Real Estate to Bitcoin Investing - Easy change?

Question

The value of bitcoin has skyrocketed, has anyone here cashed out yet for REI purposes? It seems ironic to use a highly volatile currency to fund a sometimes volatile industry. As real estate investors, do you find the crossover to currency/cryptocurrency trading is easy? Do they share many similarities? I would like to get more into Cryptocurrency investment myself.

Joe Splitrock · Answer

The major difference between real estate and bitcoin is a real world need. Real estate covers two of the basic human needs, shelter and food (land is used for farming and food production).

Bitcoin is a currency created with simulated scarcity built in. It is not backed by any government and is not freely exchanged directly for basic human needs. You have to sell bitcoin and pay taxes, then with the remaining money you can purchase real estate.

Supply and demand governs the value of both bitcoin and real estate. The demand on bitcoin has been fueled by speculation and media hype. Real estate values are also fueled by speculation and hype, but the underlying physical asset is also of value. The danger with bitcoin is that the there is no underlying physical asset. Bitcoin could be replaced with a different crypto currency and the value could drop to nothing. If bitcoin is hacked and compromised, it would have a catastrophic effect and there is no government bail out program to help on that crash.

Early investors have started exiting crypto currency. They are in the media telling everyone it could go up 1000% more, which is their attempt to build hype and increase the value as they plan their exit.

The founder of Litecoin just cashed out after a 9300% run up in value. He claims that he cashed out due to a conflict of interest, which is laughable. He is a smart guy. Everyone knows when a CEO sells shares all the shares in his company, it is hardly a vote of confidence in the future.

I agree there are parallels to real estate from a supply/demand, hype and bubble perspective. That is true of anything, even tulips. Real estate has an underlying physical asset and cash flow pays you while you own it. Real estate is government supported and protected. Bitcoin is purely speculation and you only make money when you sell.

Jared Forman · Answer

@Tyrel McAllister I have been active in both and could not advise you on your personal investment decisions...

My personal philosophy is that you must understand the cryptocurrency/ blockchain to invest in it. If you do not understand it then you are gambleing on others people.  I myself do invest in cryptocurrency, but believe in the future of it.

The price of bitcoin is rising/ falling because:

1. People think they can day trade it

2. whales

3. People get the heebie jeebies about the prices

4. The value of countries currencies

Vince DeCrow · Answer

@Tyrel McAllister The crossover from currency/cryptocurrency is made very easy by certain exchanges and websites that are out there today. The ease of trade is part of the reason for the skyrocketing prices.

Chris Moore · Answer

Congrats, but we are having different conversations. Using blockchain tech for your contract has nothing to do with investing IN Cryptos or Real Estate.  Again, I am addressing the original question of differences/similarities investing IN Real Estate vs investing IN cryptos.

Stefanie K. · Answer

No.  Trade crypto if you want to gamble (I do a little bit, it's fun, but it's not a significant portion of my networth).  Do it if you want but just be real with yourself and understand that you are gambling, not necessarily investing.

Matt R. · Answer

It is a form of currency/asset and I guess it is backed by all the other worlds currencies who purchased already. Guys are trading cars and real estate today but the percentage is not significantly measurable yet? Maybe vacation homes might be a niche first. Not really for buying a cup of coffee as cash does fine for all that daily stuff.

Good luck!

Chris Moore · Answer

I'm sure I will regret engaging in this....basic economic supply/demand models are utilized for goods or services. If more people need plumbers than are available then (in a "perfect market") then the price of their service goes up. If there are more Ford trucks for sale than there are buyers the price goes down. Crypto markets are not at that type of market (yet) they are completely driven by speculation right now. Saying supply and demand have anything do to with this rush is nonsense.  The average joe has no clue what the supply of the coin (pick any "currency") is and has no plan to spend it as a currency at this point. They only plan to resell it at a higher price just like tulip "investors" or beanie babies.  The use and development of blockchain technology has nothing do to with the price of an individual currency.  Just because Bank XYZ is starting to look into  blockchain does not mean etherium's demand goes up or it becomes more valuable...

I believe this thread was started regarding transitioning from RE investing to crypto investing. In that vein, I do not see any similarities between real estate investing and "investing" in cryptos.

Real Estate to Bitcoin Investing - Easy change?

Most Popular Reply