Blockchain And (Un)Real Estate – Technology

Blockchain technology has – so far – not lead to a
transfer of the world’s land registers onto this technology or
to a “tokenization” of title (documents). The only
significant exception in this respect is Georgia where a
purchaser’s title to real property can be registered by
execution of a smart contract.

Virtual parcels

In contrast, however, virtual worlds where virtual land can be
acquired (for very real money) are spreading. One example for such
a virtual world is Cryptovoxels (https://www.cryptovoxels.com/). Cryptovoxels
serves (according to our understanding) primarily as a
“digital art space” where digital art is exhibited and
also created. Thus, exhibitions can be visited in Cryptovoxels and
NFT-art can be viewed and subsequently also purchased (via the
platform OpenSea).

Every parcel of “real estate” created in Cryptovoxels,
virtually every plot of land in Cryptovoxels on which visitors can
wander and view art by using avatars, has a unique (token) number.
For example parcel #4650 was purchased in Cryptovoxels for the
Museum Francisco Carolinum in Linz (https://www.cryptovoxels.com/parcels/4650). The
owner of token #4650 is clearly identified on the page of the
respective parcel. In turn, a link (a URI) is connected to this
token #4650 via which the metadata for this “parcel” can
be viewed; part of this metadata is again the link to parcel #4650
together with further information on the location (coordinates),
size, height etc. of the parcel. This metadata shows, for example,
that the property linked to token #4650 is exactly
119.879997286167m² and, hence, serves as virtual
land register. This plot – i.e. token #4650 of smart contract
0x79986aF15539de2db9A5086382daEdA917A9CF0C – was and can be
traded via the platform opensea.io.

After having acquired “real property” in Cryptovoxels
the new owner can “construct” buildings on his land (as
the mentioned Museum Francisco Carolinum has done; see plot #4650
via the mentioned link).

Lastly, the owner can of course also sell the respective
property off after having “developed” it. This again
works by executing a smart contract and transfer of the respective
token into the purchaser’s wallet. Given that Cryptovolxels
runs on the Ethereum-Blockchain and the unchangeable link between
the token and the description of the property, a purchaser can be
sure that the seller has valid title to this property.

The current success of this virtual world and the many others
– i.e. of the respective virtual assets – can be seen
by the increase of the prices per virtual sqm in recent months
(which was also linked to the rise of the price of Ether before the
most recent “price corrections” of this crypto-currency
took place).

Conclusion

It remains to be seen whether this new form of investment into
(un)real property is here to stay or just a short trend. For the
time being, however, it seems that the tokenization of titles to
“properties” are better suited for the virtual realm than
the real world where trust in centrally managed land registers is
still high.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.