4 Reasons Cryptocurrencies & Blockchain Technology Are Poised to Transform Real Estate

by | BiggerPockets.com

This is no ordinary article or time in history. If you haven’t heard some rumblings about a new technology called “blockchain” and how people are almost printing money with “bitcoin,” you’ve probably been living under a rock the last few months.

I think we will all look back and marvel at the change and growth in a world that we’ve only started to scratch the surface of understanding.

A few notes before we start:

  1. The focus of this article isn’t to give an exhaustive explanation of blockchain technology or bitcoin. Many others have done a remarkable job explaining this in better detail than I ever could. Here is a good place to start.
  2. My interest in this technological tangent was first sparked by observing the insane gains made by people who had simply purchased bitcoin at the right time and held it. No value created, no improvements made, just pure timing. At its core, this doesn’t fit within the the model of a real estate investor or developer. My success is built on identifying needs and creating tangible value that solves those needs. This inconsistency led me to dig deeper and realize that bitcoin was the tip of a much larger and more interesting technological revolution called blockchain. Today, I seek to lay out a few reasons why I think this technology will have a profound impact on the real estate industry.
  3. The words below are simply my thoughts, musings, and ideas. I am by no means an expert in any of this and am not espousing you invest in cryptocurrency, bitcoin, or anything else that you have not adequately researched and understand. Find your niche and stick to it. This has worked well for me in real estate, and I intend to continue this philosophy in all future investing. Caveat emptor!

I’m a real estate investor and developer; I’m completely self-made and have devoted the majority of my professional life to learning about the nuances of this incredible industry and wealth-generating tool. You and I probably ended up in real estate for many of the same reasons: It’s stable, it’s tangible, and it produces cashflow (something we all need to live and function in modern society). Thankfully, I don’t think we are going to innovate ourselves out of the undeniable power that comes with investing, owning, and developing real estate. But every now and then, something pushes an entire industry, generation, and even world forward (think the electric light, modern medicine, the internet, etc.).

I’m taking what some would consider to be a risky stance: I consider blockchain technology to be one of those innovations.

Right now, while the majority of the world is caught up in the hype of bitcoin, ethereum, and litecoin that just in the last year has gone up 6,072% (talk about a solid annual ROI!), many are missing the truly world-changing shift that could take place if this technology is correctly shepherded.

Here’s why.

4 Reasons Bitcoin & Blockchain Technology Will Transform Real Estate

1. Our monetary system is broken, and cryptocurrencies could be the fix.

We as real estate investors understand this better than pretty much anyone else. I have never trusted or invested in centralized banking, fiat currency, and the stock market. I want to control the assets I’ve worked so hard to build. Real estate to a large degree allows me to do this. Nobody can create more land right next to mine and cause the value of my property to tank. That can and does happen with centralized banking and government controlled currency. The amount of trust we are forced to exercise when depositing money into our local banks is a little bit terrifying.

We have been off the gold standard for decades, fractional reserve banking has led to economic meltdown more than once, and the Federal Reserve that’s supposed to guarantee our deposits only keeps enough cash on hand to satisfy 1% of these transactions. Talk about disconcerting.

The fundamental concept behind blockchain and bitcoin is we now don’t have to blindly trust. All cryptocurrencies are built on a decentralized network that is made up of each individual who owns any piece of the digital currency. There is no single point where an individual, organization, or government can manipulate the system for their gain.

Why does this matter to real estate?

We real estate investors already enjoy a hedge of protection that most other types of investments don’t. Theoretically, our property would go up in value at a similar rate to even out hyperinflation. We also have the added benefit of being able to utilize a property to provide basic needs (namely shelter or food) if we reached a level of economic instability that took us back to bartering and trade.

Related: Bitcoin or Real Estate: Which is the Better Investment?

I, for one, though, don’t relish the fact that the currency I use to purchase, invest, and improve my real estate is always teetering on the brink of a large-scale meltdown. A stable, decentralized currency WILL benefit all real estate investors and developers.

2. Blockchain technology provides an easy way to transact money and data safely.

Now, here’s where things get really interesting. The way the decentralized network of bitcoin works is on something called a blockchain. This is essentially a way of creating a transparent ledger that is next to impossible to fraudulently manipulate. When information is entered on this blockchain and spread out to a network of millions, tens of millions, or billions of people, hacking into and manipulating the data inside becomes extremely difficult. (For the sake of brevity, I’m glossing over a TON of details.) So you’ve basically created a very secure way to transfer money, data, etc.

In real estate, what types of data are important to transfer without risk of manipulation or fraud?

Contracts! Deeds! Titles! Heck, every building block of our entire industry!

Why does this matter to real estate?

