How NFTs Will Change Real Estate Forever
— By Sam Zoghbi
What’s an NFT?
It’s proof of ownership verifiable on the blockchain. (Non — Fungible — Token)
The keywords we have to pay attention to when it comes to NFTs are; immutable, secured, transparent, & easily verifiable.
- Secured by blockchain technology, meaning that every transaction that is recorded on the blockchain ledger has to be verified and agreed on by 51% of the chain and is equipped with a public and private key.
- Immutable because once the NFT is on the blockchain you cannot touch it anymore.
- Transparent because also once the NFT is on the blockchain, then it’s published out there, anyone has access to it like every other transaction on the blockchain.
- Easily verifiable due to the fact that every transaction on the blockchain has a clear wallet that owns it hence you can directly check the ownership of the NFT, removing fraud from the equation.
Technically speaking, An NFT is a token that is individually related by a certain “NFT contract” via a ‘token ID’ that points to certain metadata. For most NFTs, that is a digital art file that is referenced through the metadata. This digital art file can represent ownership and access to anything you can imagine.
What is the blockchain?
The blockchain is a distributed ledger technology that is in fact a series of computers (nodes) linked together by a network. This network of computers is autonomous and only needs the internet and electricity to function.
The value of this chain is the safety & decentralization of information, which is a revolution in Trust, Ownership, Customer Experience, & Data/Identity Protection making it the way we do business and exchange value.
Blockchain technology is basically a peer-to-peer, decentralized, distributed way of doing business, sharing information safely, exchanging value & contributing to the ecosystem.
The metric will never be priced from now on, the new playing field is assigned value through community building.
How does the blockchain work?
Like any new technology, in the early stages, we are still discovering its applications in our everyday lives.
When humanity first discovered electricity, some used it to light the dark, others to build a TV, and some to build a refrigerator.
Now it’s up to pioneers in every industry to venture into this new tech as did in the age of the internet.
Let’s explore Real Estate as an example.
Real estate has been rampant with fraud for centuries, starting with people selling properties they don’t actually own to bankers giving out shady loans, all the way to corruption and lost documents, or even failing to prove transactions like ownership in the past.
Blockchain’s inherent system of trust makes it the ideal technology for real estate.
As real estate companies all over the globe are using blockchain’s smart contracts and ledger abilities to transparently and efficiently facilitate renting, buying, investing, and even lending.
As a result, real-estate transactions verified by the blockchain have emerged as an innovative necessity.
Like many other industries, real estate faces major administrative problems such as high transaction fees, a lack of transparency, fraud, and the effects of a middleman including undue influence and commissions. Blockchain through NFTs enables supporting technologies to overcome the obstacles inherent within the real estate investment market.
These technologies include NFTs, Smart Contracts, immutable record management, and timestamped storage.
We can utilize these key properties of blockchain technology by proposing a system that has the ability to record real estate transactions in a private blockchain, using NFTs.
The immutability of the blockchain ledger and transactions can provide a safe space for the real estate business. Blockchain technology can also assist the authentication process by hastening background checks.
Personal digital keys are provided to parties that are involved in a contract, thus minimizing the risk of any fraud.
Now, what are Smart Contracts?
A smart contract is an agreement between two people in the form of computer code. They run on the blockchain, so they are stored on a public database and cannot be changed. The transactions that happen in a smart contract are processed by the blockchain, which means they can be sent automatically without a third party.
With smart contracts, it is possible to link the digital ownership of the property (NFTs), documents, and contracts directly into the blockchain. The owner is protected because once inside the blockchain, it is impossible to be tampered with or altered as data.
Areas of Focus
Property management: in the past when the concept of elevators was brought to life, they were operated by actual human beings whose sole job was to drive the elevator to the desired floor. That was later solved by a button that relays a command to the engine with a start and end signal.
Today smart contracts allow property owners to collect rental fees, execute commands, restrict or allow access to properties, areas of the property, or even functions of certain areas like gym, spa, heating or cooling system, pool, and underground parking. NFTs are ding miracles in the management of dorms, big compounds, complex buildings, clubs, hotels, and gated communities.
Property sharing: imagine “Airbnb” and “Uber” brought together peer-to-peer transactions for rentals. With an automated settlement system, we can finally see real estate deals taking place in the e-commerce field. A new generation of marketplaces like “Zillow” will evolve, and they will be transactional marketplaces.
Transfer of ownership with NFTs & smart contracts is typically used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary’s involvement or time loss by connecting supply & demand more quickly and directly than ever possible. Tokenizing real property will facilitate digital exchange that enables the property to be listed within a smart contract where buyers can claim it when conditions set by the contract are met.