If you haven’t heard about blockchain technologies yet, then you are in for a treat. The buzz surrounding Bitcoin, Ethereum, and other blockchains have never been higher than it is these days. More people than ever before in history are holding Bitcoin or some other type of cryptocurrency. Still, hyper-adoption hasn’t fully kicked in yet, even though we are seeing large corporations, politicians, and Wall Street talking about decentralization. Now that non-fungible tokens (NFTs) are so popular, there are many ways they can integrate into homeownership and other things we overcomplicate today.
So, for those who aren’t familiar with Bitcoin and non-custodial ownership over the money you make, let's take a deeper look into this all.
What is Cryptocurrency?
Cryptocurrency isn’t some scary, shady type of money like some of the Bitcoin critics have said in the past. Even they are coming around because you can’t deny the power of real ownership over finances. Although different crypto coins work in slightly different ways, the overall theme is the same. Decentralize the money supply, cap the total supply, and deploy smart contracts, which can execute predetermined transactions, restlessly.
Let’s take Bitcoin for example, when one person sends another Bitcoin, it goes from the sender’s wallet to the recipient’s wallet, without the need for any banks, or centralized authorizations. You can send Bitcoin anywhere around the world for a fraction of the cost of traditional payment rails like Western Union.
The revolutionary public ledger shows every transaction that occurs on its blockchain for anyone to see. It only shows the wallet number and transaction details, so the names of the people involved stay anonymous. The public ledger updates on thousands of networked computers simultaneously, with each transaction, making the blockchain un-hackable.
This all occurs on the Bitcoin blockchain, and there are in-depth articles about exactly how Bitcoin works that we won’t bore you with here. But you get the point, right?
What are NFTs?
Simply put, NFTs are digital artwork, or anything else, which is made, and saved forever on the blockchain. Just about every crypto coin currently provides NFT services and you could own an NFT on Ethereum, Solana, Cardano, Avalanche, and others.
The cost for creating, selling, or buying NFTs will vary depending on which chain it resides on, the gas fees required to move them from buyers to sellers, etc.
How Can Blockchain and NFTs Help with Homeownership?
Today, when you buy or sell Real Estate, you will need to hire a title company to ensure that there will be a clear title to properly close and transfer ownership from the seller to the buyer. This process takes a lot of work, endless searches, and fees to pay, and will cost you at least $1,000 or more. Plus, the price of the house will dictate the fees associated with closing and transferring the title.
Instead of going through this process, any real estate could be issued an NFT for the title of the property. The NFT would be stored on the blockchain and held in the owner’s name. It doesn’t matter if the owner is a person, or a company, even a bank that is providing a mortgage to the buyer could hold NFT title to the property.
How Can Decentralized Finance (DEFI) Play into Real Estate Transactions?
If you want to buy a house in 2022, there are steps you will need to take, especially if you need to obtain a mortgage to purchase the home? This will require you to provide a plethora of required documents, proof of income, proof of funds, sourced funds, and other stipulations. After you submit it all, there is still an underwriter who gets to make a decision about whether or not your going to get approved.
The barrier to entry for homebuyers is getting higher all the time. Especially when you take inflation, and interest rate hikes into consideration.
Nowadays, you can invest, and borrow money in DEFI, from companies like Compound, a decentralized finance center. Here, you won’t need to verify anything including your identity to take part in staking rewards for investing in cryptocurrencies, which can give you upwards of 30% on some crypto coins.
In 2022, DEFI isn’t where it can be, 5 to 10 years from now. You can’t get a 3.5% down loan like in traditional FHA financing. But things are looking bright, and the future will be interesting because blockchains are competing to fit into the new world of decentralization. Home financing is an important part of the American dream and hopefully, DEFI will offer better ways to buy properties by borrowing cryptocurrencies to do so.
Wrapping This up Thoughtfully!
Soon it's not difficult to see buyers and sellers strapping on their VR glasses, to enter the Metaverse MLS, where they can browse real estate listings for sale. Just like people surf the net today, folks will be able to find their dream home in WEB3, then get a cryptocurrency loan to buy the property, and then instantly receive the property’s title, via an NFT, securely stored on the blockchain and within the new owner’s private wallet…
That's a future we can all get behind and feel like we're being treated fairly.