cryptocurrency

Forget the Metaverse, I Bought Real Land

In 1958, developers purchased 82,000 acres of barren land that was situated a hundred miles north of Los Angeles with a plan to build a sprawling metropolis for 400,000 future residents. As it instantly became the third largest city in California by land area, they chose an appropriately symbolic name, California City. It was a flop from the start. Although powerful marketing led to the sale of 50,000 lots by the early 1970s, the city only had a population of 1,300 people by 1969. That was bad enough that the Federal Trade Commission intervened in 1972 and forced a settlement that allowed thousands of landowners to get refunds. California City held on, however, and it’s now home to nearly 15,000 residents. It even has its own airport. But still, what it has become is still remarkably short of the original vision.

All of this history was something I breezed through right before I impulsively clicked a button on my screen asking me to confirm my purchase for a lot there. One click. That’s apparently all it took to become the newest member of a potential future neighborhood in California City, one that might not ever come to fruition. But how I found it in the first place is the real story. It appears that in the modern era this sleepy desert outpost has become a bit of an experimental laboratory for something relatively new in the real estate world, converting properties into NFTs.

Here’s how it’s done. A landowner places their property into an individual trust and ownership of that trust is governed by whomever owns the corresponding NFT on Ethereum. In effect, the owner of the trust would be defined by their ugly hex address, like this one for example: 0x64233eAa064ef0d54ff1A963933D0D2d46ab5829. It’s actually quite basic and it’s all made possible by a “proptech” company called Fabrica.

Founded in 2018 and backed by investors like Mark Cuban and Zain Jaffer, properties tokenized by Fabrica “can be traded instantly, used as collateral and are compatible with all NFT platforms,” the company states. “The product automates sales transactions, facilitating title transfer, payments and regulatory compliance.” Fabrica facilitates the on-ramping of your land into an NFT and even provides its own marketplace for buyers and sellers. That’s where I got mine. Interested parties can read up on a property’s on-chain history and even check the title. There’s also a cool little Google Earth-like animation that flies the user to their specific plot of land. The experience feels a lot like buying a plot of virtual land in a video game or the metaverse except this land is real. That means that sleek little NFT in your digital wallet comes with real responsibilities like property taxes, which Fabrica works to keep the owner informed about. It also means any and all liabilities of property ownership. The upside is that you can go and visit it in real life and even develop it. You can’t do that in a video game.

Although I’ve counted six properties in California City that are immediately identifiable as NFTs, it’s hardly the only place in the United States where this is being done. Properties available for sale as NFTs as of this writing include locations across Colorado, Arizona, New Mexico, San Bernardino-CA, and even Orange, New York. Some are very remote and speculative, while others are a part of normal civilization and priced accordingly. Buyer beware of course given the serious nature of these assets.

Perhaps one of the biggest obstacles to understanding how this is all possible is the widespread misconception of what NFTs are. Most of the American population lives under the mistaken impression that NFTs are cartoon art pictures like Bored Apes or CryptoPunks that were all the rage in 2021 and to some extent are still popular in niche circles, but almost anything can be tokenized. More recently, for example, domain names are being converted into NFTs to facilitate faster sales and quicker payouts. The same is true now here with land. Not only can land ownership change hands in the blink of an eye by transferring the NFT but one can also easily tap into the value by pledging it on a peer-to-peer NFT loan marketplace like NFTfi. Fabrica officially announced a partnership with NFTfi this past December, for example. The possibilities are endless

For the perpetual skeptics of all things blockchain that are convinced real business will only ever be done in the real world, a visualization of an NFT on a crypto wallet app might not be all that convincing, especially if the icon for it is situated right next to one of those expensive monkey pictures that kids wouldn’t shut up about years ago. The proof then is in the adventure. With a drive of less than two hours from Downtown Los Angeles, there’s a little plot of land on a quiet street known as Yerba Boulevard. It’s covered in weeds and reddish soil. Empty plains make up most of the backdrop but the suburbs are very slowly creeping their way there. In fact, I’ve since learned who my neighbor is across the street. It’s a 26,000 square foot cannabis facility that was just built in 2022. I bet the owners would be into NFTs (😂). Since that facility is up for sale, numerous 3D surrounding views exist of my plot. Turns out I can even walk to the airport. It’s not much but it’s home to me and all I could afford for the purpose of this story and learning what it was all about. Maybe those 400,000 planned residents will eventually want my land and it’ll make me a millionaire. Ah the allure of California City.