TD₿: Bitcoin is a Better Store of Value than Real Estate by John Tuld
TL;DR Bitcoin was designed to be a store of value, while real estate has morphed into one due to fiat currencies' inability to hold their value over time.
Hey Bitcoiners,
Real estate is the largest asset class in the world. The value of the global real estate market is estimated to exceed $300 trillion.
This makes sense in part because shelter is a fundamental human need, and owning land has been a tried and true way to build wealth. However, as the dollar loses purchasing power every year due to inflation, individuals have turned more and more to proxy stores of value like stocks and real estate to preserve their wealth over time.
Since fiat currencies are not good long-term stores of value, our economy has become more financialized over the last several decades. Because the money is broken, real estate serves as investors’ go-to store of value rather than simply a place to live.
The problem that arises is this creates a dynamic where the prices of homes rise continuously over time as investors continue to pile into the sector. This makes homes less affordability for those who need a home to provide shelter for themselves and their families.
To put this into perspective, investors bought 24% of all U.S. single-family houses sold nationwide last year, up from 15% to 16% annually going back to 2012, according to CoreLogic, a California-based data analytics firm.
Furthermore, large investment firms like BlackRock have been buying up family homes in mass as an investment opportunity, transforming a nation of homeowners into a nation of renters. BlackRock recently raised a record $24 billion for its latest real estate fund, Blackstone Real Estate Partners X.
As wealthy investors purchase second and third homes on the market for their investment potential and large investment firms snap up entire neighborhoods, housing has never been more unaffordable for the average American.
Due to rising interest rates and soaring home prices, the National Association of Realtors Housing Affordability Index is currently even lower than the Housing bubble right before it blew up in the Global Financial Crisis of 2007-2008.
This all comes back to fiat currencies not being able to hold their value over time. The good news is that a better store of value than real estate now exists for people who have been priced out of the housing market.
John Tuld wrote this article that highlights some of the ways that Bitcoin is a superior store of value compared to real estate. (01/14/2022)
Bitcoin is more scarce than real estate. The dollar amount of bitcoin equivalent to a house can be stored in the palm of your hand. Bitcoin cannot suffer from termite damage. Bitcoin cannot be wiped out by a flood. Bitcoin is difficult to seize, and Bitcoin is divisible.
In all these ways and more, Bitcoin is the ultimate store of value because it was designed to be just that. Bitcoin does that one thing very, very well.
Real estate was never meant to be used as a primary store of value, it was meant for living. Now that a money exists that can preserve its value over time, perhaps we will start to see funds flow from real estate into bitcoin, and housing will become more affordable for the people who need it the most.
Tick tock next block,
Cory Klippsten
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