The amount of red tape, fees, and wasted time this type of network could eliminate is staggering. How many of you have lost deals, had deals massively delayed, purchased something that didn’t have a clear title, etc.? (And if it hasn’t happened to you yet, just stay in real estate a little longer.)

Imagine being able to purchase a piece of property without needing a title company or title insurance, while feeling 100 percent confident you were buying exactly what you thought you were. Sounds pretty good to me!

3. Blockchain allows for smart contracts.

Yet another powerful tool blockchain allows us to harness is something called “smart contracts.” When data, a process, or workflow is entered on a blockchain, it becomes impossible to deviate from this agreed upon path.

Why does this matter to real estate?

The real estate industry uses contracts all the time. My journey into investing first involved becoming a licensed sales agent. Visualize with me a world where you could spell out the terms of your purchase, sale, lease, on a smart contract and feel completely confident these terms would not be deviated from.

It’s happened to me more than once that a buyer has not performed on a contract and then has tried to hold up the earnest money that was now rightfully mine for months with stupid arguments and legal games. This could be a thing of the past. Deposits would be held inside the smart contracts and paid out exactly as the contract states. No deviation.



Related: 4 Ways Technology is Shaking Up Commercial Real Estate (& Why Multifamily Will Pull Ahead)

4. This new technology could create transparency and immutable records of title.

Once we as investors purchase a piece of real estate, there isn’t much worry that someone will dispute our ownership stake.

For billions of others, unfortunately, this isn’t true. Can you imagine purchasing a piece of real estate, making years of payments on it, and then a government official coming in and saying you don’t have legal ownership? It sounded crazy to me the first time I heard about this, but 78% of the land in Ghana is unregistered! The property records that date back decades in the United States just don’t exist there.

Would you be willing to build a store, apartment complex, or restaurant if you knew that someone could come in out of the blue and say you didn’t own the land anymore? Experts estimate that there are literally trillions of dollars locked away and not used for development and infrastructure projects.

Why does this matter to real estate?

Perhaps this won’t affect your business tomorrow, but the overall economic impact of smart contracts to keep accurate land records in developing countries is huge.

We would see third world countries making leaps into the modern age! What has taken decades or hundreds of years in other countries could be accomplished in just a few years by harnessing the power of blockchain and smart contracts.

This is Only the Beginning

You could equate it to internet in the late 1990s. Nobody really knew what it was, how to use it, or what the long-term benefits would be. I think we all can agree on the critical role the internet now plays in our daily lives and businesses. We can also observe the career-defining effect it had on early adopters who took risks and began applying internet technology to different industries and businesses.

Here’s what I’d encourage you to do.

First, do NOT go liquidate your real estate portfolio and dump it into cryptocurrency. I know I didn’t have to say that because if you’re reading this you, aren’t manipulated by hype and FOMO. But realize and accept you will undoubtedly hear the stories of the few who got lucky, took massive risk, and made insane returns overnight. Money quickly earned is usually quickly lost, and you probably won’t hear the stories of those who lost everything. The ratio of failure to success in this and in real estate is probably less than 10:1 or worse.

Second, don’t stick your head in the sand and pretend everything will go on as usual. The cat is out of the bag; there’s no going back. It’s time to get to work. This is the next area of real estate you need to become familiar with. I know every time I’ve pushed myself into a new aspect of real estate investing, it’s been a hard, exciting, but ultimately very rewarding experience. From flipping to rentals, wholesaling to commercial, growth and change is never easy.

Third, unless you want to invest directly in companies developing blockchain applications for real estate, you do have some time; adoption of new technology takes years. However, the time to prepare, strategize, and plan is now.

You’ve been given a peak behind the curtain of the future. What you do with this information is up to you.

I’ll leave you with one of my favorite quotes from Dale Carnegie:

“…the best possible way to prepare for tomorrow is to concentrate with all your intelligence, all your enthusiasm, on doing today’s work superbly today. That is the only possible way you can prepare for the future.”

We’re republishing this article to help out our newer readers.

What do you think? How will blockchain technology play out over the next several years?

Let’s discuss below!

About Author

Christopher Gill

Christopher Gill is a real estate investor and serial entrepreneur based out of San Antonio, TX. Starting with just $15,000 in working capitol in the past 5 years he’s owned millions of dollars worth of residential and commercial real estate.

Come hang out and let’s talk real estate!

60 Comments

  1. karen rittenhouse

    Thanks for your post, Christopher.

    I’m so excited about Blockchain technology and cryptocurrencies as ways to transact business in a secure and private way. Like electric cars, many believed the technology to be far off yet here it is and, as you say, it’s not going away.

    Privacy and security in real estate and every other transaction we enter. Smart contracts. The future is bright and I’m thrilled to see it heading our way. I’ve been studying it diligently.

