Blockchain Doesn’t Just Apply to Virtual Real Estate, Says Mike Bjorkman
“How much would you pay for your dream home if you could only visit it a few times a year?” real estate advisor Mike Bjorkman asks. “Or if you could never visit it? Or if it did not physically exist?”
The marketplace for non-fungible tokens, also known as NFTs, was white-hot in 2021. NFTs dominated the financial news for a few days after an NFT of art by Beeple sold for $69.3 million in an auction at Christie’s.
But NFTs aren’t just art. NFTs of real estate is booming in the crypto marketplace.
Mike Bjorkman Notes That SuperWorld Has Had Super-Sales
Consider the augmented reality virtual real estate company SuperWorld, which reportedly sold “thousands” of properties for an average of $2,000 each in 2021.
SuperWorld is mapped as an overlay on the 3-D world, dividing the surface of the Earth into 64 billion parcels. In theory, an investor could own an NFT of the White House, the Kremlin, the Eiffel Tower, or the Parthenon in Athens. Sentimental investors could own an NFT of their childhood homes and playgrounds.
Co-founder and CEO Hrish Lothikar snapped up 50 properties, including Times Square in Manhattan, the Pyramids of Giza, and the Colisseum in Rome. Unpurchased 100 meters by 100-meter plots sell for 0.1 Etherium or about $314 in March of 2022.
Mike Bjorkman explains that what good is a virtual house if you can’t sit on your virtual sofa inside it? NFTs of real estate have been going through a kind of virtual land rush, but the blockchain is also relevant to real-world real estate.
Blockchain Is Also Changing the 3-D Real Estate Industry, Mark Bjorkman Says
Blockchains have been around longer than NFTs, Mike Bjorkman points out.
One way of thinking about blockchain is as an indestructible database. Each “block” stores specific data and has a data storage limit. When a block is full, it is linked with data from transactions before and after it, giving rise to the term “blockchain.”
How does this relate to real estate?
Since about 1910, buyers and sellers of real estate have used agents. These are people who are knowledgeable about local laws and regulations about verifying the ownership of real property. Agents assure the buyer will have legal title to the land the seller is selling.
Blockchain performs many of the same functions as a real estate agent. Blockchain is a secure way to register transactions through “smart contracts.” The investors who own a property receive crypto tokens that can be traded through a secure database. When they want to sell all or part of their investment in the property, they simply sell the tokens, instantly and efficiently.
Blockchain is anonymous, so there is no need to form an LLC. Blockchain is open to investors all over the world, so there is no need for crowdfunding or creative financing for challenging properties.
Of course, some questions remain to be answered, such as who calls the plumber when the tenant reports a leak. There may need to be an enforcible covenant regarding payments of insurance and taxes.
As practical questions get answered, Mike Bjorkman believes, blockchain will be increasingly relevant in the real estate industry. Investors are already past Blockchain 101 and are moving on to exciting applications of blockchain technology in the real estate industry.