NFT: a bridge between the digital world and the real world

While the common of mortals only hear about NFTs in the TV news or the short last-breaking-news summary, usually in these media related to a song or a piece of art, just to forget about it when the topic changes to the football teams roster or match results, other people is founding enterprises in traditional sectors like real-estate based in NFTs.

Actually, the general public doesn't need to understand how the technology works in order to use it, Internet is probably the most remarkable example. Your own car is probably another. After that, your TV set, your mobile phone, and a long etc.

One of the best known models for the Information Technology adoption is Roger's theory (1995) which rests upon the fact that different people have different propensities to accept a new product or idea, and that it results in the time the acceptance of new things takes.

• The two “adopter categories”?that precede “the chasm”?are called?innovators?and?early adopters. It stands to reason that the?innovators?are most scarce since only a few people have the time and enthusiasm to constantly search for the newest project (IOTA, 2020). Early Adopters are the group that fills out “early market”?composition before the new technology can advance into mainstream adoption.
• Next come the?early majority of pragmatists?and the?late majority of conservatives, and the last group to eventually adopt a product are called laggards or skeptics. For example, a skeptic may only use NFT when it is the only remaining method of performing a required task.

While NFTs are yet in the early market stage, Zeus Smart Visual Data has been co-organizer of the first NFT international event in Spain, "NFT Cross roads", so, what if we have a look at the meaning of NFT, see if we can understand the use, and then feel if this is going to be a thing in our everyday life?.

NFT means Non-Fungible-Token. And a Token is, generally speaking, something that represents another thing. For example, one may pay a token amount as advance deposit, or good faith deposit representing the total amount. If you go through the definitions of the Oxford Dictionary about the word token, you may learn that it being a representation, tokens may also hide the true value of what they represent.

We see then that coins and paper money (currency) are tokens, since they represent a value, only that they are fungible because you can exchange them for other coins or paper money, or for other equivalent things: fungible goods are items that are interchangeable because they are identical to each other for practical purposes.?Commodities, common shares, options, and dollar bills?are examples of fungible goods.

In fact cryptocurrencies are “fungible” the same as physical money, meaning they can be traded or exchanged for one another. They’re also equal in value—one dollar is always worth another dollar; one Bitcoin is always equal to another Bitcoin. Crypto’s fungibility makes it a trusted mean of conducting transactions on the blockchain.

NFTs are different. Each has a digital signature that makes it impossible for NFTs to be exchanged for or equal to one another (hence, non-fungible). That is why there is a link between NFTs and scarcity: the more something can be uniquely represented, the more it is elligible for NFTs, that's the reason why the first "things" being represented by NFTs have been creativity works (paintings, songs, etc...).

OK, now that we have a unique way to represent something that is unique, how is NFT different to stock shares? Stocks are fractional ownership in a firm or corporation, which means stock shares of a company are equal, the value of one unit is the same as the value of the next, the same as physical money or cryptocurrency, whereas the NFT is a non-interchangeable unit, each NFT token is not equal to the next, is not fungible (not interchangeable).

The way sales and purchases are regulated to avoid any form of fraud is also different: while stock sales and purchases are conducted in accordance with established norms and regulations, NFT sales and purchases are conducted in accordance to the blockchain technology, which ensures that fraud it's not feasible by the protection of the technology used. NFTs are maintained as data on a blockchain (see my previous article "Blockchain: the truth unveiled")

Now we can understand how NFTs are used in representing original artwork or creations, but how NFTs may be used in real-estate? Well first we need to understand that you can purchase NFTs with crypto or fiat currency (see my article "Cryptocurrency: a penny for your thoughts").

Since we can use NFT for representing ownership of physical items on blockchain networks, as a result, NFTs can serve as an ideal instrument for enabling the sale and purchase of real estate properties, for the following reasons:

• Paperwork: one of the biggest setbacks in real estate investments emerges in the form of property ownership transfers. Presently, you would need huge volumes of paperwork for purchasing a property. NFT real estate transactions empowers buyers to take control of ownership of real estate within minutes.
• Vulnerability: digital transactions are vulnerable to cyber fraud, while a real estate NFT marketplace provides the assurance of improved security and data integrity. The benefits of blockchain and NFT provide the confidence buyers, and sellers need for transferring their assets.
• Simplicity of loans and borrowing: NFTs can also simplify the process of taking out loans on your property, or borrowing against your real estate NFT on Decentralized Exchanges (DEXs) or traditional finance solutions on blockchain. Opposite to CEX (Cryptocurrency exchanges) which use order books to match buyers and sellers on the open market and keep crypto assets in an exchange-based wallet, DEXs are non-custodial and leverage the functionality of self-executing?smart contracts?for peer-to-peer trading, while users retain control of their private keys and funds.
• Fractional ownership: fractional ownership or FO tokenization offers a simple approach to the representation of real estate as NFTs. You can think of fractional ownership tokenization as a crowdfunding platform, which helps investors in buying shares. The fractional owners have a specific number of tokens representing their share in the asset.?

To know more about the mechanisms of using NFTs for real estate you can read "Working of NFT Real Estate Interplay" in this article from 101blockchains NFT Real Estate – Explained, which be aware, might turn you into an early adopter.

Like a puzzle, NFT, cryptocurrency and blockchain are building the foundations for digitalizing the real world, first with transactions, then with real tangible assets, both together suitable for playing in the new digital world of the metaverse.

You might be interested in this piece of news from one of the companies establishing in the metaverse: Metaverse interactive showroom of Idai Nature, which includes a poll.

What do you think? are you going to be waiting in the skeptic zone of Roger's curve? or shall we start moving together the NFTs to mainstream market? Getting yourself some cryptocurrency for starters may help you be at least in a healthy pragmatic adoption zone.