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Post Info TOPIC: Real Estate already operates in the Metaverse

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Real Estate already operates in the Metaverse

Have you heard of converting real estate into tokens ? Nowadays, there are more and more metaverse development company projects that involve blockchain technology to increase security and transparency with clients.

By way of introduction, a token is a digital asset that lives within the blockchain . This asset is neither more nor less than a property right. In turn, this must have unique characteristics and enjoy a utility, so that whoever buys it can use it for a purpose and not be a merely speculative good.

Now yes, let's take this technology to the real estate world. There are two types of tokenizable real estate: physical and virtual. Physical real estate (such as a house) can be tokenizable, that is, create a digital asset (token) that has its representation in a property in the real world .

On the other hand, virtual real estate is usually a plot of land within a digital world like The Sandbox or Decentraland (commonly called the metaverse).

It is important to note that when people talk about virtual real estate or real estate tokens, not everyone is necessarily talking about the same thing. Some refer to physical real estate that is sold in the form of tokens, while others may refer to digital real estate (such as NFTs) that only lives within the Metaverses development services.

Virtual real estate is spaces or buildings within virtual worlds where people can enter with avatars and enjoy virtual events, play games, and even learn.

The relationship between the metaverse and NFTs is that any object that one turns into an NFT can be used within these digital worlds. Physical real estate can be tokenized as a whole asset or through fractional ownership. This is achieved by converting the asset into a legal entity and the ownership of this entity is represented by tokens.

Now, what if I want to buy that NFT? The way to acquire them is using cryptocurrencies in a secondary market . Solutions are also being worked on so that you can buy your token with hard currency. Once purchased, it remains in a digital wallet (such as Metamask) and we could resell it or transfer it to another person.

However, many people wonder: how can I link a physical asset to a token? This is an interesting question, because when you buy a token, you are simply buying a digital asset on a blockchain .

There are two ways to tokenize real estate: Entire Asset tokenization and Fractional Ownership tokenization.

Fractional property tokenization is relatively simple and similar to crowdfunding, where depending on how the investment is structured , each owner can hold one or more fractional shares of the underlying real estate. These shares can also be represented in the form of tokens, however tokenizing an entire asset is a bit more complicated.

Most developed countries currently structure and document real estate through a deed office, so for a token to serve as our property title, lawmakers would need to pass a law creating a regulated asset class that allows that there are deeds directly issued in the form of NFT .

Do we have a real case where a tokenized property has been sold? Yes, the first successful sale of a tokenized property happened in the US in February of this year.

In conclusion, many people are quick to state that tokens cannot be tied to physical assets and it is true that legislation still has a long way to go to provide strong regulatory frameworks for asset tokenization. However, it is absolutely false to affirm that today it is not possible.

Tokenization is possible, it just requires some additional structuring to make it compatible with the real world. In the coming years, the real estate sector will be one of the industries that will benefit the most from the use of the blockchain and some business models, related to the credit market, will promote this development and generate disruptive solutions.

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