# Why We Use NFTs

### 🧾 **Why NFTs Instead of Fungible Tokens?**

When tokenizing real estate, one of the most important decisions is **how to represent ownership on the blockchain**: should you use **fungible tokens (like ERC-20)**, or **non-fungible tokens (NFTs, like ERC-721 or ERC-1155)**?

At PropertyDEX, we chose to use **NFTs**—and here’s why.

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#### 🔄 **Fungible Tokens vs NFTs: What’s the Difference?**

* **Fungible Tokens (ERC-20)**: These are interchangeable and identical tokens. One token is the same as any other, like dollars or Bitcoin.
* **Non-Fungible Tokens (NFTs)**: Each token is **unique** and carries its own metadata. It can represent a specific share of a property, including individual rights and attributes.

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#### 🧠 **Why NFTs Are Better for Real Estate**

**1. 🎯 Each Property Share is Unique**

Every NFT can represent:

* A specific unit or fraction of a property
* Unique metadata (e.g. floor number, rental terms, ownership timestamp)
* Specific rights (e.g. right to revenue, access, governance)

This makes it easy to **track, assign, and verify ownership**, especially in a legal context.

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**2. ⚖️ Regulatory Flexibility**

Fungible tokens (like ERC-20) can easily be interpreted as **securities**, which often triggers complex regulatory obligations (e.g., SEC rules, MiFID II).

NFTs, on the other hand:

* Represent **unique, utility-based assets**
* Can be designed to **avoid characteristics of financial instruments**
* Are more often treated as **digital collectibles or certificates of ownership**

This makes NFTs a **safer and more compliant choice**, especially in early-stage and cross-border projects.

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**3. 🔧 Customizable Rights and Logic**

With NFTs, you can **encode flexible rights** into each token, such as:

* Revenue-sharing ratios
* Governance voting power
* Usage rights or access to data
* Priority in rental income or dividends

This is much harder to achieve with fungible tokens, where every unit is identical and lacks metadata.

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**4. 🔍 Improved Transparency and Auditability**

NFTs offer **better traceability**:

* Each transfer, owner, and interaction is uniquely recorded
* You can always track who owns what, and when they bought it
* Ideal for audits, dispute resolution, and trustless verification

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#### 🏆 **Conclusion: NFTs Fit Real Estate Like a Glove**

Real estate is **naturally non-fungible**—each property is different, and even shares of the same property may have different conditions. NFTs mirror this structure perfectly, enabling **real, enforceable, customizable ownership** that can be managed entirely on-chain.

For this reason, PropertyDEX uses NFTs as the foundation for fractional property investment.
