Have any of you been keeping up with NFT’s? They are the latest and greatest get-rich-quick scheme that is just a bunch of internet trolls using decent marketing to sell mediocre artwork for outrageous sums of money. That’s all, right?
What are NFT’s?
It turns out NFT’s, or non-fungible tokens, might change the way we buy and sell our homes, forever. For context, the NFT’s have been top of mind lately because of the way artwork is being sold like crazy on the platform. Beeple, an artist that had never sold a piece of artwork for more than 100 dollars, recently raked in tens of millions due to his engagement with NFT’s. Grimes also sold one of her NFT’s for 6 million dollars. The marketplaces have just been going gangbusters for reasons that I’m still trying to understand.
As best as I can tell, the reason these artists are selling their NFT’s for so much money isn’t actually because of the art at all. It is because of the novelty of NFT’s. In the Beeple article linked above, it mentions:
The technology has absolutely exploded over the past few weeks — and Winkelmann, more than anyone else, has been at the forefront of its rapid rise.
“He showed us this collage, and that was my eureka moment when I knew this was going to be extremely important,” Noah Davis, a specialist in post-war and contemporary art at Christie’s, told The Verge. “It was just so monumental and so indicative of what NFTs can do.”
In other words, the value of using the NFT’s in and of themselves are where a good amount of the value is coming from. It basically is just a unique code that gets put on a blockchain to prove who the owner and artists are. What’s crazy is it’s completely changing the way transactions of highly valued art take place(this verge article does a thorough job of explaining NFT’s). I think this could have very important implications for other highly valued and n of 1 assets, homes.
NFT’s for Real Esate
The reason NFT’s are valuable for real estate is because they can become the digital source of truth for the contracts previously managed or overseen by a local agent. You all know this, but, in principle, an agent exists to facilitate a real estate transaction considering both the buyer and seller are competing with one another for the best deal. Therefore, an agent acts as an arbitrator of sorts. The problem with that, however, is the agents are human with their own incentives. Because we are all flawed beings, sorry perfectionists, agents don’t always keep the best interest of who they are representing at heart. NFT’s would be able to eliminate that pain. ButterflyMX explains how in this article:
A smart contract is a self-executing contract outlining the terms of the agreement between buyer and seller. The terms are written into lines of codes that are stored across a distributed and decentralized blockchain network. The blockchain codes monitor the execution of the contract, and such transactions are trackable and irreversible.
Listing agreements, letters of intent, offer sheets, and closing documents are examples of contracts that can become digitized on blockchains. Signing smart contracts instead of paper contracts can significantly speed up the whole transaction process. It also eliminates the need to meet and negotiate with brokers, bankers, and lawyers while ensuring peace of mind that the transactions are secure and legitimate.
In other words, you could stipulate in the smart contract or NFT for the property what criteria you need for the house and then the blockchain would only be able to get executed once you found a home with those stipulations clearly met. You no longer need an agent vouching for you. You can do it yourself and use the blockchain as your source of truth. If there is a conflict or dispute between the buyer and seller, they would refer to the blockchain to settle.
The Revolution is Starting
As it now stands, there is still quite a bit to iron out before it becomes industry standard, but transactions have taken place. Propy is the first player in the space that is actually providing the technology to enable houses to be bought and sold on blockchain. As a matter of fact, the first transaction ever took place in Burlington, VT. It was only a 12 ft strip of land, but the proof of concept seemed to work. Propy was the platform where the transaction took place and expect to see more of this happen as the tech evolves and our culture adopts more of it.
Since then, the first NFT has been created to represent an art video and a home! It was sold at a fraction of what the home was actually worth(take a look at this article for specifics) but, again, it was more a proof of concept that a market could actually be created if an NFT was made to represent a home. It worked! Expect to see more of it.
Do you think NFT’s and blockchain will be as valuable as people say it will be? Will it change the way the industry works? Is Propy the next big tech provider for real estate transactions? LMK what you think!