  2. Jerry Kisasonak

    There are possibilities with crypto but I don’t think anything is going to happen anytime soon. Over the past 3 months Bitcoin has been around 5,000, 19,000, and back down to 11,000. That’s all within 3 months. Anything with this type of volatility isn’t going to be taken seriously in terms of an actual currency. And when business don’t accept it as a currency, calling it a currency is sort of a misnomer. I think it’s for this reason that some have referenced it as a bond. Others have called it stock – stock in the blockchain. Others aren’t really sure what to call it due to its ambiguity.

  3. Curtis Bidwell

    Thanks for your article and keeping our minds moving forward! Cryptocurrencies are certainly making waves, and with high risk comes … big winners and big losers! With so many countries making it illegal, the number of criminals hiding behind its anonymity, and hackers stealing hundreds of millions worth (estimates between 10- 30% is lost to hackers!) – Until it finds its footing I’m watching from the sidelines for now.

  4. Jessie Huffey

    Very interesting concepts here. In terms of real estate, however, blockchain may be able to keep an accurate record of title and who owns what, but at this point, that will not prevent corrupt people and governments with power from just taking what they want, regardless of who can prove ownership, etc. Unless blockchain has a powerful enforcement organization behind it, “might will make right”.

  5. Darin Anderson

    I have seen too many people jump on blockchain as a revolutionary technology in the last 3 months. Often times as a way to play the bitcoin hype but to say I realize bitcoin could be all fluff but blockchain, thats the real deal. that will change the world because it has a verifiable self tracking ledger. No one yet has been able to explain how it works at a level that is understandable so they don’t really understand it either.

    Meanwhile the actual coins that use this technology get stolen all the time. The exchanges get hacked and broken into. The whole scene is an absolute mess. There is no way to trust anything that is happening there right now. The primary use for most transactions using this technology is black market and underground to avoid the light of any regulatory and government agencies that might be trying to stop fraud, money laundering or any other illegal activities.

    The supposed unreliability of fiat money cannot be matched by the unreliability of anything operating purely on blockchain with no actual asset, organization, govt, or any viable form of value behind it. Fiat money only has the full faith and credit of the govt behind. When it comes to the US govt, that actually means a whole heck of a lot, even with all of our problems. Crypto has nothing behind it.

    Now as to the claims of the problems that this technology will solve:

    “1. Our monetary system is broken, and cryptocurrencies could be the fix.”

    Big claim. No details. How is our monetary system broken? It’s been a very stable currency for a very long time. The world reserve currency. Minimal inflation for decades. Moderate inflation once in the 70s. Killed quickly by the fed in the 80s. Seems to be working absolutely spectacularly. Cryptocurrencies are as unstable as the currency of Venezuela. Ask yourself, would you be willing to hold dollars in a bank account for 5 years with no ability to sell them? I would. People with CDs do it all the time. Would you be willing to do the same with any current cryptocurrency? Of course not. Our monetary system is solid, stable, and spectacular. Cryptocurrencies are a joke, backed by nothing, guaranteed by nothing, easily hacked and stolen which has happened countless times already on major exchanges.

    “We have been off the gold standard for decades, fractional reserve banking has led to economic meltdown more than once”

    We were still on a partial gold standard until 1973. What economic meltdowns have we had since then? Dot com crash? Housing bubble? 50% corrections in the market, recovered within a few years. Not ideal situations, but certainly nothing catastrophic. Not like the Great Depression when we were still on the gold standard but didn’t have FDIC insurance to back the banks. And then we had the panics of 1857, 1873, 1893. Gold standard didn’t stop any of those. There is a religious belief in things like the gold standard and non-fiat money systems and an unwarranted demonizing of fiat money systems. History does not show that fiat systems are disastrous and non-fiat are not. Crashes have existed with both systems. The business cycle is not eliminated by any monetary systems. Recent history does show that the crashes in the US monetary system since going to 100% fiat money have been shorter and less severe than they were in the past. That may or may not be because of fiat money. But certainly there is no evidence that fiat money in the US monetary system has made crashes worse.

    “How many of you have lost deals, had deals massively delayed, purchased something that didn’t have a clear title, etc.? Imagine being able to purchase a piece of property without needing a title company or title insurance, while feeling 100 percent confident you were buying exactly what you thought you were. Sounds pretty good to me!”

