An NFT, or Non-Fungible token, is a distinctive token issued on the blockchain which is most commonly used to acquire digital assets. Blockchains, alternatively, are a structure within a record of transactions that are made in cryptocurrency and are regulated across multiple computers that are linked by a “peer-to-peer” network. NFT transactions are made online, commonly with cryptocurrency, and are usually encoded with a similar underlying software.
NFT’s can work true for real estate as well, and crypto enthusiasts are eagerly eyeing the possibility of trading deeds and property titles at the touch of a button. There are a multitude of things NFTs provide investors and dealers that are dealing with real estate in the digital sphere. For example, NFTs are able to undertake the issues of fraud or extortion, by providing an easier solution to prove the owner actually owns the property. NFTs also centralize the transaction process by permitting a buyer to “assume” ownership of any piece of real estate within minutes. NFT technology and blockchains in general also allow for higher levels of data integrity and security. This level of preservation offers protection to both buyers and sellers, and makes the transfer of assets much less complicated.
There are two very distinguishing types of tokenization that are used via NFTs for real estate: Entire Asset Tokenization (EA Tokenization) and Fractional Ownership Tokenization (FO Tokenization). FO Tokenization offers a much easier NFT representation of real estate because it acts as a “crowdfunding” platforms wherein investors are aided in buying shares. Fractional Owners have specific numbers of tokens that represent their shares in their assets. Alternatively, EA Tokenization is a much more complex concept which requires the conversion of the actual property deed into an NFT. The issue with EA Tokenization, however, is that it sets some arduous setbacks because of the regulatory concerns that deal with real estate investments. Therefore, FO tokenization offers a more improved alternative than EA tokenization when considering simplicity of transactions