All Forum Posts by: Jerry Shen

Originally posted by @Erik W.:

Jerry, you're a bigger fish in a bigger pond that I am if you're hanging onto $1 M+ in bit coin.  Given your considerable net worth, I'm a little surprised you're asking for advice on how to close a deal involving over 7 figures in crypto currency....but I guess we all have our blind spots.   I wish I had some helpful advice for you on this, but I'm outclassed in this discussion.  Best wishes on finding someone to help transact this deal.  

Well that's part of the problem Erik. All of the financial experts I've spoken to know less about bitcoin and crypto than many teenagers who are dabbling in it. Believe it or not I've gotten more information out of this thread already than I've gotten from some very expensive wealth planners. That's the nature of disruptive technology I suppose.

And I don't think the actual amount of the transaction is really relevant so I wouldn't say you are outclassed. Even if there was someone who has done something similar for 1BTC I would love to know how and with whom.

Originally posted by @Erik W.:

Selling $1 M would "move" the market?  According to blockchain.com, the total market value of all bit coins in circulation is over $280 Billion.  The market "sees" hundreds of millions transacted daily.  No offense, but anyone who claims a sale of $1 M of anything makes a noticeable impact in a market worth $280 B does not understand how large markets work.  Btw, I'm not a fan of bit coin or any kind of crypto currency.  Not into speculating.  I have no dog in this fight other than I simply understand ratios.  1 M out of 281,000 M is nothing...not even 1/3 of 1%.  

So I think you'll be safe to liquidate, if desired, and buy the real estate using good old USD.  Unless the Seller is certifiably insane, they'll add a clause to the contract that the bit coin will be assessed at the time of closing and the present value applied toward the total purchase price that is denominated in USD or some other currency.  I don't know of any title agency that would handle a closing like that since you wouldn't know the amount of funds needed to bring to the table until the minute you do the signatures....but maybe you can find one.  This "investment" can pop and drop any time for the least foreseeable event.  If there's one thing everyone agrees on, it's that crypto currency is volatile.  One hack...value drops 30% in 10 minutes....pray that doesn't happen on your way to the closing table because you'll need another $300,000 USD to cover your purchase (if we're talking $1 Million).  The other side...even worse perhaps, is the two hours after you buy the real estate, the coin doubles in values, meaning overpaid by 100% for the real estate.

I've addressed this the $1M is hypothetical the actual amount is more than that. And yes you can move the market with just $1M. As you said bitcoin is volatile that means small things can swing the pendulum in unpredictable ways. Exchanges are not connected so all you need to do is move the price on one particular exchange, you don't have to move the entire market. And spreading across multiple exchanges would mean I get eaten up by fees.

I've addressed your second paragraph in prior posts but tldr is that I am executing a particular hedging strategy and want to maximize my return based on that strategy. 

Originally posted by @Karen Margrave:

@Jerry Shen why when bitcoins doing so well for you do you want to buy real estate? What type of real estate are you looking for, and where? It seems like there should be sellers that would be willing to take their equity or at least a portion of it in trade for bitcoin. Is it possible to transfer Bitcoin to someone else, or does it need to be liquidated? What was your initial investment into bitcoin (if you don't mind sharing, and how long were you invested?) There's been some posts recently discussing the issue, so I'm curious. 

I want to buy real estate to rebalance my portfolio. As to how much I put in I originally put in exactly 4% of my net worth in March. In 8 months it's appreciated 2000% so now it's about 43% of my net worth (much more than I have in RE at the moment) so I'm looking to diversify out without sacrificing gains. In investing that's typically done by exchanging one asset for another rather than using cash as an intermediary (which would require you to time the market perfectly).

Originally posted by @Nathan Poole:

@Jerry Shen Thanks for that reply I've heard from a lot of people that are feeling the same way. 

Do you have any recommendations on how to hold my liquid assets? Currently I am holding mutual funds and EFTs but I was under the impression that, when expecting a downturn, or correction, something less volatile might be more appropriate. Thoughts?

I wouldn't recommend others do the same but I'm holding the vast majority of my liquid capital in Bitcoin. I explain why here: https://www.biggerpockets.com/forums/50/topics/517...

TLDR on that post: If you don't want to hold cash (I don't blame you) you want something that is disconnected from the real estate markets. Right now cryptocurrency is the only asset that has this property. But of course, it's very volatile.

Robert is correct that gold/silver does to a certain extent as well but it's facing a lot of pressure from bitcoin as a primary store of value right now.

I think it's ironic that the so-called experts that are calling bubble on bitcoin are the same ones that purposely create bubbles to enrich themselves and leave taxpayers holding the bag. Bitcoin is probably a bubble (which is why I'm long term bullish but not trying to make short term profit) but so was the internet in 1995, that doesn't mean when the bubble crashed the internet had no value. The only difference with bitcoin is that this particular bubble is outside of their control, as it's completely open source, transparent and decentralized. Not the best asset class for Wall Street to fleece the public on =)

Originally posted by @Matt Brechting:

Curious. With what you are planning to do are you going to write your offer in bitcoin? If that’s the case then I see no problem with it. How mad will you be if you write the offer and it’s accepted at the equivalent of 100k and by the time you close it is worth the equivalent of 150k?

