- Neil Mandt
CRYPTO BACKED BY HARD ASSETS LIKE REAL ESTATE WILL SUCCEED
One of the main reasons the crypto market is crashing is due to the fact that very few coins have anything of value backing them. Bitcoin was initially used as digital currency by criminals and tax evaders who were transacting on the dark web. The next level of adopters invested in the promise of a decentralized banking system that would be free of fees, government controls and expectations that the coin will grow exponentially in value.
Countless coins that followed were entirely nefarious in nature. Many were based on con games and technological claims that may never or were impossible to be realized. People sitting on the sidelines are scratching their heads as they wonder if they are missing out on the next big thing, or if this is another pet rock? History may point to much of this moment as a mirage or even worse, a series of Ponzi schemes.
Blockchain networks addressed security concerns associated with centralized server systems, and as the liquidity of the cash in the Bitcoin community exploded, a wider audience started to accept it as a safe tender. Unfortunately, there is nothing behind it beyond a community that faithfully endorses the coin. The lack of government regulations has been one of the tenants of its success. It is this missing element that is exploiting many of the flaws in the system.
This doesn’t mean crypto has no value, at least not in every situation. There is an important place for crypto in our world today, as it offers entirely new ways of transferring money, revolutionary forms of ownership and fresh revenue streams that were unimaginable just a few years ago. That said, crypto opportunities must make sense, and logic should always play a role when investing. Despite the volatility of the current market, there are a number of crypto opportunities that offer security of ownership, most notably in the case of NFTs.
There are many misunderstandings as to what an NFT actually is, when in reality it is only a certificate of ownership. It’s a receipt that is recorded on the blockchain, no more, no less. As more NFT adoption takes place we will see marriage licenses recorded on blockchain as an NFT. When someone buys an engagement ring, the ownership will be recorded on blockchain as an NFT. When a traveler gets a passport, it will be recorded on blockchain as an NFT. Anything of value can be recorded on blockchain as an NFT, as it’s just a receipt of ownership.
Uniqueness and scarcity can add value to NFTs. If only one exists and more than one person wants it, a value can be established. Whether it will grow in value will be determined by a public that continues to want to pay for that particular NFT. If investors lose interest, then it will drop in value, which can happen quickly if it's based on marketing and not substance.
Bored Ape Yacht Club is an example of NFT artwork that also has value beyond owning the thumbnail or video clip. Owners are invited to have access to their private online club, akin to getting access to a country club membership. Investors who want membership to the Bored Ape Yacht Club exclusive group will enjoy owning this NFT, as they gain entry to parties, special purchases and networking with others who share their interests.
As mentioned above, there is a new class of NFTs that are backed by real world assets, making them a store of value, which is an asset that maintains its value, rather than depreciating, such as gold or real estate. The Metaverse Rights marketplace captures the best aspects of blockchain technology and asset backed crypto by offering NFTs of shared ownership for a real-world property’s digital rights. When Augmented Reality (AR) becomes a thing, AR advertising will soon follow. Where you see billboards today, you'll see advertisements in AR. When this happens, property owners will enjoy a new revenue stream from these media sales.
Property owners are now able to sell a percentage of their ownership stake in their future AR profits on the Metaverse Rights marketplace. This delivers an immediate financial win for the property owner, as they collect the cash from the auction at its conclusion, which takes place before any AR revenue begins to flow. For the person who bought the NFT, they will have secured a position in the building's monthly revenue whenever AR advertising is realized. Anyone who buys the NFT can feel confident that their investment is safe, as they have a contract with a real-world real estate asset.
Additional benefits for property owners who sell a small portion of their future revenue is they are claiming their digital ownership rights to their physical property and recording it on the blockchain. This is an indication to rogue advertisers, video games or social media companies that property owners are aware their assets have value in the Metaverse and they will not accept any third party violations or usage without payment.
Through all the speculation of price, functionality and purpose of crypto, community NFTs that offer additional values like Bored Ape Yacht Club and asset backed NFT marketplaces like Metaverse Rights will offer some level of confidence for their investors. As we see more success stories like these, developers will produce more practical use cases and crypto will flourish. Transparency is something that is greatly needed in the crypto arena. Investors should understand what they are investing in, what the underlying technology is and why their products will continue to add value for years to come.