    Sounds great, but it’s not true. Blockchain won’t do any of these things. Why don’t you get clear title? Anything that has been filed against the title will show up in a 5 second search. Blockchain doesn’t make that easier. The issue with title insurance is that things aren’t always filed. They get lost. Claims come out of the wood work from past years. Unless they change the laws to say that if you don’t have a claim listed in the blockchain register at the time of the transaction then you are out of luck. Too bad you lose. They could make that law today. If you don’t have a claim filed with the county and the time of the transaction you lose. They aren’t going to pass that law and since they won’t, blockchain won’t stop claims from coming out of the wood work months or years after the transaction has completed. Blockchain will not guarantee clear title and will not eliminate the need for title insurance.

    Far too much faith and excitement is being pilled onto a technology that almost no one actually understands.

    What will will real estate transactions look like in 20 years? I don’t know, but its unlikely that blockchain is going to be any kind of radical savior bringing any drastic changes to how we do transactions. It could be involved. It will be incremental. It will fall far short of the hype.

    • Hondo Davis

      Near zero interest rates, bank bailouts, and multiple QE’s since 2008 is basically the definition of a broken monetary system. This type monetary policy is unbelievably inflationary in nature, regardless of CPI numbers show. Basically every aspect of the economy is currently in a bubble because of the Fed’s inflationary policies. All economies need to correct in order to wash malinvestment, but by manipulating interest rates and money supply the Fed artificially props up the economy, forbidding a full correction, and continuing bad investment. There no possible way $13T worth of QE and trillions of negative yielding bonds will not wreak havoc at some point.

      • Darin Anderson

        I have heard this argument for over 10 years now. How long can one keep making this argument and be taken seriously when none of the predictions happen.

        “Near zero interest rates, bank bailouts, and multiple QE’s since 2008 is basically the definition of a broken monetary system.”

        No. A broken monetary system is one where you can’t trust, rely on, or afford to hold and transact in that monetary unit because it is unsafe, unstable, or drastically losing value. None of those things has been true for the US dollar. Ever! And much less so recently than at any time in the past.

        “This type monetary policy is unbelievably inflationary in nature, regardless of CPI numbers show.”

        No it isn’t. I see so you know what real inflation is but all the numbers are cooked. Easy money and low interest rates do not create inflation. It depends on the volume of money, people’s disposable income, and the willingness to both spend and borrow. The volume of money has been very low. Wages are increasing slowly, and the willingness to borrow and spend has been muted. Thus there is very little inflation. Money does not create inflation simple because it exists in a big pile in a bank vault or in an electronic system. Money creates inflation when it gets spent creating demand that outstrips supply driving up prices. The only place that is happening right now is housing and its not because of demand, its because of a drastic under supply of houses, both on the existing market because people aren’t selling and in the new construction market because we are still under building housing by 400K per year on long term historical norms. Inflation for most other things is extremely muted. Oh, that’s right though, I forgot, you know the real inflation numbers which show rampant inflation and its all being hidden by the government.

        “Basically every aspect of the economy is currently in a bubble because of the Fed’s inflationary policies.”

        Every aspect? Really. What will real estate crash to? What will stocks crash to? What will gold crash to? What will commodities crash to? What will oil crash to?

        There can be pockets of bubbles at any given time in an economy. In 1998 I thought stocks were ahead of themselves. In 2005 I thought housing was ahead of itself. I was early both times. I don’t see anything that looks as bubbly right now as either of those did then, except perhaps cryptocurrencies. They are the only things that are generating the cult following that stocks did in the 90s and housing did in the 2000s. And that is what creates bubbles. Euphoric mania. Not the fed and monetary policy.

    • Christopher Smith

      Agreed.

      I think we have a whole lot of folks who are simply parroting what they hear or read others saying thinking they will sound really intelligent in the process, and why not, so few people truly understand this so no one will ever know anyways right?

      New innovation is fine, but that requires deep proven understanding not talking out your backside about things you probably really do not understand. Just another article targeted at feather heads.

    • Wesley C. Green

      Fiat currency is backed by a govt. printing press. You let Bernie Saunders become President for eight years, with Pelosi and Schumer running Congress and you will be living in Venezuela. My Grandmother told me her and my grandfather thought they had it made in 1929 because they had saved up $500 in the bank, and one day it was gone.

      A vast majority of these coins are useless, others are the next Amazon, Google, Facebook, Yahoo, etc. The Block chains they live on though are going to create this value when they are adopted because they literally cut out a lot of bloat built into our modern economy, typically handed to us by govt. sanctioned monoplies…

      Block Chain tech will not eliminate the need for Title Insurance, but it will make the process simpler and faster to transact. It’s going to be a huge boon for the new and used car market, as applications are coming to market to put the full history of a vehicle locked into the block chain. Car Facts will have to adopt to this tech, or be crushed. Think about it. All the maintenance history, auto claims, mileage, etc. will be at your disposal when you are making a decision to buy that vehicle. The same can be said for Real Estate, and all the mechanical components (smart homes) to Real Estate. Which property do you want to buy, the once where you guess at all that, or have a comprehensive list of it by simply reading a bar code?

