The chief executive of a company that facilitates real estate transactions with blockchain networks believes brokers will need to become more familiar with the technology to reach a new type of customer.
These tools will be especially attractive to the growing number of people who hold cryptocurrency, as well as foreign investors and buyers who wish to remain anonymous, Propy CEO Natalia Karayaneva said during an Inman Connect session Thursday entitled, “NFT and Blockchain in Real Estate: What You Need to Know.”
“This is what we want to build in the future, where agents are participants in the [blockchain] network and they own the space,” Karayaneva said of her company’s efforts. “They own the real estate transactions and none of [the] big corporations or governments can take away this control from the agents.”
Blockchain technology has been around for years, but only recently have there been a large slate of real estate transactions conducted entirely in cryptocurrency.
Homeowners can have a record of their title stored on blockchain ledgers through unique markers called non-fungible tokens, or NFTs. These increasingly popular tokens have been used to represent ownership in photos, art and other digital assets.
“This is absolutely applicable to real estate because real estate already behaves as a digital asset,” Karayaneva said. “… Title of properties is already a digital record. And at the same time, the asset itself is immovable, so nobody can just come and grab a home from you. And thus we can do ‘NFT’-ing of real estate and allowing the ownership of a home to be held in one digital wallet.”
Once a property is registered as a limited liability company with its local government, the token representing ownership of the LLC can be bought and sold easily, she said.
This NFT technology also opens up new options for fractional ownership of properties, Karayaneva said.
Despite the technology’s rising popularity and a dizzying array of possible applications, it has not escaped criticism.
Cryptocurrency is produced through a digital “mining” process, in which high-powered computers are tasked with solving complex problems to create these currency-like stores of value. This process can be expensive and result in a significant carbon footprint.
Some of the technology’s less-than-savory benefits — particularly to tax dodgers — may be short-lived, Inman Connect moderator Clelia Peters said.
“Because it’s decentralized and not owned or overseen … by governments, sometimes people think of it as a shadow market or a black market,” Peters said. “We are starting to see some attempts on the part of the government to oversee, particularly around cryptocurrency for taxation purposes.”
But because of its popularity as an alternative to government currency, Peters said she expects the role of crypto in real estate to continue to grow.
“We’re very ambitious in the company that this can potentially transform the industry and transform the paradigm of home ownership,” Karayaneva said. “We see that we can empower … agents to transact faster and make their customer look at the agent with more satisfaction.”