What is Crypto and Why I think it’s Important in Real Estate

Written By Samantha Joseph

Unless you’re living under a rock, you’ve probably heard of cryptocurrency, or better known as crypto. And if you follow me on social media, you heard me mention that this year I’m diving into crypto to learn the ins and outs. As someone in real estate, you might be wondering why the heck I care about cryptocurrency. In this blog post, we'll explore some of the benefits of crypto and how it could be useful in the real estate industry.

For a lot of people, when they hear crypto they think of Bitcoin. And that's not wrong. But since Bitcoin launched in 2009, thousands of other digital currencies have launched. Each one has its own unique features and applications (Dogecoin ring any bells?).

Now you might be thinking, cool, but what is it? The most simple definition is, cryptocurrency is a decentralized digital currency. Meaning no one single person, entity, government, or bank own or control the currency. There are many people more knowledgeable than me that go into what it is and how it works. I’ll link two of the resources I found helpful and started out with.

Benefits of Cryptocurrency

One of the primary benefits of crypto is that it provides a secure way to exchange money online.

You could do this using a bank or an app like Venmo and it would take 2-7 days for the transaction to complete. The bank would check if you have the money and then move that amount into the other person's account. With crypto, you don't need a bank involved. The blockchain, which is secure and decentralized, does the check and moves the money directly. We'll go into more detail on what the blockchain actually does next week.

What does this mean in practice?

  • Security. The blockchain works using advanced cryptography. This makes it near impossible to manipulate or fake transactions to steal money.

  • Fair. Crypto is open to everyone (with an internet connection). Banks or apps can discriminate against you or lock you out, but not crypto. As long as you have your private key, you have complete ownership and control over your cryptocurrency

  • Speed. Since there are no intermediaries, sending funds is direct and instantaneous. Sending wires or moving money internationally is now a lot faster and cheaper.

  • Transparency. The blockchain ledger is public and accessible to everyone. This means that all transactions are transparent and can be traced back to their origin.

So how can cryptocurrency be useful in the real estate industry? Here are some potential applications:

  • Real estate contracts: Smart contracts are rules enforced by code on the blockchain. If the necessary triggers happen on chain, the contract will self-execute. This means contracts like property transfers and rental agreements can happen using crypto. This can make real estate contracts faster, cheaper, and easier to set up and execute.

  • Fractional ownership: Crypto makes it easier for many people to own one thing together without legal overhead. This could make it easier for people to become investors in real estate properties.

  • International real estate: Buying houses abroad can be slow and expensive. This is due to currency exchange and many intermediaries fees. Crypto can help simplify transactions by speeding up the verification and payment process. This will make buying international real estate easier and potentially cheaper.

  • Ending systemic poverty: For many people, buying a home means taking out a loan. One of the primary factors that lenders consider is the applicant's credit score. Unfortunately, research shows that individuals with lower incomes often have lower credit scores. This can lead to either predatory loans or denial of the loan all together. All in all making it harder for the individual to break the cycle and build wealth through real estate. Since crypto isn't based on traditional banks and loans, it may provide a more fair alternative for financing.

Resources for Learning More

I know the world of cryptocurrencies can seem daunting to beginners. But it's worth considering the potential benefits, especially for the real estate industry.

As I mentioned before, I’m VERY new to this space and still have so much to learn. I want these posts to start conversations and also give you the confidence to dig in when it all feels so overwhelming. Below are some of the resources I’ve been enjoying in my crypto learning journey:

Samantha Joseph
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