      Be easy on the block chain it’s your friend.

    • Andrew Cimperman

      Our monetary system is most difficult broken broken. Our government and most all other governments pay the private centralized banking system to borrow money in which then hyper inflate the currency, primarily during times of war. It’s lead America into trillions of dollars in debt. We allow the banking cartel to create Fiat out of nothing and then charges interest on it. The system designed as it is, we will never be able to pay the debt. Look what happened to Mexico’s currency in the 90s with almost a 90% depletion rate. There was a similar problems in Egypt well as Iceland in the last few years. Remember in the recent past when we had a government shutdown because Congress wasn’t going to allow borrowing from the Federal Reserve over Obama trying to push Obamacare through, all the federal land was withheld from Americans as a collateral for the debt we owe to our own centralized banking system until further borrowing was allowed. Most people don’t understand that are federal taxes on income do not pay for roads or other government instruments or benefits to the public, or even to pay the debt that we have accumulated. Income taxes are to pay for the service of are centralized banking system. Will Bitcoin be able to fix this problem I don’t know but it definitely seems like a possibility. As for Bitcoin primarily being used in the black market is a bit outrageous, there’s a black mark and it uses every currency. It was our American banking Institution that were caught laundering the drug cartels money long before Bitcoin was being used on the black market.

  6. Michael Purcell

    Great job, Christopher, and I think you hit the nail on the head (no pun intended).
    As with everything these days, not everyone will agree, but I think you’re reference to the dot.com era is a good one.
    As you probably know by now, Bitcoin continues its roller coaster ride and probably will now that the government has gotten into the act.

  7. I must say I was disappointed to see an article on block chain and cryptocurrency on a real estate blog. Cryptocurrency is the exact opposite of real estate investing.

    Regarding the authors points about cryptocurrency being the future, I suggest the real estate investors sit tight and let the wave pass by.

    The monetary system is not broken, we all use it everyday and it works just fine
    We already have a safe way of transferring money, we use it everyday and it works just fine
    We will never have smart contracts. Every contract is very unique and requires the ability to be customized rapidly and quickly. We have and will continue to rely upon trust to do business, not computers.
    And…we already have an immutable record of transactions. Its called the Clerk of Courts.

    I don’t mind my friends getting irrationally exuberant about bitcoin at the sports pub but please don’t bring it into the real estate world.

    We are much wiser and saner group than the general population and the last thing we need is to invest in something because it is going up.

    Friends Don’t let friends invest in cryptocurrency. Please. Just Don’t.

    • Jonathan Roper

      Okay, so you love the dollar (despite it getting you less and less each decade, we’ll table that for now). Americans are less inclined to enter the cryptocurrency market because we do have a “strong” currency and many do not see the value in buying something that is quite volatile. As the cryptocurrency market grows, the volatility will eventually stabilize. Across the world, many people are seeing their currency inflate to such an extent that the current volatility in cryptocurrency is actually appealing because it is more stable than what they have. To sit tight on the sidelines 100% is a mistake in my opinion. I do own investment real estate and will put more into the real estate market this year than I did last year and so forth. Real estate and cryptocurrency do belong together, you can’t make more land and there is a set number of (insert cryptocurrency of your choice here). There is not a know amount of gold and silver, and we keep printing more dollars. If you believe in the dollar, out of 100 of them, put 1 into cryptocurrency for the simple fact that that 1 dollar isn’t tied to the other 99. Happy investing.

      • Darin Anderson

        the dollar loses 2% valuation to inflation per year over the last decade. That’s spectacular. Do you want a dollar that does not lose any value? So inflation is zero? Do you want a dollar that gains value so that we have deflation? Those are economic disasters.

        Measured inflation is the greatest thing in a monetary system. Small inflation eats away at debt. It makes borrowing money now to invest for the future more profitable. It makes spending money now more profitable so it drives the economy through consumption and investment.

        Deflation does the opposite. It brings the economy to a halt. No one wants to spend. No one wants to invest. Because money makes money just by sitting there and looking at it. That’s exactly they way people made money on houses in the 2000’s. Buy a house, sit there and look at it, sell it for 50K more in 6 months. That is a recipe for disaster. That is why deflation is so bad economically.

        And a fully stable currency with no deflation or inflation (almost impossible you always get one or the other but lets entertain it). That results in no extra incentive to invest, no extra incentive to take on debt, no incentive to own assets because there is generally little to no asset appreciation. This is also not a desirable situation. People do not have an incentive to invest so things tend to stagnate.

