NFT is Revolutionizing Virtual Real Estate: Exploring Digital Lands and Properties in Virtual World

The landscape of digital assets is evolving fast and rising in popularity, as the concept progresses. Digital lands and properties in the virtual world are becoming attractive for investors who are looking to diversify their portfolio. Even though investing in virtual real estate is still in its early days, many people are now considering it as a new and lucrative opportunity. The metaverse has expanded the real estate investment boundaries and new and innovative opportunities are on the way. NFT or Non-Fungible Token plays a pivotal and unique role in authentication and ownership in not only virtual assets but also the tokenized tangible asset. But before going through the opportunities, let’s see what exactly the Metaverse is and how it works.

What is Metaverse?

Metaverse refers to a digital space, where people are able to interact with each other in a more engaging way than the old websites. Users can interact with other users, trade land and properties, visit a concert, participate in a conference or attend a meeting from the convenience of their home. The metaverse is made to be a perfect place for the digital economy to evolve and progress faster than before. For instance, the online shopping experience will be quite different. The traditional method of online shopping, where the user enters into an ecommerce website, selects the product, and makes the payment will change significantly. In the metaverse world, users will experience real shopping by walking down the street, entering into a shop and trying on a suite without leaving their houses. That would be the same for many other industries and sectors, when it comes to metaverse.

How NFT Plays its Unique Role in Metaverse and Virtual Real Estate

NFT makes the tokenization of virtual real estate possible across a blockchain network. In other words, every digital asset such as a virtual real estate property can be tokenized and converted to one or multiple utility NFT. NFT brings several benefits to Metaverse and virtual real estate. Think of a piece of virtual land in the metaverse. By crafting an NFT out of the land, blockchain generates a unique identifier for that property. NFT data including ownership, trade history, authenticity, etc. remains safe in the blockchain shared ledger. Blockchain shared ledger is immutable. It means the data that is stored in the blockchain can not be changed or replicated. Hence, the virtual land ownership remains safe under the buyer’s name. Besides, smart contracts take care of all transactions such as trading, ownership transfer, money exchange, etc. with no human interference. That would eliminate human errors and risk of fraudulent activities. 

The Future of NFT in Virtual Real Estate

The transformation of our digital world from Web2 to Web3 is happening right now. Brands are now purchasing virtual lands and properties in metaverse platforms such as Decentraland and The Sandbox, to secure their presence in metaverse and market their products to Web3 consumers and users. In such a fast-paced environment, NFT becomes an integral part of Web3 by making secure ownership, instant transactions, unique product identification and immutability possible. Real Estate NFT, either in virtual space or in the real world, enhances liquidity by making fractional ownership possible. Fractional ownership opens doors to many small-scale investors to invest in the lucrative virtual or real world real estate market. On top of that, NFT built-in programs called smart contracts take care of all transactions, identifications and authentication, so no middlemen such as banks or brokers are needed. Considering the valuable benefits, the future of the NFT market looks bright.

Risk and Challenges of NFT in Virtual Real Estate

The main and most important risk for NFT in real estate is the regulatory risk. There is no robust legal and regulation for real estate NFT as yet. That makes it quite risky, as it makes it difficult to safeguard investor’s money, in case of investing in scam projects. Even though some countries like the USA and UAE are putting a legal system for real estate NFT together, it is still in its early days. The second risk is the market volatility and illiquidity. Despite the goal of NFT real estate to enhance market liquidity, inventors might experience difficulty selling their NFTs. This is mainly due to people unfamiliarity with NFT and its advantages. 

Hence, make sure about the legitimacy of the project you are investing in, as well as the local government approval on the project for the sake of protecting your hard-earning money.