blockchain startup propy plans first-ever auction of a real apartment as a collectible nft
Propy Pioneers Real Estate Tokenization with NFT Auction
Previously, we discussed how Propy utilizes blockchain technology to streamline real estate transactions through the implementation of smart contracts. Propy distinguished itself as the first blockchain company to successfully achieve this. Now, the firm is once again expanding the possibilities, by auctioning a physical apartment as a non-fungible token (NFT).
First-of-its-Kind Auction
While some may view this as a publicity event, the core intention is to demonstrate the legal viability of such a transaction. The company intends to proceed with the auction.
The auction will feature an NFT linked to a contemporary, newly constructed, one-bedroom apartment located in Kiev, Ukraine. This property holds historical significance as the first real estate asset ever sold using blockchain technology via Propy.
Understanding NFTs and Their Potential
Propy asserts that the NFT will facilitate the transfer of actual property ownership. For those unfamiliar, NFTs, or non-fungible tokens, are unique cryptographic tokens representing ownership of a distinct asset – be it artwork, music, or collectibles – recorded digitally. NFTs have gained prominence in the crypto space due to their potential applications, even extending to the destruction of a Banksy artwork after its NFT sale.
Upon winning the apartment NFT at auction, the recipient will gain access to the ownership transfer documents. Included will be a digital artwork NFT created by the renowned Kiev graffiti artist, Chizz (a physical rendition of this digital art adorns a wall within the apartment), alongside photographs of the property. However, the apartment itself constitutes the primary asset.
Auction Details and Ownership Transfer
The auction will run for 24 hours, beginning with a starting bid of $20,000. Comprehensive details regarding the NFT sale can be found here, and will be updated as the auction progresses.
Currently, the apartment is owned by Michael Arrington, the founder of this news platform, and a current crypto investor with Arrington XRP Capital.
Propy’s investors – including Arrington and Tim Draper, the former founder of DFJ – have seen the platform process over $1 billion in transactions to date.
Propy’s Vision for the Future
Natalia Karayaneva, CEO of Propy, stated: “This NFT will be a landmark event. For Propy, it represents a significant step towards realizing the potential of blockchain technology and non-fungible tokens (NFTs) to enable ‘self-driving’ real estate transactions and integrate real estate into the decentralized finance ecosystem.”
The process will unfold as follows: Arrington has legally signed documents, prepared by Propy’s legal team, to transfer ownership to the NFT purchaser. Propy will then conduct the NFT auction, accepting payment in cryptocurrency. The auction winner will become the owner within minutes, following completion of KYC verification.
Legal Framework and Ownership Structure
The Kiev property is held by a US-based entity. Upon completion of the auction, the NFT owner will also become the owner of this entity, and consequently, the property itself. This transfer mechanism will be replicated with each subsequent resale of the NFT.
Insights from Propy and Arrington
In a recent interview, Karayaneva explained: “This idea emerged during brainstorming sessions and felt like a natural progression from our 2017 white paper. In many ways, we are already creating NFTs through our unique smart contracts when we transact real estate. However, the NFT concept offers a different approach, allowing for peer-to-peer property transfer between wallets.”
She continued: “This eliminates the need to update ownership records in land registries, a benefit applicable to many countries, including the United States. The use of LLCs in the US to maintain owner privacy aligns with this model.”
Arrington added: “From a crypto perspective, we’ve observed how DeFi integrates with credit markets. Holding an NFT or any DeFi asset allows borrowing against it without intermediaries. Currently, owning physical real estate prevents direct borrowing without a bank or mortgage, due to the associated friction and delays.”
“If we can connect real estate and other real-world assets to DeFi, the potential for credit creation could reach trillions. This is a necessary evolution. The primary challenges lie in legal and regulatory considerations, areas where Propy has invested significant effort. However, the ease of trade and access to credit markets offered by NFT representation of real-world assets is a compelling concept.”