        A fully stable currency with zero inflation. Count me out. I want nothing to do with it. Inflation is currently running below 2%. I wish it was 4%. Reasonable modest inflation is the Goldilocks scenario. So yes, I love the dollar, not despite it losing value, but because it loses value.

        We should really stop demonizing inflation. It’s the grease that keeps the economy’s engine running smooth. Without it, things seize up and nothing good happens.

        Give me some inflation or give me a different economy to be a part of.

        • Jonathan Roper

          I’ll play in dollar game for as long as it is around. My main point is others around the globe don’t have a “strong” currency. Cryptocurrency is a much better bet for them because many people say it has value. Inflation isn’t bad, hyperinflation is. I also do not have 100% faith the dollar will always be around. Having some money in a different system unrelated to our current one seems like a good move to me.

        • Aaron Wright

          Deflation does no such thing to the economy, while inflation robs people of their wealth slowly but surely.

          You cannot save anything, you have to risk investments just to break even.

        • Darin Anderson

          Why is having money in any monetary system important? Don’t have money. Have assets. If the money inflates the assets go with them. I don’t hold cash beyond that which is necessary to transact business. The rest is invested in assets.

          That’s another reason I don’t understand the fascination with currencies and inflation. Why should anyone care about the devaluation of currency, except for hyper inflation which we have never seen in this country? Who, especially on this forum, is worried about losing value on holding cash? Who holds cash? Senior citizens on a fixed income is the only category that should have a valid reason to hold cash.

          From that standpoint, assets that are not leveraged are immune from inflation. Assets that are leveraged with debt see great appreciation returns with inflation. Inflation is the only reason that leverage is so powerful in real estate investing.

          I see no benefit to trying to be involved in any currency plays at all. It’s pure speculation for which I have no advantage. Investing in assets that I understand plays to my advantage and gives me a path to growing wealth.

        • Darin Anderson

          @Aaron,

          I’m sorry, the Great Depression being the most famous case of serious deflation must have been overblown. Guess that didn’t bring the economy to a halt:

          http://money.visualcapitalist.com/the-worlds-most-famous-case-of-deflation-part-1-of-2/

          In the Great Recession we had just started to touch on deflation. Thank God they used the monetary system, quantitative easy and zero interest to keep deflation at bay and not send us in the direction of another Great Depression.

          As to inflation requiring you to risk investments to break even … Thank God for that too! Otherwise lets all just sit on our cash and look at each other. No sense taking any risk. Risk taking is what drives the economy. You are making my point. If there is no incentive to take risk, the economy stagnates.

          All of you who love fixed monetary systems, that can’t grow with the economy or the population, and want to live in a deflationary world, be my guest. I prefer inflation every day of the week, because its growing my assets day by day.

        • DJ Scruggs

          Aaron Wright, sustained deflation is catastrophic. That’s basically what the Great Depression was. This is the reason Ben Bernanke (who’s academic expertise was the Great Depression) launched QE. Everyone hated it but if he had not done QE we would have had an even worse meltdown after 2008.

          Ironically, deflation is the problem with Bitcoin and other cryptocurrencies. Holders of these currencies don’t want to spend them because they suspect a coin today will be worth more tomorrow.

          Crypto will continue to be too volatile for everyday use until a stable one come along. (I like Dai and Basecoin, but it’s still very early in the game.)

          However, blockchain technology is already in use and will continue to expand regardless of the price of Bitcoin.

          For example, Vermont is pilot testing land registries — https://www.coindesk.com/vermont-city-pilots-land-registry-record-with-blockchain-startup/

      • This is a real estate blog. Not a gold blog. Or a stock blog. Of a bonds blog and it is especially not a crypto currency blog. I come here because people have decades of experience doing what works. I’m not interested in propaganda or predictions about the future. I’m interested in hearing people’s success stories (and failures)

        For that reason. I invite everyone who is interested in crypto currencies to gobhave the conversation where it belongs. And that is not on a real estate blog.

    • Darin Anderson

      Kindred spirit.

      It gets a bit old hearing people attack the fed, fiat money, and the monetary system with the same tired arguments when that system has resulted in the most stable economic system in modern history all while they continue to predict it will do the exact opposite.

      I will give them this though. They have great resolve. All evidence to the contrary doesn’t slow down their predictions for one minute.

  8. John Murray

    I have always been amazed by economic revelations. Offshore accounts, have been around a while. The playing of peek a boo with regulators (especially the IRS) is something that is not new. Warlords, Druglords, and White Collar Criminals will always develop new ways to keep the regulators, enforcers and Lawmakers on their toes. It’s only a matter of time before this form of peek a boo will become, oh there you are.

