CryptoCurrency & Real Estate? Possible Future?

[Karolis Braciulis]

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.

[Alvin Sylvain]

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.