Bitcoin: A Digital Store of Value for Real Estate Investors is an opinion editorial written by Leon Wankum, a real estate and venture capital expert. The article explores the concept of using bitcoin as a superior store of wealth for real estate investors. Wankum highlights the historical rise of real estate as a store of value and the risks associated with physical assets like property. He argues that bitcoin offers unique advantages, such as portability, security, and protection against confiscation and taxation. Wankum presents compelling strategies for real estate investors to accumulate bitcoin and emphasizes the potential for significant wealth growth in the digital asset. Overall, the article aims to encourage real estate investors to consider bitcoin as an essential component of their long-term wealth management strategy.
Physical Vs. Digital Stores Of Value
The benefits of using bitcoin as a store of value became evident during the Ukrainian-Russian conflict in 2022. Ukrainians turned to bitcoin to protect their wealth as they fled their homes, as opposed to leaving their real estate behind. Unlike real estate, which is immobile and creates a local dependency, bitcoin is portable and can be easily stored and protected. Bitcoin is a digital commodity that cannot be destroyed in times of war or conflict, making it a more secure store of value compared to real estate.
Benefits of Using Bitcoin as a Store of Value
Bitcoin offers several advantages as a store of value. It is relatively easy and cheap to maintain, as there is no need to worry about daily maintenance, rent, or repairs. Bitcoin can be self-custodied, allowing individuals to have control over their wealth without relying on third parties. Additionally, bitcoin is a digital asset that cannot be physically destroyed in the event of war or conflict. Its decentralized nature and robust network make it more secure than any other digital infrastructure. Furthermore, bitcoin’s fixed supply cap and the potential for increased demand make it an excellent hedge against inflation and a reliable store of value.
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Bitcoin’s Portability and Immunity to War and Conflict
The ability to easily move and liquidate assets is crucial in times of crisis. Real estate, being immobile and costly to maintain, poses significant challenges in such situations. On the other hand, bitcoin can be easily transferred and accessed, even in war zones or unstable regions. Individuals can memorize their bitcoin wallet’s backup (seed phrase) to restore access to their wealth in case of relocation or displacement. This portability and accessibility make bitcoin a valuable asset in times of conflict and war.
Drawbacks of Real Estate as a Store of Value
While real estate has historically been considered a store of value, it has its drawbacks. Real estate is difficult to move or liquidate, especially during times of crisis. It requires lengthy bureaucratic processes for transfers and can be expensive to maintain. Additionally, real estate is vulnerable to destruction, taxation, and confiscation by governments. The physical nature of real estate makes it an easy target for arbitrary taxation and confiscation, particularly in totalitarian states or regions facing financial troubles.
Difficulty of Moving or Liquidating Real Estate in Times of Crisis
During periods of war or conflict, the immobility of real estate becomes a significant challenge. People cannot take their real estate with them when fleeing from violence or instability. Real estate ownership creates a local dependency that can pose problems in a world experiencing increased conflict and radicalization. Moreover, real estate is expensive to maintain and can be easily destroyed. Additionally, the process of moving or liquidating real estate can be lengthy and bureaucratic, further complicating matters during times of crisis.
Taxation
Totalitarian states have a history of using taxation as a means to oppress specific groups or confiscate wealth. Real estate, being a tangible asset, is particularly susceptible to taxation due to its physical nature. On the other hand, bitcoin, being a digital asset, is difficult to tax. Its digital nature makes it challenging for totalitarian states to seize or steal bitcoin, making it an attractive option for individuals seeking to protect their wealth from arbitrary taxation.
Difficulty of Taxing Bitcoin Due to Its Digital Nature
Bitcoin’s digital nature presents unique challenges for governments looking to tax it. Unlike real estate, which can be easily identified and taxed, bitcoin exists solely in the digital realm. It is decentralized and difficult to trace, making it challenging for authorities to enforce taxation. As a result, individuals can store their wealth in bitcoin without fear of it being arbitrarily taxed or confiscated by governments.
The Risk of Confiscation
Throughout history, property confiscation has been a common occurrence. The Holocaust serves as a painful reminder of the dangers faced by individuals whose wealth can be easily confiscated. Bitcoin, on the other hand, is a property that truly belongs to the individual. When stored in cold storage (offline), bitcoin cannot be confiscated by third parties. Its digital nature and decentralization make it difficult to seize, ensuring that individuals have full control over their wealth.
Lessons from History: Confiscation of Property
History is filled with examples of property confiscation. The horrors of the Holocaust and the constant fear of property confiscation highlight the importance of property rights and the need for assets that are difficult to confiscate. Bitcoin provides individuals with a digital asset that cannot be easily seized by governments or other entities. Its decentralization and cryptographic security make it a formidable store of value in times of political unrest or confiscation risks.
Bitcoin as a Difficult Asset to Confiscate
Bitcoin’s unique properties make it a difficult asset to confiscate. Unlike physical assets, such as real estate or precious metals, bitcoin exists solely in the digital realm. It can be stored in secure wallets that only the owner has access to. Cold storage options, such as hardware wallets or paper wallets, ensure that bitcoin is not at risk of confiscation by third parties. This makes bitcoin an attractive option for individuals looking to protect their wealth from confiscation risks.
Ease of Selling or Taking Bitcoin in Times of Crisis
Compared to real estate, which is challenging to move or liquidate during times of crisis, bitcoin offers ease and speed. Bitcoin can be transferred or accessed from anywhere in the world, making it a valuable asset in uncertain times. In case of relocation, individuals can restore their bitcoin wallets using the backup (seed phrase) and have immediate access to their wealth. This ease of movement and accessibility sets bitcoin apart from real estate as a store of value in times of crisis.
Bitcoin Is Digital Real Estate
Bitcoin offers similar functions to real estate, such as the ability to store value and build wealth. However, bitcoin excels in these functions compared to real estate. Bitcoin’s superior properties make it a direct competitor to real estate as the world’s most used store of value. Its limited supply and excellent monetary properties position bitcoin as a viable alternative to traditional assets for wealth preservation.
Bitcoin’s Potential to Absorb a Significant Portion of Real Estate Market Cap
Given bitcoin’s superior properties as a store of value, it has the potential to absorb a significant portion of the monetary premium carried by real estate. If bitcoin were to capture 10% to 15% of the real estate market cap over the next few decades, its value could reach $30 trillion to $50 trillion. This potential valuation translates to a substantial increase in the price of bitcoin per unit, making it an attractive investment option for real estate investors.
Calculation of Bitcoin’s Potential Value
Based on the assumption that bitcoin will absorb a portion of the real estate market cap, its potential value can be estimated. With a market cap of $330 trillion, real estate represents a significant store of value globally. If bitcoin captures 10% to 15% of this market cap, its value could reach $30 trillion to $50 trillion. These calculations highlight the immense potential of bitcoin as a digital asset and an alternative store of value.
Early Adoption of Bitcoin for Real Estate Investors
Real estate investors should consider adopting bitcoin early to capitalize on its potential as a store of value. Early adoption of new technologies often leads to greater benefits. Bitcoin’s price potential is significantly higher than that of real estate, making it an attractive option for wealth accumulation. Additionally, bitcoin can support real estate developers by protecting capital from inflation and positioning them for the future. The geopolitical and macroeconomic issues currently affecting the real estate industry further emphasize the need for real estate investors to embrace bitcoin as a core asset.
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