  9. Mark Beekman

    The quickest way to illustrate how antiquated the monetary system is in the U.S. is to try to purchase Bitcoin:

    ACH transfer to an exchange? Sure, but there may be a cap and you’ll have to wait several BUSINESS days. Well, that’s not very efficient.

    How about a lightning-quick wire transfer. Hmmm…. Is it a weekend? A Federal holiday? Are you initiating the transfer after 1:00pm? Are the planets aligned? Did I sacrifice my firstborn? Barring any mishaps, you’ll also be eating bank fees on both ends of the transfer (and those fees are the same regardless of the amount be transferred). There’s also the issue of whether the receiving bank gets/credits the funds before their cut-off time for the day.

    I think what a lot of people fail to realize is that Bitcoin/Blockchain is the simple, raw, base layer of the new financial system. No one can hack this base layer. No one can hack the protocol. No one can brute force hack the private keys to your Bitcoin wallet. From this base layer we can (and have) add more and more centralized, third-party layers. Just like the physical $20 bill in your wallet is the base layer of our current financial system, we also have other layers like credit cards, banks, PayPal, Western Union, safety deposit boxes. Crypto is simply a new, way more efficient base layer with internet-like secondary layer possibilities.

  10. Robert pe

    HI: What are your thoughts on Rentberry, a landlord/ tenant platform which has been around i believe a few years now, and adopting blockchain technology to its business. I dipped my toes in the ICO. There has been alot of interest in this one. Are you familiar with it and your thoughts? thx

    • Paul Bee

      I was intruiged by RentBerry at first because it was a use of blockchain technology within the real estate world. But I really couldn’t get a feel of what they were doing as the wording on their website is very vague. They claim tenants and landlords could review one another and it would be forever in the blockchain tied to your identity, so if there was that one time you paid rent late when you were in college it is going to now follow you around for life? Also they claim prospective tenants could make lower offers or engage in a bidding war on a property to get the real market value. They claim it often resulted in lower rents for tenants. Finally they say their coin offering “leverages blockchain technology to ensure seamless rental experience and allows for crowdsourcing to help tenants unfreeze millions of dollars tied up in rental security deposits.” What is a seamless rental experience? It’s just a bit to vague for me, I started reading the white paper but got bored half way through.

  11. Mary B.

    this all depends on cryptocurrencies survival of Government regulations. it will certainly be a different thing once the government takes control of it. yet so will every global industry for that matter. until uncle sam is finished fondling cc all of this is only a dream…

  12. Michael Baum

    The biggest issue with crytpo currencies is perception. Ask the average person and they will say it is a way for criminals to do business and launder money. Silk Road pretty much created that perception and along with it’s anonymity makes it difficult to trust it as an honest solution.

    Also, there is nothing stopping a new crypto currencies from popping up. All it will take is someone with a better way of doing it and the previous systems will become defunct. I could start a new blockchain algorithm tomorrow and see where it ends up. Call ’em BaumBits…

    Take a look at MySpace vs Facebook. Different things for sure, but MySpace was the social network of choice for most, then up comes Facebook and now where is MySpace?

    Just like anything else, they are worth what people are willing to pay. With nothing backing them, it is hard to think they would become the currency of choice for everyone.

    I wouldn’t be surprised to see crypto currencies going the way of bearer bonds.

    • Jonathan Roper on

      People decide what cryptocurrency/currencies will have value. A new technology that demonstrates value should have value. I think there is something to be said about already launched platforms like Ethereum and Stellar Lumens that are already tested. At some point Amazon became the elephant in the room. My mother said to me at an early age, “You either are a nerd or you’ll work for one one day.” I think the nerds are onto something. I for one am paying attention.

  13. brian ploszay

    Bitcoin and blockchain are something to follow, but it needs to be put in its place for those who frequent BiggerPockets. It’s been attracting lots of hype and super speculative (dangerous) investing. It is not yet integral to our core business.

    Let’s back up and look at the core of what most of us do: We sell, produce and rent real estate. Most of my daily issues as a landlord are old school – tenant complains about a broken toilet. There is a squirrel that got into the roof.

    The author of this article claims that earnest money “deposits would be held inside the smart contracts and paid out exactly as the contract states. No deviation.” Yes, deviation. And that is called local law. Earnest money deposits in my local market are super strict and local laws supersedes contract terminology. And the disappearance of title insurance? Not for me. I specialize in buying properties with issues. How about the issues that are unknowns and unrecoverable? Answer: Title Insurance.

    There are some claimants saying real estate brokers will disappear within 10 to 15 years. I am watching all of this.

    Fiat currency? Works relatively well for countries that have strong economies and legal systems that protect business interests. Please don’t use Zimbabwe to prove that Fiat currencies have risks. The ability to have a centralized monetary system can save us from financial catastrophes such as the 2008 meltdown. A non central, global currency? Brave new world. I’ll be watching it.

