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NFT – A WIND OF CHANGE TO VIETNAM PROPERTY AND CONSTRUCTION INDUSTRY
Digital investment is gradually becoming the main trend of the future around the world, with the recently emerging form of real estate investment through NFT. The form of real estate investment split on the Blockchain technology platform or real estate investment through NFT is gradually gaining attention in the context of the prolonged epidemic that leads to a stalled real estate transaction.
WHAT IS NFT?
Non-fungible tokens (NFTs) are non-interchangeable digital assets that are stored on digital ledger (blockchain) to show public proof of ownership. Unlike other fungible (interchangeable) tokens from blockchain like cryptocurrencies, each NFT is generated with a unique identifier by a digital signature and cannot be directly exchanged with other tokens. NFTs exist in all digital objects including digital content (photos, videos, 3D models, audio, etc.), gaming items, domain names, physical items, and investment or collateral, etc. With the widespread sharing of digital objects, the buyer of NFT is guaranteed official ownership and is not constrained to sharing copies of the original file, and thus anyone can view the NFTs.
NEW PATH FOR PROPERTY AND CONSTRUCTION INDUSTRY
The tokenization from physical products to virtual products has not been as developed as the digital content sector. However, there have been many projects digging into tokenizing real estate and partitioning it into many small pieces as tokens, and the owner of each token is actually owning a piece of that underlying asset. Through tokenization, the entry barriers are more accessible, highly diversified portfolios, more vibrant liquidity and any transaction will convert to smart contracts that allocate ownership and conduct the transferability of NFT
The construction industry usually is the last segment attached to the newest technologies. Recently, there have been many applications of new tech in the architecture sector, authenticating digital certificates of ownership of architecture design and making it available for buying and selling. As the architecture and construction have close-knit interconnection with each other, the wider application of NFT in construction is only a matter of time.
DIGITAL REAL ESTATE ECOSYSTEM AND TRADITIONAL BUSINESS: WHAT’S THE DIFFERENCE?
With new advances in 4.0 technology, the digital real estate ecosystem mainly focuses on solving 4 major problems of the traditional real estate market, including: Capital, management, exploitation and supply chain in the industry.
Regarding the capital, when putting the real estate assets on the ecosystem, it’ll help the owner to efficiently exploit the investment. Furthermore, with the professional capacity of the asset management company as well as the AI assessment and appraisal platform, it will bring about optimal capital flow efficiency, opportune investment and matching with the needs of the market.
Regarding management, the digital platform has eliminated all of the cumbersome procedures in traditional transactions. So instead of having to wait for notarization procedures, purchase and pay the full value of real estate assets, the real estate property owner only needs to confirm the ANFT property certificate.
Regarding the exploitation, digital real estate asset exploitation will have higher efficiency rate, especially when the ecosystem is fully applied with the exploitation activities, helping to flexibly transfer asset value on the market.
Regarding the supply chain, when all types of real estate are digitized, the digital real estate ecosystem will be a giant “online real estate market”, where real estate products can be flexibly purchased and transacted in the fastest way as all procedures are shortened. And notably, transparency – a factor of top concern to all investors when pouring capital into any channel.
CHALLENGES
Personal security for cryptocurrency tokens is among the most significant challenges with NFT, as these digital-based tokens are extremely vulnerable to security attacks. Similar to any other social media accounts, the owner of NFT tokens must save his password, otherwise losing the account means losing the tokens and money. Furthermore, regulations governing cryptocurrency transactions are still limited, particularly in developing countries such as Vietnam, and no law or tax rule in this field has been enacted to control how the transactions operate. Consequently, Vietnamese awareness and belief in NFT are relatively low.
According to the Digiconomist, a single Ethereum transaction consumes more than 70.32 kWh, enough to power 1 U.S. household for 2.5 days. This is equivalent to a carbon footprint of around 34 Kg of carbon dioxide (CO2). With the intense electricity consumption of cryptocurrencies especially on the Ethereum blockchain, the increase in NFT users has exacerbated the problem. Additionally, NFTs’ computation requirements are notably higher due to various stages involved including minting, bidding, selling and transferring process which can lead to even higher energy consumption rate. Thus, the rush towards this trend can potentially harm the environment, causing unprecedented rise in temperature, sea level, species extinction, severe weather events and other hallmarks of global warming.
GROWTH POTENTIAL
According to Blockchain Center’s analysis of Google Trends data, global interest in NFT increased 426% in August 2021. The number of Google searches for the keyword “how to buy NFT” increased more than 5 times, from 19 on August 1 to 100 on August 29, 2021. Covid-19 has fast-forwarded the application of technology in many traditional markets and several industries have to push their products into the digital space. Hence, it is only a matter of time before all assets become blockchain-based assets.
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