What is the future of cryptocurrency in real estate?
Crypto has become unignorable. Bang or bust it has proven it will be a big deal. So, should you be accepting bitcoin? What are the dangers? Is the future a whole new type of digital wallet altogether?
It’s soaring, but the bears and government keep sounding the warnings. Here’s what we know…
Bitcoin’s Rise To Alternative Currency
In less than 12 months, bitcoin’s price has risen more than 100x. Of course, that also follows a 75% or more drop prior to that.
In early 2021, Bitcoin hit a market value of $1T. That’s just bitcoin. There are many other major and crazy cryptocurrencies behind that from Litecoin to Dogecoin. Despite the government’s complaints, that would probably make it ‘too big to fail’ by 2008 standards.
For years the one big threat to bitcoin has been potential regulation. Our new Treasury Secretary Janet Yellen has already spoken out against bitcoin in her first few days in office.
She has even poised rolling out a new digital currency in the next few years. Others are hoping for a global digital currency. One which is of course heavily regulated by the government instead of the private sector, and has the ability to pull in all of the capital otherwise floating around in cash, with big data on every transaction and payment that happens.
Still for now, demand is insatiable, though hyper speculative and manipulated. In 2020 bitcoin failed to separate itself from the performance of the wider public stock market. Some analysts now say that big company’s stock is directly tied to bitcoin prices, like Tesla. Many hope that will change. If not, it could be far riskier than imagined and provides no diversification for investors.
The New Normal
Bitcoin is now normal. It is now easier than ever to buy, sell and invest in bitcoin and make purchases. It is normal for everyone at all levels of society from minimum wage workers to billionaires. In some parts of the world, you can do everything in bitcoin. It is more widely accepted than the US dollar. Even some major US cities like Miami are proposing paying workers and collecting revenues in bitcoin.
Bitcoin In Real Estate
Bitcoin has been used in real estate for many years now.
It will soon be expected of real estate owners and landlords to accept it for rent and property sales. This is something every real estate business and investor should probably be working on making intuitive and convenient.
It does offer convenience for both sides. For investors it can help provide balance in the hyper growth potential and liquidity of crypto, with the hard tangible safety of real estate as an asset.
There are dangers. Most notably, that you can’t get it back or trace it once you send the money.
Looking ahead, the underlying blockchain technology is probably where the biggest transformations will come from. Most notably in the distributed instant ledger system for transactions, to speed up real estate and bring more confidence to consumers and investors. Secondly, once there is more confidence in the future of crypto and clarity on what government regulation looks like, the tokenization of real estate will likely take off. Like stocks this means more investing, liquidity, and demand, but also more volatility and risk. The big question is whether it will be differentiated and untethered from the public stock market, or at least for how long.