Why NFTs are just like real estate

If the thought of investing in NFTs makes you think, 'What are we even buying - just a token? The JPG is somewhere else?' Then here's a truth bomb - buying real estate is not so different from trading in paper-based tokens to gain ownership of an off-chain asset.

It works because it conforms to a made-up social convention. For example, if you were to buy a ranch, you'd wire the funds to the seller, thereby transferring certain 'social credits'. Then, you'd sign a paper deed before a notary, instead of doing it cryptographically.

After submitting the deed to the clerk's office, the land is yours. The deed doesn't grant you any rights in the physical world - all of it is imaginary. How can two people claim ownership of a land by merely signing papers? What allows them to do that?

The answer is 'social convention'. The land and the deed are as 'off-chain' as an NFT token or a JPG file. They are linked only through social convention. Owning real-estate, because it is an age old concept, doesn't seem weird.

However, since we are watching the convention of NFTs unfold in real time, it confuses the public and creates a sense that it is fake or make-believe. But it's only a matter of time until digital ownership becomes normal and NFTs are the equivalent of a title deed.

One may argue "But I have rights to my property!" Well, who gives them to us? The ranch itself doesn't care or knows who owns it. Two men decided so a couple of centuries before – and here we are. It's a convention – a game humans play. And with NFTs, the game has gone digital.

There are concerns regarding the lack of laws surrounding NFTs. But can't additional laws still be formulated? E-signatures didn't always exist; we can learn new things. NFTs sound like a game with mutually agreed rules - but isn't everything else in society too?

Bottom Line - The concept of 'ownership' has always made society more efficient. Today, the metaverse cultivates people's passion to own a different kind of property, and to avoid the fate of being a serf on someone else's land. In that context, NFTs make perfect sense.