No I would write the offer in cash and put the down payment in the equivalent exchange rate at closing to the seller (if all cash purchase) or bank (if financed). The volatility of bitcoin is not a factor at all (except in the 30 mins or so it takes to get the bitcoin transaction confirmed on the blockchain and exchanged for USD I guess). I tried saying this in previous posts but maybe did not make it super clear.

Originally posted by @James Green:

@Jerry Shen how much higher are you "prognosticating" that bitcoin will go up? If you sell some now, will that be liquidating all your holdings? It's no different than those who hold stocks, then need to liquidate to purchase items. Yes they "may" lose some potential future value, but cash in hand for a needed purchase is better than holding on & the market tanks just before you need the money.

As a side note, the real true investment is in the underlying technology, block-chain, not in the crypto-currency of the month. There plenty of industries that are now seeing the value of block-chain. IMHO bitcoin has lost its earlier years luster of being able to purchase "real items" in the "real world". At $16K a coin, what can you purchase? Whose going to accept .0001875 of a bitcoin for a grande at Starbucks? I do remember the days when I could of harvested the coins, but I had a Win98 machine hooked up to a dial-up modem. DSL was not in my area yet, but I did have the software downloaded to do it. I just thought it was a little fad for nerds at the time.

I'm not prognosticating a particular price, I'm hedging against the entire financial market. Crypto is the only asset that is completely disconnected from the existing financial system. So my investment thesis is that during the next crash (which is likely soon), RE will be at its lowest while crypto is at its highest. So to maximize my returns I need to hold the crypto as long as possible. I could be wrong, but the only way to make lots of money is to make educated bets and execute them. So that's what I'm trying to do.

I will never sell my entire bitcoin holdings because I am long term bullish on the technology. I think crypto is where internet was in 1995, a lot of what people on this thread are saying about crypto you can replace with "internet" in 1995. That's part of why I still think it's a great time to get in because most people who are not in technology are very skeptical but there is clear underlying value.

As for bitcoin vs blockchain I think there is value in both, but other applications built on the blockchain are largely unproven so I don't invest in any of them. And bitcoin hasn't been a currency for years. The current price of bitcoin is based on its perceived value as a store of value vis a vis gold. And I think it will be difficult for any other crypto to displace bitcoin for this particular function simply because bitcoin's security has been constantly attacked and hardened for 10 years. It also has the largest market cap so it's too large for 51% attacks even by nation states. Those are significant network effects and technology maturity factors that will make it very difficult for a crypto to supplant bitcoin as essentially the global reserve cryptocurrency. There will most likely be other cryptos that serve other functions but I would be very surprised to see anyone take this over from bitcoin (not is anyone else really contending).

Wow not really trying to make this thread about the virtues of crypto I don’t know if it will work out or not of course it is speculative and you are right it is not a currency but that's been well understood for years its a store of value. Michael Diggs you may be right but your reasons show a fundamental lack of understanding of crypto and how it works. I don’t even think you understand what inflation and deflation are. Dollars are not inflationary because you can subdivide into cents they are inflationary because the federal reserve prints unlimited amounts whenever there is a recession which dilutes your buying power. Bitcoin’s final supply has been fixed since day one. And as for Jamie Dimon prices have doubled since he made his proclamation and his own traders are trading bitcoin futures so I wouldn't put too much stock in what he says. As to why buy real estate at all its for diversification. A huge chunk of my net worth is in bitcoin and I think I mentioned this before but I am a real estate investor I have several large commercial properties already. Just because I am bullish on bitcoin doesn’t mean I’m going to put all my eggs in that basket. I want to pull out some of my gains into more stable investments. I don’t think SALT lending (or other block chain based lending platforms) are ready for prime time or ready to support large real estate purchases yet. I certainly don’t want to be the first to try :-) If someone can show me a large real estate loan (> $10M) on the platform that hasn't blown up I'll take a look. But in general I don't trust the new applications that have been built on top of the blockchain there are a lot of frauds and security holes. And to everyone who says to exchange it on coinbase, the reason I don't want to do that upfront is because I have a very specific investment thesis I am trying to execute. I believe that we are headed for a real estate crash and I want to be ready for it, but I don't want to hold cash unless I need to. I think the next crash will spook a lot of investors into putting money into cryptocurrencies because it's the first publicly available asset class that you can use to hedge against the ENTIRE existing financial system. So I am trying to time it so that I can buy RE at it's bottom when crypto is at its peak. I may be right I may be wrong but the only way to really beat markets is to make a bet and go for it. That's why I need a way to buy RE with crypto one way or the other. Hope that makes sense.

@michael Diggs What does ransomware have to do with money laundering? Either way there is far more cash used for both purposes than cryptocurrency do you think the government hates cash?

I already invest in real estate I have an office and a mall. Thanks for everyone’s suggestions I guess I am a bit ahead of the times. And just to state again I am aware that selling 1M in bitcoin won’t move the market I just used that as a hypothetical number I don’t want to reveal how much I am selling but it’s much more than that. And just to clarify I am not looking to settle in bitcoin so the volatility of BTC/USD is not an issue I would pay whatever BTC is required to get to the USD value at close.