effort tracing the origins of their one-of-a-kind digital asset.
OpenSea intends to be the world's largest NFT marketplace, with anything from art to virtual reality, sports, and trading cards available. There are over 200 categories and 4 million products on the web.
People interested in purchasing common NFT products such as CryptoPunks, CryptoKitties, or virtual real estate may use ether to do so on OpenSea.
Several marketplaces, including Somnium Space, a popular virtual real-estate platform, operate on OpenSea.
OpenSea connects the market and infrastructure layers for the digital goods economy, and it is a critical asset in this modern world of digital ownership. OpenSea is a one-stop-shop for discovering, buying, and selling any non-fungible digital asset that adheres to a common standard, and it also easily informs you of the “who, what, when, and where” of a specific NFT. OpenSea displays the authenticity, trade, and sales history of digital products in a readable and trustworthy manner.
The Future of Virtual World Real Estate Investment
“We have rules and deeds in the real world to indicate and secure the rights of valuable assets; we now have NFTs in the virtual world.”
Digital assets and blockchain technologies are transforming the future of commerce. As a result, NFT's are driving this positive development.
Bringing NFT’s to land sections has shown tremendous potential for further growth. As NFT’s become more advanced and embedded into financial infrastructure, it could be possible to integrate the same idea of tokenized pieces of property, each with a different value and position, in the physical world.
Early movers in virtual real estate will get in at prices that are always reasonable compared to real-world markets. Like early movers in fast-growing places in the real world, those who invest early and hold for the long term will benefit.