  14. Nice post, and even better comment thread! But nobody has mentioned what currently defines (and limits) crypto”currencies” in the US: tax law. All crypto”currencies” are assets by tax law. If I buy a pizza with bitcoin, it’s a taxable event. If I trade bitcoin for Ether, taxable event. Can I pay my taxes in either … in any country? Nope. The bottom line from my perspective is that these are cryptoassets, not currencies. They are volatile (though innovative) stores of value pegged to the electricity cost of production plus the hope/faith of those that invest in them. And frankly, the only way I see blockchain tech influencing our monetary system would be (1) if it were to be usurped by the Fed and treasury, or (2) if the monetary system collapsed completely. I think neither are likely in the foreseeable future.

    The blockchain is where I believe the real potential innovations are. Note the word “potential.” I’m not really sold on the use cases mentioned in this post, and I fear that blockchain tech is a solution looking for a problem in many cases. But I’ll readily admit that my vision is limited. We may be miles away from use cases that would truly add value to RE investing, but I do feel the potential is there. Worth keeping an eye on? Absolutely! Worth investing in? Only with a small, speculative portion of the portfolio (your gambling budget :P).

  15. James Blaschak

    Cryptocurrencies currently have scalability issues. In order to be relevant, the maximum transaction rate has to compare favorably to VISA, which is currently 24 thousand transactions per second. Bitcoin is years, or perhaps decades, from TPS rates like that.

  16. Becca Tew

    Another exciting aspect is lending with blockchain technology! Hopefully gone are the days of jumping through hoops to get a traditional loan. My friends have been looking at SALT which is a platform to lend on your crypto currencies for things like Real Estate.

    There is nothing more frustrating to me in this industry than lending! Or maybe I just need to read more on Bigger Pockets. 🙂

  17. Daniel Tam

    I believe blockchain is here to stay, and that we will see many applications of blockchain in banking, healthcare, and yes, real estate. Here are some nice applications and a history for those interested. https://nyti.ms/2FGOzYh

    I also see a role for blockchain as a medium of exchange, especially for large transactions. Auction houses are one example, where you cannot easily charge a $1 M purchase to a Visa card. And, yes this could apply to a home purchase.

    The verdict is still out on whether crypto currencies will survive, at least in mainstream usage, beyond having to pay off ransomware. I still havent seen Bitcoin behaving as an actual currency, beyond masking the identity of the party requesting payment.

    I do encourage all readers to explore blockchain applications, rather than zeroing in on Bitcoin and crypto currencies. My sense is that the former will impact our lives far more in the coming years.

  18. Eric Carr

    I agree with most of your statements, well done.

    Not all crypto is decentralized. Large organizations and now banks have developed their own and there are plans for more.

    In my veiw, 95%+ of the currencies available are garbage and like the dot com blow out, the currencies with no value or utility will be washed away.

    Bonus point for how this will affect developing nations, I imagine many develpoing countires will adopt this even sooner than the US – officially. As we continue to see, in an increasingly global economy, when other countires do well, we will do even better.

  19. Paul Bee

    If you don’t understand what a blockchain is watch this video, it explains it fairly well. If it helps, everytime you see the word blockchain replace it in your head with the word database. A blockchain is essentially an incorruptible digital ledger that records transactions and other information.
    https://www.youtube.com/watch?v=SSo_EIwHSd4

    Don’t confuse Bitcoin and Blockchain as the same thing, they are not. Bitcoin uses a Blockchain to record transactions but there are Blockchains (databases) being used by lots of different companies having nothing to do with Cryptocurrency.

  20. Bob Evans

    Hi Christopher, I like the concepts behind Bitcoin. However we live a world of US dollars. Everytime we do a transaction in Bitcoin we need to convert back to US dollars after the transaction is completed. Given the volatility of Bitcoin, this does not lend itself well to being a currency at this point. The other main issue is that it is not likely the US government will adopt Bitcoin as a currency anytime soon. The US government has a huge advantage in the world by having the US dollar as the defacto world currency. No reason to give that up unless the advatage is gone.

  21. Simon Dupuis

    I can’t really imagine that here at biggerpockets any people ‘investing’ in bitcoins.
    So many people can get free investing education here….
    And they will invest there hard work money in a bitcoins of some sort?
    A crypto money based on blockchain and non trusting?

    A hand shake is not a deal anymore…

    LOL it will never happen!

    “Bitcoin miners are eating up Canada’s electricity”
    “new projects may represent a significant threat to Canada’s low-carbon transition”

    https://thenarwhal.ca/bitcoin-miners-are-eating-up-canadas-electricity/

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