CryptoCurrency & Real Estate? Possible Future?

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CryptoCurrency & Real Estate? Possible Future?

Karolis Braciulis
Member since 2021 · 3 posts · 5 votes

The global real estate market is expected to grow from $2,687.5 billion in 2020 to $2,774.5 billion in 2021 at a compound annual growth rate of 3%. The transfer of wealth that occurs throughout real estate is unmatched, but it still operates in a very traditional way.

Cryptocurrency and the blockchain they operate on offer a solution to the traditional real estate market. The infrastructure to be able to purchase real estate already exists and there have already been completed transactions. For example, in 2017 a buyer purchased a single-family home in Texas using Bitcoin. There was also another use of Bitcoin to buy property on Lake Tahoe for 1.6 million. Many out of country investors are also very interested in utilizing such virtual currencies to diversify their holdings in United States real property.

So, therefore, yes you can use cryptocurrencies to invest in real estate, but why do more people not use it? One of the big downsides to cryptocurrencies is they are still very new. It is a new form of technology and a recent study in the U.S showed that about only 1 in 10 people understand how they work, while 29% have some knowledge about them. 81% of people have never purchased any and 35% believe they are a fad that are not worth bothering with. Based on those statistics alone it is easy to understand why they are not being more utilized in real estate transactions. For every real estate transaction, every buyer needs a seller, and the buyer and seller must be willing to transact using cryptocurrency. Those statistics alone make that seem very unlikely, but it seems in due time that will change. As many large institutions including Paypal, Grayscale, and MicroStrategy continue to pile into the space, widespread adoption keeps nearing.

As the market becomes more comfortable with the idea of virtual currencies in real estate, finding both sellers and buyers should be theoretically easier. Additionally, it is also likely the niche will develop around only a few central currencies, with the main one being Bitcoin which is seen as the digital version of gold. At the rate it is growing; one day in the future, you may be walking down the street and see a “Bitcoin Accepted” on the For Sale sign in your neighbor’s front yard.

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Alvin Sylvain
Los Angeles · Member since 2018 · 464 posts · 471 votes
5y

First of all, you say that Cryptocurrency offers a "solution", but there is no mention of what exactly is the problem being solved.

Cryptocurrency as an exchange medium is here to stay, there is no doubt of that. But then, so is gold and silver.

But do you really want to be in the group of far-sighted individuals who find out where the landmines are the hard way? I'm not trying to be a Luddite here, just warning that there are known and unknown pitfalls and somebody still has to fall into them.

Bitcoin in particular has a number of problems that make its use as a currency problematic. As mentioned earlier, its value measured in other currencies can fluctuate wildly in a short period of time. That's great if you buy something for a 100 dollar bill that only cost you $50, but how would you feel if the reverse happened?

Further, it may sound great on paper that the quantity of Bitcoin can not be increased, but the pragmatic reality is that, as we get closer to that max quantity, the time and expense of "mining" the next coin takes longer and costs more. There is no transaction fee in handing over a suitcase full of USD which takes place instantly. That can not be said for Bitcoin. There is a known, predictable transaction fee paying with loans or credit cards. Again, that can not be said for Bitcoin.

There are competing cryptos that seek to resolve these problems. But as far as I'm concerned, cryptos in general and Bitcoin in particular are not real solutions to any real problem. For me, I'll wait and let the rest of you explode the landmines.

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  • Eugene Lavatman
    Property Manager · NY · Member since 2019 · 19 posts · 8 votes
    5y

    Major disruptions coming our way! Rent payments via Stablecoin (maybe Diem.com?), real time payment transactions, no waiting 4 - 5 days for ACH to process, no 2.99% processing fee like credit cards. 

    2Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    5y

    With blockfi crypto program you can get loan for a rehab
    https://blockfi.com/home-loans

    4Reply
  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    5y

    but why do more people not use it?

    1) Buyer and seller have to both agree on using BTC

    2) Value can swing from 50% to double in a brief period

    3) 2) means if it goes up double then house price has doubled (or halved) in terms of dollars without an adjust, how would a buyer/seller feel

    I guess Blockchain as a means of communicating transactional info is a good idea, so that's one positive result of BTC.

