Quick take:
- Venture capitalist Bill Tai says that stocks and real estate will be sold as NFTs.
- If that happens, it could simplify the process of property ownership transfer.
- Tai expects more assets to be tokenized as the internet shifts from Web2 to Web3.
Venture capitalist Bill Tai is confident that company stocks and real estate will be turned into NFTs in the future. At the Crypto Finance Conference in St. Moritz, Switzerland on Wednesday, Tai said it’s simply a matter of time as he expects more assets to be turned into NFTs as the internet shifts from Web2 to Web3.
With the metaverse property market quickly booming, virtual real estate and digital asset investor Republic Realm recently bought digital real estate in The Sandbox metaverse for $4.3 million on November 30. This broke the record for the purchase of a patch of land for $2.43 million in multiplayer role-playing game Decentraland a week before that.
The ownership of digital assets (known as “LAND”) on Decentraland is an NFT recorded on the ERC-721 blockchain which makes verification of ownership easier. With the rise of NFTs coupled with the hot virtual property market, investors and property business owners have been speculating that what applies to “LAND” ownership in the metaverse can also apply to homeownership in real life.
In a Forbes article written in April 2021 by CEO of Silicon Valley proptech company Propy, Natalia Karayaneva, American VC investor Tim Draper said: “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.”
In June 2021, Propy made history with its sale of the world’s first real estate sold as NFT, which fetched a price of 36ETH.
The transfer of property ownership is currently a labour-intensive process with a large amount of paperwork in many parts of the world. Industry experts believe that tokenizing real estate could simplify the process as the chain of ownership and other relevant information can be stored on the blockchain.
“We entered the space and our first client was Slice, which was building a platform for tokenizing real estate. Specifically, commercial real estate, specifically for sale to international investors. One of the greatest and original use for the blockchain is the ability to transact large or small value amounts internationally across borders with very little friction,” said Henry Elder, co-founder and Head of Real Estate at Digital Asset Advisors in a podcast.
However, tokenizing physical real estate comes with its set of risks. NFTs can still be hacked. Losing a private key to the asset on the blockchain results in immediately losing access to it, especially if there are no third parties with the capacity required to drop all real estate data into NFTs to ensure ownership continuity.
These are the issues that should perhaps be resolved before the physical real estate world adopts NFTs en masse.
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