The real estate market has traditionally been a stable and secure investment option, but it can also be a slow and expensive process. On the other hand, the cryptocurrency market is a relatively new and rapidly growing industry, but it can be highly volatile and uncertain. However, in recent years, the intersection between these two industries has begun to gain traction.
For over 13 years now, Bitcoin, the first and most well-known cryptocurrency, has been gaining attention in recent years not only as a form of digital currency but also as a potential hedge against monetary debasement. Monetary debasement refers to the decline in the value of a currency due to an increase in the supply of money, which can be caused by factors such as inflation or government printing of money via decree, thus inserting excess amounts of value backed by nothing.
One of the key features of Bitcoin is its limited supply, with a maximum of 21 million bitcoins that can ever be in circulation. This scarcity is built into the Bitcoin protocol and is designed to mimic the behavior of a commodity, such as gold. The limited supply of Bitcoin creates a natural barrier against monetary debasement, as there is no central authority that can manipulate the supply of bitcoins in circulation.
Furthermore, Bitcoin’s decentralized nature, meaning that any government or central bank does not control it, makes it resistant to traditional forms of monetary debasement such as inflationary monetary policies. This is because the supply of bitcoin is determined by the underlying algorithm and cannot be increased arbitrarily.
Additionally, Bitcoin’s decentralized nature provides an alternative store of value, providing an escape from the traditional monetary system subject to inflationary policies. This can be particularly useful in countries with hyperinflation or political instability where conventional forms of savings may lose value rapidly.
In order to properly explain how Real Estate can benefit from Crypto, especially Bitcoin, we need to delve into the what, how, and why. What is currently being done, how it can be done better, and even why we should. Many will allude to the old adage “If it ain’t broke don’t fix it”, so we will argue why the system is indeed broken and in desperate need of fixing.
Before even going into how Real Estate transactions work, let’s be super explicit here and state that there’s a very finite amount of people/companies entitled to financially benefit from a Real Estate transaction. According to the Florida Association of Realtors (FAR) and the National Association of Realtors (NAR), there are several legal parties involved in a real estate transaction. These include the buyer, the seller, and their respective real estate agents or brokers. Additionally, there may be a title company or attorney involved to handle the transfer of ownership and ensure that the title is clear of any liens or encumbrances. In some cases, a mortgage company may also be involved if the buyer is obtaining financing for the purchase. Depending on the specifics of the transaction, other legal parties may be involved, such as a home inspector, surveyor, or escrow agent. Each legal party plays a specific role in the process of taking transactions to close, but only the seller, the buyer, Real Estate agents, and Brokers can benefit financially from the transaction.
Real estate brokers and agents typically get paid when the transaction closes. The commission is typically paid out of the proceeds of the sale, and it is split between the buyer’s agent and the seller’s agent. In a cash purchase, compensation will still be paid at closing, but since there is no mortgage involved, the commission will be paid by the seller.