    3Reply
  • Cooper Raines
    Real Estate Agent · CO · Member since 2020 · 29 posts · 18 votes
    5y

    The tokenization of real estate is another very interesting idea. I've seen a few projects that have done it, the St. Regis Aspen Colorado Resort being one of them. They essentially tokenized the equity and then sold the tokens to raise capital, very cool project that I could see becoming more commonplace. With REITs you typically are investing in large pools of real estate holdings whereas with this tokenization concept you can invest in singular projects while retaining liquidity.

    6Reply
  • Alvin Sylvain
    Los Angeles · Member since 2018 · 464 posts · 471 votes
    5y

    First of all, you say that Cryptocurrency offers a "solution", but there is no mention of what exactly is the problem being solved.

    Cryptocurrency as an exchange medium is here to stay, there is no doubt of that. But then, so is gold and silver.

    But do you really want to be in the group of far-sighted individuals who find out where the landmines are the hard way? I'm not trying to be a Luddite here, just warning that there are known and unknown pitfalls and somebody still has to fall into them.

    Bitcoin in particular has a number of problems that make its use as a currency problematic. As mentioned earlier, its value measured in other currencies can fluctuate wildly in a short period of time. That's great if you buy something for a 100 dollar bill that only cost you $50, but how would you feel if the reverse happened?

    Further, it may sound great on paper that the quantity of Bitcoin can not be increased, but the pragmatic reality is that, as we get closer to that max quantity, the time and expense of "mining" the next coin takes longer and costs more. There is no transaction fee in handing over a suitcase full of USD which takes place instantly. That can not be said for Bitcoin. There is a known, predictable transaction fee paying with loans or credit cards. Again, that can not be said for Bitcoin.

    There are competing cryptos that seek to resolve these problems. But as far as I'm concerned, cryptos in general and Bitcoin in particular are not real solutions to any real problem. For me, I'll wait and let the rest of you explode the landmines.

    8Reply
  • Mike Wadsley
    Real Estate Agent · Littleton, CO · Member since 2014 · 74 posts · 45 votes
    5y

    Steve is absolutely correct. The volatility in the price of crypto makes it prohibitive in providing a fixed bid offer on a property that can take at least a few weeks to close. Take for example the cost of bitcoin the past week has gone up over 14%. In this case, the buyer is going to pay more for the property than the original bid. You would have to bid in US dollars and agree to transact at whatever the appropriate price at a specific point in time would be. The logistics would be maddening.

    3Reply
  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    5y
    Originally posted by @Alvin Sylvain:

    There are competing cryptos that seek to resolve these problems. But as far as I'm concerned, cryptos in general and Bitcoin in particular are not real solutions to any real problem. For me, I'll wait and let the rest of you explode the landmines.

    Well, addresses a couple of things which I'm sure Congress will have a investigation on (like they can stop it):

    1) Makes criminal activity easier.  Traceability on a transaction sucks

    2) Make tax accounting much simpler as in non-existent.  That's what they used large denomination currency for, but now India doesn't even issue large (I think like >$50) bills any more exactly for tax collections.

    Brave new world.

    0Reply
  • Bishara M.
    Investor · TX · Member since 2020 · 23 posts · 13 votes
    5y

    Hello All,

    I am currently a Real Estate (beginner) and crypto investor, been studying the field for some time now, STILL learning a lot every single day. The depth of it is insane! There is a HUGE difference between blockchain and "BTC" as mentioned above.

    Blockchain in simple words, is a method by which data (including coins) are transferred from one person to another, with holding the transaction's anonymity, a LOT quicker and faster way as well. FYI; its already been deployed in some healthcare systems, where the Doctor send the patient's data and information WITHOUT any marketing entity or any other spoofing on it.

    When we talk about the cryptocurrencies, including BTC,ETH ...etc., yes they fluctuate in value, BUT there are stable coins where the value is STABLE and can be a great way to trasnfer value ($$$) from buyer to seller.

    And yes, Cryptocurrencies use blockchain technology for the transactions.

    Blockchain technology can eventually be used in Real Estate to skip SO MANY wait "hurdles" and to close a LOT FASTER (as fast as minutes).

    Happy Investing Y'all.

