Real Estate vs Bitcoin: and the winner is…


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Having been playing with Bitcoin since 2011, I have learned to hear an unmatched amount of arguments for, against, in between, doubts, uncertainties, fears, joys, frustrations, and the most inadmissible comparisons. In all cases, all the arguments against come, without a doubt, from ignorance of what a disruptive technology such as Bitcoin means, and, above all, from not understanding that a new class of assets has been created, which categorically replaces all existing asset classes.

Recently, a guy asked me to “convince him” of the advantages of buying Bitcoin instead of investing money in Real Estate. When somebody tells me something like that I get nervous, because I don't have the slightest intention of “convincing” anyone of anything. Each one is an individual who reasons and chooses for himself/herself, according to my conception of life. I did not have to “convince” myself of anything to invest in Bitcoin for more than 12 years, because mathematics does not need “convincing”. Bitcoin is mathematics, I don't see how anyone could be “convinced” of the Pythagorean theorem. In the event that someone needs to be “convinced” of the Pythagorean theorem, we would be facing an idiot who does not deserve much time.

In any case, I understand that there are doubts in a technology that deals directly with what is generally known as “money” and that in some cases, can be related to a lifetime's savings.

What I answered to the boy who was doubtful about Bitcoin versus Real Estate, is here below.

 

1) Availability

Real Estate. As a general rule, Real Estate properties worth investing in have already been bought by Real Estate whales. Those that remain are bought in installments by a large number of people who dream of owning their own home. This is surely the type of investment that the boy in question is thinking of making. In the event that he manages to get a house like the one he wants, and in the place he wants, he will have to spend the rest of his life, with or without a mortgage, paying off that asset, not being able to allocate resources to others investments. This is because the fees to buy houses are very high. If over time, due to some market issue, the place where he bought his house depreciates, then he will be losing money in terms of opportunity. This reasoning is applicable whether he is buying one or more properties. The old adage of the Real Estate business should not be forgotten: “the three main variables to decide an investment in Real Estate are location, location, and location.”

 

BTC. All Bitcoin are the same. You don't have to think about where they are located. As for availability, they are where you are, you only need an internet connection and a Smartphone.

 

2) Scarcity.

Real Estate. In theory, infinite houses can be built. In practice, this is obviously not true, but what is clear is that there is no limit to the growth of construction, given the voracity of builders who are increasingly building larger towers to crowd people into large urban city cages. The growing investment in Real Estate has its origin in the unilateral decision of the USA to abandon the gold standard in 1971. Investors had to look for an asset that would give them peace of mind, and they found Real Estate, with the result that today, due to the lavish price growth that caused the excessive increase in demand, no young person today can buy his/her house if it is not financed by their parents, by a bank or by the hand of God. As long as prices remain firm, construction will continue without limit. When a balance is reached, God only knows what can be done with the excess properties.

 

BTC. There are only 21 million bitcoins. Nothing more to add for someone who understands what scarcity means.

 

3) Fractional purchase

Real Estate. You cannot buy a brick, or an iron beam, or a bathtub of a house. You can pay an installment of a future house promise, regarding a house that is not yet built. But if you are going to buy an already built house, you have to put all the money on the table.

 

BTC. You can make a BTC purchase as small as $10, and on some platforms, even less. If you want to save, I don't see a better option than BTC, because, as far as I know, you can't put as low as $10 into any other financial option other than crypto.

 

4) Convertibility.

Real Estate. Ok, you now have a series of properties. Now you need cash. Well, it's very simple, you put a property up for sale. Very simple? If the property is valued at, say $10m, how many buyers are there? If the property is valued at $100k, it seems like there are more buyers around, but how long does it take before the desired cash is obtained? I think we will agree that it is not immediate, and that, in many cases, you will have to give up something of value to get the cash when you want.

 

BTC. It only takes 3 clicks on a Smartphone to convert BTC into cash and have it credited into your bank account. It can't pass more than a minute.

 

5) Expenses and dealings with tenants

Real Estate. The more properties one owns, the more the expense account increases. I don't see any argument in favor of increasing expenses. On the other hand, have you ever dealt with tenants? I don't recommend it, for your health.

 

BTC. There is no expense involved in storing BTC. What is a tenant?

 

6) War, vandalism, natural disasters

Real Estate. Houses are called real estate precisely because they cannot be moved. They are where they are. In the case of natural disasters or man-made disasters, properties quickly lose their value, faster than any other asset. The most luxurious mansion in Saigon could be bought for a few hundred dollars in the late 1960s.

 

BTC. There is no war that can harm the zeros and ones that represent your Bitcoin holding. It is the same case of the cockroaches that resisted the Hiroshima nuclear bomb.

 

7) Expropriation

Real Estate. Today the world is experiencing a furious wave of return to the extreme right, but, when one reads and interprets history, one knows that eternal cycles do not exist, and that when the pendulum swings very close to an extreme, the only thing we know for sure that will happen is that it will return to the other side with the same fury. We do not know what will happen in, say, 20 years, but, in the case of a return to the ultra-left, which is not at all unlikely, as demonstrated by the Sumerians, the Medes, the Persians, the Romans and other empires, the possibility of a massive expropriation of properties will always be present.

 

BTC. There is no terrestrial or extraterrestrial force that can expropriate your Bitcoin. They can put all possible obstacles on you from a “legal” perspective, but they will only be feeding secondary markets. Your Bitcoin will always be yours.

 

8) Value

Several renowned analysts who deserve my respect for the seriousness of their arguments, predict a Bitcoin worth $1m by the year 2030. That means that, according to today's price, June 23, 2024, the growth would be about 15 times. Can anyone think that by 2030 a property can increase in value 15 times?

 

 

Conclusion

“Think” said the sign Tom Watson, founder of IBM, hung behind his chair at his modest desk.

 

 

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SirGerardThe1st
SirGerardThe1st

Franchise & Brands veteran. Experienced business owner. I began with Bitcoin in 2011. I am maximalist of nothing. Ok, frankly speaking, I am maximalist of decentralization.


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