The future has moved in: Digital Currencies and Real Estate
We have been telling you about how digital currencies are entering our real lives, and how adoption is happening across different areas of business. We have already discussed tech and fashion, so if you’re interested in those worlds, make sure to take a peek. Today, however, we are telling you all about real estate.
Real estate and digital currencies are a match made in heaven. One of the obstacles to mainstream adoption, and one of the reasons why a lot of people are resistant to the idea of adopting digital currencies into their day-to-day lives is volatility. The market is not mature yet and the value of digital currencies still fluctuates a little too much for comfort sometimes. So what kind of market would be, on paper at least, this kind of currencies’ best friend?
A very illiquid one.
An illiquid asset is an asset that, albeit valuable, is hard to sell. Real estate is such a market. You can’t break up a house and sell its parts. If you buy a house and want to flip it, you need to find a buyer who is willing to put up its full price. If you want to turn a profit, then it needs to be more than what you yourself paid. It can take time for the market to provide that. Unless, of course, you’re willing to accept currencies that may just become more valuable very quickly.
That line of thinking was what brought IBREA to life.
Real estate and digital currencies have been intertwined since 2013
IBREA, or the International Blockchain Real Estate Association, is an organization with purely educational purposes, and as such may not be well known to most, but they have been fighting the good fight for a very long time, having perceived how fast Bitcoin’s value was rising during 2012 and 2013.
It did take some time before keys started changing hands on purely digital terms, but it’s fair to say they were right all along.
Tokenization is disrupting the market
But the fact that people can make millions off of a single real estate deal due to market volatility isn’t the only way digital currencies are a perfect fit for real estate. As we said before, the real estate market is particularly illiquid, due to the impossibility of breaking up the assets into smaller, more easily marketable, pieces.
That is changing.
Thanks to blockchain technology, real estate agents are now compartmentalizing their assets, and allowing people to buy shares in developments, much like they would buy stocks in a company. ATLANT are pioneering this way of doing business that could revolutionise the way real estate developments fund themselves.
The market is much further along than others
Every real estate deal is unique. This isn’t a market where products are mass produced or bought in mass. Every deal is negotiated and offers and counter-offers are normal and expected. This means that deals involving Bitcoin and other digital currencies have been happening for quite a while.
Coliving companies like The Collective already accept deposits in digital currencies. Massive players like Engel & Völkers have been actively encouraging their clients to consider accepting them for years. Vacation rental houses, parking spots, homes. There are blockchain-based real estate companies popping up everywhere, and using the massive savings of this technology to get ahead of their competition. This market has always been hindered by large costs and time wasting with intermediaries (banks, mortgage brokers, lawyers). The way blockchain rids you of much of that was bound to attract interest.
Buyers know this, but so do sellers. A £17 million apartment made headlines a couple of years ago because the owner refused to take cash. Bitcoin only. And Zurich played host to probably the most massive digital currencies real estate deal yet. $134 million.
And this isn’t only happening in the West. Middle-eastern market leaders like Arms &McGregor are accepting digital currencies as payment for all their properties (thanks to Utrust. You should check them out, they are real cool).
The future is huge
Because the market is so much more advanced, and because it’s such a good fit, real estate is sure to be one of the shining lights for mainstream adoption of digital currencies. Expectations are that the market will grow extremely fast.
So make sure you don’t miss this train. Early adopters will be the ones that get ahead of their competition and reap the rewards. Adoption waits for no one, and this untapped market won’t remain that way for long.
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