    4Reply
  • Levi T.Pro Member
    Rental Property Investor · Tucson AZ / Nice FR / Washington DC · Member since 2016 · 1k+ posts · 1k+ votes
    5y

    @Alvin Sylvain is 100% right. What problem is blockchain solving for real estate? Real estate does not have a lot of problems. You can buy and sell it with a single peace of paper, but what does become complicated is title insurances, which blockchain does not resolve, as only a human can pickup the phone and call creditors, search for debt, and clean the title of all its encombrements. Blockchain does not resolve that.

    Mainstream real estate will never adopt blockchain because a transfer mechanism, as long as we have the issue with lost private keys. That will never change, because it’s at the heart of what blockchain does. Just imagine your title work locked away, never to let you or a bank to be able to claim their assets under the law. It’s a freaking nightmare, with long lasting legal issues.

    Unless someone wants to be paid with BTC, all we would be doing is transferring to another asset class. Same goes with someone that owns BTC. The only upshot I see is a possible crypto 1031 into a type of DST, but that does not legally exist yet.

    I find people go through logic process when they come in contact with crypto for the first time, and slowly dig through it all and arrive back at the beginning on what is, stored value. At first it sounds like it solves all transaction problems, I know I’ve been there, moved on, and came back around a few times. I don’t recall what year I got into crypto, but BTC was a few hundred per coin back then. I have invested in alt coins, etc, and watch them all come and go. It’s been a fun ride, but at the end of the day, it’s just another asset class. Blockchain itself it great for insuring single transactions across books from entity to entity, and as long as double spend never happens, it’s here to stay as a value store, but I don’t see it ever becomes the big player people think it will be in term of the payments. Even the banks decided to it was better to create their own private chain vs using a public one. Thus I think we have already arrived at it’s true value, which is once again just another asset to invest in.

    1Reply
  • Karl Eisenhofer
    Rental Property Investor · Massachusetts and Maine · Member since 2020 · 18 posts · 18 votes
    5y

    @LeviT

    Never is a big word.

    3Reply
  • Trevor Kelly
    Member since 2020 · 4 posts · 3 votes
    5y

    I have been doing my research and while I am new to studying Crypto and Blockchain, I see the opportunities. I don't see Crypto as a currency rather a method of preserving wealth.  I see Bitcoin as like "digital land" there is a finite supply. Therefore, as more people begin to understand the benefits of Bitcoin, more people are going to get on board. True, it is very volatile, true only a small percentage of the population understand crypto currencies.  I see Crypto as the same way that Google, Facebook and Amazon and Apple were in their early days. People thought it was a fad people did not think it would last yet here we are.  Google is an information platform, Facebook is a social platform and Amazon is a retail platform. Apple?... Well we all know where they are .  They have all survived other companies trying to duplicate them.  Also, take into account that institutional investors are taking a serious look at this and getting in. Look at the opportunities that this provides to individuals who are tired of the banking system as it is.  Also another thing to consider is the amount of money that the central banks are creating.  They will just print more and that means the value of a dollar will erode.  Like I said I am new to Crypto and I am learning. Take a look at Michael Saylor, he invested in the Googles, Apples and Facebooks etc when they were in their infancy. I think he has done well to say the least. He sees the same potential in Crypto.  There is are some great interviews on YT and he has a great way of breaking things down so that everyone can understand. Just my 2.5cents 

    3Reply
  • Trudy Pachon
    Investor · San Diego, CA · Member since 2015 · 89 posts · 89 votes
    5y

    I just recently rediscovered Bitcoin and crypto. Had an acquaintance that tried to sell me on it in 2016, but I didn't get it then. Wish I had listened then, but I get it now. It's been quite a ride!

    Tokenization of assets sounds interesting to me. NFTs (non-fungible tokens) are something that I'm trying to learn more about. We've created a few on Rarible, but it seems like there is a lot you could do with this method of insuring validity to an item. 

    There is a fun little sandbox I've been playing in called Decentraland which deals with virtual land/real estate/stuff. Some really smart folks are doing really innovative things in the space. If blockchain technology is more widely adopted, it will be interesting to see how these two asset classes find ways to interact in the real world

    2Reply
  • Eric Carr
    Real Estate Broker · Los Angeles, CA · Member since 2017 · 655 posts · 293 votes
    5y

    Yes, there will be more ways than a few. 

