Florida home to be sold as a non-fungible token (NFT) in novel crypto transaction
- A home in Florida will be auctioned off in the upcoming week as a “non-fungible token" (NFT) in what is believed to be among the first such transactions in the US.
A home along Florida's Gulf Coast will be auctioned off in the upcoming week as a “non-fungible token" (NFT) in what is believed to be among the first such transactions in the US. Non-fungible tokens — or NFTs — use a version of the encryption technology employed to secure cryptocurrencies to create one-of-a-kind digital objects. The technology provides digital creations a kind of certificate of authenticity, allowing ownership of something that could otherwise be replicated endlessly.
In the case of the four-bedroom home in Gulfport, Florida, a California-based real estate technology company, Propy, will mint the property rights into a digital token and host an online auction, with bids starting at $650,000.
Minting property rights into an NFT would allow owners to sell a home as quickly as a Venmo transaction, Leslie Alessandra, the home's current owner, told the Tampa Bay Times.
Christopher Vasilakis, a local real estate and virtual-reality expert, described such a transaction as “essentially just selling a company and a company owns that house."
There could also be challenges given the volatility of cryptocurrency, and it's not yet clear if the value of a house tied to an NFT would be affected by the crypto market, Vasilakis said.
NFTs Are the Ticket to New York's Newest Social Clubs
(Bloomberg) When Maxwell Tribeca opens its doors in July, it will have all the elements that define a certain kind of social club: a prestigious address, swanky decor, exclusive perks for members, and a well-heeled and well-connected founding team. But that's not enough for David Litwak, founder and former chief executive officer of the tech travel platform Mozio. To become a member, you'll also need to get involved in one of the buzziest corners of the crypto market.The 8,000 square-foot space, which will be located at 135 Watts Street, is modeled after the eating clubs known as txokos of San Sebastian, Spain. Entry will require owning a so-called nonfungible token, or NFT—a kind of crypto asset being touted by everyone from Tom Brady to Melania Trump.
NFTs are digital tokens that act like certificates of authenticity for, and in some cases represent ownership of, assets that range from expensive illustrations of apes to collectibles like celebrity autographs and physical goods like a case of rare whisky. Increasingly, as is the case with Maxwell Tribeca, they operate as a kind of passport to rarefied spaces and experiences—access that in this case includes your own liquor lockers.The place will operate “like a house party. Instead of ordering a negroni at the bar, you go get your own gin from your locker and pour yourself a gin and tonic,” Litwak tells Bloomberg. “We're trying to create thousands of second homes, not third spaces, where people belong, and NFTs are a means to an end, he says. “Web3 often treats them like an end unto themselves,” he adds, referring to the the term popularized by venture capitalists to refer to online services that are built on the decentralized technology known as the blockchain.Maxwell Tribeca memberships start at $1,000 for shared liquor lockers; small liquor lockers will go for $5,000, and large liquor lockers $8,000; the monthly membership fee will be $250.
“Social symbols and social status has always been an important part of society and culture, I think NFTs just give us a different way to signal that as consumers and a different way to create exclusivity as a business owner,” says Nick Casares, head of product at PolyientX, a platform that provides tools to create rewards for NFT communities.Litwak, who already has another NFT club in the works in partnership with pro soccer player Kyle Martino, contends that a crypto-based membership makes the experience more accessible than more traditional mechanisms. Using NFTs as the cost of entry makes it “easier to democratize your fundraising base,” according to Litwak.
Buying and selling NFTs typically requires incurring transaction fees that can be a significant percentage of the sale, in addition to the complexity of needing to create and fund crypto accounts and wallets. Litwak intends to work around these issues by building an entirely new marketplace, called Maxwell Social, rather than relying on companies like OpenSea that act as a kind of EBay for NFTs. “OpenSea is great at selling art NFTs to the highest bidder, we want to sell membership NFTs to the right bidder,” Litwak says. “Communities curate on more than just finances. But OpenSea does not.”He said there will be no transaction fees for buyers, but there will be a 2.5% fee on membership resale. Nor will there be an end date for the sale of their NFTs: “We will sell them as long as we need to, to find the members for our social club.” Litwak says he is aiming for about 600 members.Litwak plans to provide a kind of concierge service to help would-be members get started with crypto and overcome any technical hurdles: “The minting will happen in person, in our space, at a designated event. This will streamline buying into the community and allow us to help them mint the NFT in person and resolve any wallet issues, crypto issues.”
But Maxwell Tribeca will have to fight for NFT-minded New Yorkers' attention, because there's also Flyfish Club, a high-end seafood experience. Flyfish Club is led by VCR Group, a hospitality and restaurant group whose partners include Gary Vaynerchuk, co-founder of online reservation system Resy.
Flyfish, which has plans to open in early 2023, has so far generated a bit north of $14 million through its original NFT launch during which members purchased tokens directly from their website. They've earned an additional $2 million in royalties from OpenSea, where some of the people who bought one of those original 1,501 NFTs have chosen to sell their tokens (and their associated memberships) on the secondary market. FlyFish receives 10% of proceeds of these sales. David Rodolitz, founder and chief executive officer of VCR Group, told Bloomberg there's been around $21 million total in secondary sales to date.
“Every single thing about what we are doing is the exact opposite of a typical membership,” he says. “Ours is a one-time purchase of the NFT which becomes an asset to the token holder, there is no reoccurring fee each year and that person is in control of their asset and can actually use it, or sell it or lease it.”
He emphasized that people who buy into Flyfish have the ability to monetize their membership, “which no other club in the world could do because you don't own anything. You are essentially just renting an experience from them.”
Litwak maintains that Maxwell Tribeca will be a very different experience from Flyfish.
“Gary [Vaynerchuk] raised $14 million, good for him, but he sold his memberships to the highest bidders. That club will likely be 90% crypto dudes,” says Litwak. “He's demonstrated the potential to raise capital. But it ignores why people care about a place to belong. [At Flyfish Club] anyone who can afford it can buy in, and then pretend it's a community.”
Despite recent volatility in the market for crypto assets, which has seen wild swings in the prices of tokens like Bitcoin and Ether, Rodolitz is unfazed. “We are not using NFTs as a form of speculative crypto investment strategy,” he says. “So whether Ethereum is up or down or left or right, it actually has no influence on our business model whatsoever.”Not everyone thinks New York's dining scene needs NFTs. “The tech behind the NFT makes some aspects easier: buying your token, trading your token, subleasing your token, providing proof of ownership, etc. But that's not new economics, those are just convenient features,” says Scott Heimendinger, the former chief innovation officer at sous vide device maker Anova and who was an early adopter of crowdfunding. Heimendinger also questions whether the prospect of spending time with people comfortable plunking down thousands of dollars in crypto would be attractive to most New Yorkers. As he put it, creating a community “might be a tall order if you're building a caviar clubhouse for the Kendall Roy crowd.”