The concept of ownership is changing. This is nothing new because through the ages civilizations have used different instruments to prove ownership. NFT real estate exemplifies a leap in the use case of distributed ledger technology also known as blockchain.
Investment in digital items has been the norm in the last 50 years. What is new these days is the idea of buying a home, land or other items that people have attached value to their utility in the past. Who would believe that a time would come when you buy a house in a digital space, despite the fact that there is no possibility of living in that house.
That folks are spending hundreds of thousands of dollars in digital space known as metaverse has continued to delineate the boundaries between the real and virtual space.
Changing perceptions of ownership are similar to the variety of games in a icecasino, where each game reflects a unique understanding and approach to risk. Real estate NFTs, as an example of the use of blockchain technology, are reminiscent of casino bonuses and promotions offered to attract the attention of players. Players can also enjoy live betting where they can follow the match in real time and place bets as the game progresses. This exciting feature offers players an immersive and interactive experience.
A New Trend Driven By Blockchain
The perception of the metaverse as a virtual real estate is driving a market that is valued at millions of dollars despite the fact that this is a relatively new form of investment. This trend has been incentivized by the blockchain technology which makes it possible to place digitally signed items on it. Moreover, the technology makes it possible to prove whether an item placed on it is unique. Collectors generally place high premiums on collectibles that are exclusively theirs. The fact that NFTs can be proven to be unique makes them popular items due to rarity.
For instance, founders that mint these non-fungible tokens usually ensure that there are limited numbers in existence. Consequently, these tokens could have high demand which reflects in price.
What is NFT Real Estate?
Have you heard of Mars House? This is a virtual house that was sold for digital currencies valued at $512,000. This is just one of thousands of these virtual real estates that have been sold since 2018 when NFTs started becoming a popular phenomenon.
Items such as house, land and other items have been tokenized in the virtual world. Collectors actively invest in these valued digital files. It is surprising that millions of dollars are being spent by people to own them.
NFT real estate are unique digital files that have been placed on the blockchain. These files may represent real-life items such as houses or land. They may also be arbitrary works such as art, images and videos. A tweet by the CEO of Twitter, Jack Dorsey sold for $2.9 million as a NFT. Bridge Oracle CEO, Sina Estavi who bought the first Tweet of Dorsey in the form of NFT stated that his intention was to highlight the importance of non-fungible tokens as a part of the future of the tech and cryptocurrency sphere.
NFT real estate is proof that perception of value is the primary reason for demand and not necessarily utility. A physical house is useful in that it solves the problem of having a shelter over your head. But you cannot say the same about digital assets that have been built on the blockchain. What is obvious is that what drives the market is perception of value. And this is a trend that won’t go away anytime soon. The antecedence is there to support this.
Real Versus Virtual
Bitcoin for instance is the first mainstream digital asset that was deployed on the blockchain. Today, the coin is valued at more than $50,000 despite the fact that it is not a physical item. We can say that the digital currency is representative of what people are already used to – fiat. We all use money as means of exchange, means of transfer of value or as a means to store value. What a virtual currency such as Bitcoin does is represent the reality we already know; that money exists in a tangible form.
The NFT tweet by Jack Dorsey represents an original tweet he posted in 2006. As in many instances, the virtual digital NFT represents the real tweet that still exists on the Twitter platform.
SuperWorld is another NFT minting platform that is building virtual real estate by selling plots of land that are virtual versions of every inch of space on the surface of the earth. These 64 billion plots of land represent geographic real estate available on earth. The implication of this is that some of these plots are prime properties while others are not as valuable, especially if they’re located in the rural area or desert land.
An NFT virtual real estate located in Lower Manhattan would definitely be more valuable than a plot of land in the Sahara.
Despite the fact that there are many instances when the NFT is a virtual version of a physical item, in most instances, the creation of a non-fungible token is wholly a function of the imagination of the creator.
Why NFT Real Estate?
Perception is an important factor in the impact that NFT virtual estate has made in recent times. We also have to put in proper perspective that blockchain networks tend to help in creating awareness for NFT platforms. The usual limitations associated with language and geographic barriers are eliminated. Greater awareness leads to popularity of these assets.
In June, Decentraland sold some virtual real estate land for $900,000. One of the reasons why NFT platforms have attracted high volume sales is that they are usually linked with auction platforms. There is also a high level of awareness about these assets and the value that they represent.