    I've had threads over the years, the haters came out, but more, like Elon Musk, are getting in. 

    It is just a matter of time 

    0Reply
  • Account Closed
    Specialist · Charlotte North Carolina · Member since 2020 · 112 posts · 66 votes
    5y

    I saw a multifamily property be purchased for 1.2 million in bitcoin in 2016 roughly around $2,500 per coin.....

    Etheirum would be the most promising platform for integrating in the real estate market as it is an open-source, blockchain-based, decentralized software platform used for its own cryptocurrency, ether. It enables smart contracts and Distributed Applications (ĐApps) to be built and run without any downtime, fraud, control, or interference from a third party.
    This can have many applications for the operations and sales transaction of real estate and provides the flexibility REI's need as well.

    3Reply
  • Alvin Sylvain
    Los Angeles · Member since 2018 · 464 posts · 471 votes
    5y
    Originally posted by @Eric Carr:

    Yes, there will be more ways than a few. 

    I've had threads over the years, the haters came out, but more, like Elon Musk, are getting in. 

    I'm just curious about today's trend where somebody with a different opinion is automatically labeled "hater" ?

    0Reply
  • Tyler Sample
    Investor · San Antonio, TX · Member since 2015 · 82 posts · 15 votes
    5y

    Could somebody please point me in the right direction or give me articles/videos they are willing to share that I can start learning about cryptocurrency? This is all very interesting.

    1Reply
  • Trudy Pachon
    Investor · San Diego, CA · Member since 2015 · 89 posts · 89 votes
    5y

    @Tyler Sample

    There are a couple of places that I trust, but there are also a lot of scammy pump and dump type channels as well. It's a bit of the wild west. Start with the Bitcoin White Paper by Satoshi Nakamoto. It's the holy grail of blockchain. Try to understand the problem Bitcoin was trying to solve and how it solves it. It's a beautiful thing! 

    I like DAN teaches crypto. Rob is a cool guy and his website has a helpful free course. Ivan on Tech can be helpful, but I would be careful with any "advice" on altcoins from any of these folks until you learn the basics. I think the space can be easily manipulated by Youtubers "suggesting" this or that coin to pump the price up and then they dump. Anyway, it's a start. Be very careful, but it's a great space for high returns right now. High risk = high reward

    2Reply
  • Bishara M.
    Investor · TX · Member since 2020 · 23 posts · 13 votes
    5y
    Originally posted by @Trudy Pachon:

    @Tyler Sample

    There are a couple of places that I trust, but there are also a lot of scammy pump and dump type channels as well. It's a bit of the wild west. Start with the Bitcoin White Paper by Satoshi Nakamoto. It's the holy grail of blockchain. Try to understand the problem Bitcoin was trying to solve and how it solves it. It's a beautiful thing! 

    I like DAN teaches crypto. Rob is a cool guy and his website has a helpful free course. Ivan on Tech can be helpful, but I would be careful with any "advice" on altcoins from any of these folks until you learn the basics. I think the space can be easily manipulated by Youtubers "suggesting" this or that coin to pump the price up and then they dump. Anyway, it's a start. Be very careful, but it's a great space for high returns right now. High risk = high reward

    @Trudy Pachon any suggestions for the NFTs I really want to get some knowledge about this subject. I've been reading about it for a while, got me some Decentraland tokens some while back (coolest virtual Real Estate I've seen so far), but need more formal education on it. 

    0Reply
  • Eric Carr
    Real Estate Broker · Los Angeles, CA · Member since 2017 · 655 posts · 293 votes
    5y

    @Alvin Sylvain

    Where did I say it came down to simply a difference of opinion? A difference of opinion is an informed but opposite thought process, which in my book, is the definition of a good debate. What I am talking about, is not that at all. But uninformed, emotional, bias. 

