Physical Asset NFT | NFT For Physical Land - 2022
Here We have Explained Physical Asset NFT, NFT For Physical Land and the Process of Buying a Physical Asset NFT
Physical Asset NFT
Physical Asset NFT is a real-world property like land, painting, apartment and etc…Those documents convert as an NFT. These kinds of NFTs are called Physical asset NFTs.
As the world today is progressing towards adopting various blockchain-based products and even trying to incorporate them into physical world applications, there are a lot of avenues that open at any given moment. Such claims are slowly getting confirmed as non-fungible tokens (NFTs), and decentralized finance (DeFi) applications are gaining prominence and opening up more opportunities to be usable in the physical world. One such application is the usage of NFTs for physical lands.
While the move might seem revolutionary at first sight, it is important to remember that the real estate sector has been infamously slow in adopting newer technology, even if it does more good to them. There have been a few instances where physical asset NFTs are in existence. In this blog, we will discuss in detail about NFTs for physical lands and how the combination would really work and benefit the sector.
What is a Physical Asset NFT?
A physical asset NFT is a digital token that is backed up by a physical asset (such as real estate, precious metals) instead of a digital asset (such as digital art, video clips). Such an NFT bridges the gap between the real world and the digital world and makes more people appreciate the real potential of NFTs.
One would be reminded of real estate whenever we speak about physical assets. Although physical assets involve more than that, NFTs for physical land are a necessity to fasten up the process of real estate transactions and prevent fraudulent activities.
More About NFTs for Physical Lands
As far as real estate is concerned, NFTs can prove to be a great boon since they can quicken up the process of purchasing physical lands while eliminating the need for third-party intermediaries to be involved.
Such an adoption can also make it impossible for a property to be illicitly sold to multiple people and similar fraudulent activities, which are pretty common in the real estate market, particularly in regions where laws are not well-defined.
Also, NFTs help with selling bigger properties as fractionalized parts so that many investors can claim some stake in some of the biggest projects. This helps the construction firm to raise necessary funds and benefits the investors if some utility is provided.
Such physical asset NFTs can also serve as collateral in the newer DeFi-based banking so that one can get loans immediately without the need for the existing loaning process, which is slow.
Process of Buying a Physical Asset NFT
- First, legal procedures regarding the physical property (Let us consider a physical land) are carried out, which involve creating the relevant documents and agreements.
- Then, the NFT for the physical land is minted, which includes all the necessary details of the property, including documents, legal data, paperwork, images, and videos.
- The final step is to sell the NFT, which can be done once the seller receives the amount of cryptocurrency or fiat money they had agreed upon earlier.
- Subsequently, the new owner can receive the paperwork of the land and can start using it. They can even use the NFT to borrow loans, mortgage them, or even rent them fractionally without even giving the original paperwork.
Some Points to Note Before Getting into Physical Asset NFTs
- In the case of fractionalized NFT ownership of a physical asset, it might be possible that a person who holds a major share can unanimously take decisions that might impact the people who use the land and other stakeholders.
- Also, NFTs are susceptible to hacking threats, which may result in malicious scammers transferring land ownership rights and causing trouble. This issue can be addressed if real estate legislations couple both physical and NFT ownership proofs effectively.
- A huge problem occurs when the NFT holder might forget the keys to their crypto wallet and is unable to recover them. This might prove disadvantageous if the owner needs to sell the property.
A Final Say on NFTs for Physical Lands
Even though NFTs for real estate is still in infancy, the interest in the domain would only get higher. This happens once most of the real estate community understands how NFTs can resolve the most common problems in the sector. Also, the slow nature of the real estate transaction process can fasten up, hence making the investment in real estate stress-free for people.
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