Bitcoin is so 2021 - been there done that! So what is new?
Utilizing NFTs, or a Non-Fungible Token, in the process of buying and selling tangible real estate can be a highly-profitable venture for investors. The real estate market is relatively new to using digital tokens to attain real estate, especially as we enter a new age of selling properties backed by crypto-baked mortgages.
While NFTs are new, they can have an extended long-term impact on the purchasing power of a piece of land. Since digital real estate doesn’t have any definitive regulatory rules since it’s found in a vast digital world, the possibility of acquiring large properties using cryptocurrency is very well on the horizon.
What is an NFT and how do they work?
NFTs are a unique currency that can’t be replaced with something else. For example, a fungible currency, like a bitcoin can be traded for another bitcoin, but an NFT cannot be traded for exactly the same thing. Think of an NFT as a highly valuable baseball card that, if you choose to trade it, you would end up with something completely different. So how do NFTs work in a highly-saturated world and how can they make you money?
NFTs can take the form of any digital currency (JPEGs, memes, drawings and even music), and sold at a high level, can be used as cryptocurrency. Real estate NFTs, in particular, are a little different than common NFTs as they’re not purchased with tangible money. Real estate NFTs are purchased using the cryptocurrency of the seller’s choosing, held in a digital wallet and can be sold over and over for a profit to the buyer.
Since every NFT is unique, there can only be one original version of it. So though you may buy a digital photo and there are 50,000 copies in circulation, you own the rights to the actual version. Depending on whether you are interested in buying NFTs to own a unique piece of digital currency, or you’re intending to use NFTs to continually trade up, you’re likely in the business of one thing - making a profit. This is where commercial and residential real estate ties in.
Tampa Bay home-owner sold her $650,000 home as an NFT
A 4-bedroom home in Tampa Bay, Florida is the first house ever to be sold as an NFT. After the owner turned her ownership into a limited liability corporation (LLC), she was able to transform her home’s certification of authenticity into an NFT. The NFT accelerates the home’s sale process by placing the property ownership with the LLC, including paying any outstanding property taxes.
The individual who purchases the NFT allows the owner to claim to own the company and the property by extension. While this may be the first real estate transaction as an NFT, it certainly won’t be the last; with over $44 billion buying and selling NFTs in 2021, merging the real estate market with NFTs can reduce closing costs and accelerate transactions.
The future is here, and it’s all digital!
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