    0Reply
  • Account Closed
    New to Real Estate · Naples, FL · Member since 2020 · 8 posts · 3 votes
    5y

    Hey @Karolis Braciulis

    Thanks for sharing this post! I would say that one of the major downsides of cryptocurrencies at the moment is their rate of change in volatility level. The reason why the U.S dollar is the reserve currency for many countries around the world is because of its stability. It stays "relatively constant" in its rate of inflation and value. Therefore, buyers and sellers in the marketplace have a sense of security when making their investments in U.S Dollars. Contrary to this trust would be the immense volatility we see in crypto markets, especially in bitcoin, ethereum, and litecoin. There would need to be more consistency in these crypto's values before increasing the volume of important investments made with them. All the best and thanks again for sharing. 

    1Reply
  • Eric Bilderback
    Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes
    5y

    I think one of the major barriers other then instability is people still buy real estate in dollars so I need dollars back to pay the bank and I need dollars from tenets.  I doubt my tenants would pay me crypto for rent.  That will take some time but the dollar is looking shakier and shakier.  

    0Reply
  • Justin Thorpe
    Member since 2020 · 437 posts · 675 votes
    5y

    @Karolis Braciulis

    I will say this that crypto as a payments mechanism has not come of age. There are too many technical challenges. The blockchain is too far away from being scalable to match the speed and agility of conventional payment system.

    As a speculative stored value asset however it is doing very well. I am speaking specifically for Bitcoin. The blockchain in theory should overtime remove many middlemen and enable smart contracts that will enable a more speedy transaction between the buyer and the seller.

    That said even as we speak the true Peer to Peer version on crypto as was envisioned by Satoshi still is only usable by a select few. 99% of people access Bitcoin through exchanges and then you have to worry about the transaction costs as well as the on-ramp and off ramp costs to and from fiat currencies..

    0Reply
  • Alvin Sylvain
    Los Angeles · Member since 2018 · 464 posts · 471 votes
    5y
    Originally posted by @Eric Carr:

    @Alvin Sylvain

    Where did I say it came down to simply a difference of opinion? A difference of opinion is an informed but opposite thought process, which in my book, is the definition of a good debate. What I am talking about, is not that at all. But uninformed, emotional, bias. 

    You said, "I've had threads over the years, the haters came out, but more, like Elon Musk, are getting in."

    In other words, you dismissed a whole class of people who disagree with you as those with hatred. They stab puppies with letter openers and mix salt in the sugar bowl. But apparently, Elon Musk agrees with you, no hatred there, he's a Good Guy.

    Make no mistake, of course many people have uninformed opinions. Of course many people have well-researched opinions. Many highly educated and studious people disagree on millions of topics. On a scale of 1 to 10, some people are L. What can be done? I think maybe we can at least try to rise above the name-calling.

    0Reply
  • Eric Carr
    Real Estate Broker · Los Angeles, CA · Member since 2017 · 655 posts · 293 votes
    5y

    Uh.. I was talking about the haters. Just those. Never mentioned anything about anyone with a different opinion. Sounds like you are taking it personal and turning it into something it isnt.  

    But thinking back, I cant think of ANYONE who had a good argument, with facts, to back up their opinion. That's pretty well on the side of hating. 

    For someone to say, "I dont understand it, so Im not buiyng," is one thing. And only a few at most had said that. The rest, oh boy... Name calling? It's more of an adjective. Now we should rise above it? Because you are so awesome? It's one thing to disagree using actual facts. It's entirely different just to disagree using talking head rhetoric. Anything can happen. But so many have charged out to proclaim their opinion, without a factual basis to stand on. That's a hater. 

    0Reply
  • Eric Carr
    Real Estate Broker · Los Angeles, CA · Member since 2017 · 655 posts · 293 votes
    5y

    I want to point out on thing about the volatility. 

    It's the price you pay for 230% average gains, every year, for the last 10 years. 

    And with the market cap rising, and stronger hands entering the game, volatility will level out. In fact, for several months ending 2020, maybe still even now, bank stocks were more volatile than BTC. 

    Block chain also has he potential to replace escrow services. Title. And more will come. 

    @Alvin Sylvain said there's no fee to bring a suitcase of cash to a trading table, but A. good luck pulling out hundreds of thousands of dollars in cash from your bank. B. having the bank just hand you your loan in cash (also has costs in origination and interest), and C. driving or flying to another state to make the purchase, without paying travel costs and the cost of time. 

    1Reply
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