Furthermore, the concept of uniqueness and the ability to prove it has continued to attract high net worth collectors willing to spend a lot of money on blockchain-based digital assets.
Investment
People are now aware that real estate doesn’t just represent a physical asset. Digital assets have proven to be a reliable form of investment. By induction, we can state that virtual digital estates derive their value from the perception of value associated with digital assets. When we factor in the fact that physical real estate such as prime properties is highly valued, there is no reason not to believe that virtual real estates such as NFTs would not be as valuable. That is if not more valuable.
Of course this doesn’t make sense to a lot of people. Why for instance would anyone want to buy land that they would never step on or build on? Some Digital architectural firms are already working on the concept of building virtual homes that the owner and their guests could access through virtual reality tours. So in the future, there will likely be virtual homes based on blockchain, So real estate will not be limited to just land and houses in the abstract sense. People would be able to build on them and even access them through virtual simulation.
Krista Kim, the artist that designed Mars House stated that this is the likely trend of the future.
Social Security
Owning your own house or a piece of real estate is a symbol of status in most communities. If the house is big, the owners are accorded greater recognition. The same applies in the virtual world. One of the reasons a lot of collectors scramble to own pieces of NFT real estates is the status that such ownership bestows upon the owners.
Real And Virtual
Some NFT creators are working on both physical and virtual versions of their items. Andres Reisinger, a Spanish artist whose furniture design was first sold as a NFT later made a physical version that was delivered to people that originally came across the digital version. This is another dimension to the NFT concept and an illustration that the virtual real estate space is dynamic.
Like most digital versions of NFT, just 10 were produced. Five of them had physical versions. All sold for $450,000.
Who Is Driving The NFT Real Estate Space?
During the Covid19 lock-down, people became aware that it is possible that human interaction would become increasingly digital. This is in addition to what we all have already witnessed through social media, the internet and what not. Perhaps the most surprising trend is virtual property or virtual real estate. This has been incentivized by the blockchain. Who is really driving this sphere?
Investors have traditionally known that there is a need to diversify their portfolios. This class of people who are conversant with the blockchain space contribute to the growth of the NFT space. Another group of people that are active within the NFT market are artists, designers and creators of products such as videos. The need to monetize their works is the driving factor behind the involvement of this group of participants in the NFT marketplace.
The novel opportunity presented by NFTs has drawn the attention of companies that may not have been traditionally associated with blockchain. There are many of these businesses that are seeking ways to explore this market for gain. Some build supporting platforms while others are more interested in the monetization of the tokenized items created by creators.
Finally, there are individuals who are interested in the market for tokenized items. This could be due to pecuniary reasons or the pursuit of passions. The token market for non fungibles has room for everyone since there are various categories of items that can be bought. And not all are beyond the reach of the individual investor.
Some Benefits of NFT Investments
They practically fill the need of the investor, especially if they’re interested in owning unique items that no other collector owns.
This class of assets are available for all categories of investors. NFTs can be bought for as low as a few dollars to as high as several million dollars. This makes them investment vehicles that anyone can partake in.
Some Setbacks of NFT Investment
NFTs are largely unregulated just as cryptocurrencies. This could present some challenges in the future if regulators step in. This could lead to the devaluation of such assets in the future.
Owning NFT real estate may fulfill the need the individual has to own a tokenized item. However, in terms of utility, you wouldn’t say that owning a real estate NFT such as a virtual house makes as much sense as owning a physical house that actually gives the owner shelter and status associated with a physical real estate.
How NFT Real Estate Works
NFTs marketplaces present creators with listing opportunities and the market to sell tokenized items. These could be works of arts, digital images, videos and the like. Tokenized items are sold on NFT marketplaces at prices determined by demand and market perception. Buying, selling, listing and trading are the common activities in NFT marketplaces.
In effect, NFT marketplaces such as OpenSea are the meeting point of buyers, sellers and creators of NFTs. However, there are many platforms that render minting services for NFT creators. These are mainly decentralized blockchain networks such as Ethereum, Cardano and the WAX blockchain. Also, some gaming platforms such as AlienWorlds would help creators who do not have coding skills to build NFTs.
Buyers of NFT are mainly collectors who value unique items. Sometimes, the sale of these items are accomplished during auctions. This could drive the prices of such items higher than they ordinarily would have been sold.
