Real Estate’s First Cryptocurrencies

Yes “cryptocurrencies.” There’s a new word for you!

Cryptocurrencies are meeting the world of real estate investing.

It's a very exciting prospect. Let me explain exactly what's going on. 

In case you don't know, cryptocurrencies are very much like regular money in that you can use them to pay for many things.

The best-known cryptocurrency right now is bitcoin. At the moment, you can use bitcoin to buy software on the Microsoft site, to book a plane ticket on Expedia, or even to withdraw actual dollars from a number of bitcoin ATMs around the country.

The value of bitcoin has been growing explosively over the past 12 months, and it recently crossed a symbolic threshold: One bitcoin is now worth more than an ounce of gold. 

At the same time, cryptocurrencies and regular money are also very different, because cryptocurrencies are not issued by a government and are not backed by any real asset. 

This has many people worried that bitcoin and its like are open to price bubbles and that they aren't well regulated.

Well, several startups, such as Brickcoin and REcoin, are trying to tackle this exact problem by making bitcoin-like currencies, which are backed by a very real asset: property. 

Here's how it works.

First, these startups make an initial coin offering (ICO).

This is similar to the way traditional companies offer stock, and it's a way of raising money while putting a certain amount of the cryptocurrency into circulation.

Second, the startup invests this money in a real estate investment trust (REIT). 

The value of the currency is then a reflection of the actual value of the underlying real estate investments, as well as of the usefulness of the currency in making financial transactions easier. 

In theory, this means you get the best of both worlds: the flexibility and liquidity of cryptocurrencies like bitcoin, as well as the steady returns, the security, and regulatory oversight of a real asset such as property. 

In practice, it's still way too early to say whether this idea will work, and if it does, which of the real estate cryptocurrencies will emerge as the winner. 

In any case, this is certainly an interesting development that's worth keeping an eye on.

However, even if these real estate coins take off, there will always be room for traditional real estate investing.

After all, people love investing in real estate because property is a tangible asset less prone to volatility and market manipulation. Also, real estate allows for greater leverage than just about any other type of investment. 

If you are interested in investing in real estate, check out some of the great homes that have recently come on the St. George market:

Click here for all available St. George homes for sale

And if you're looking to sell your home, you can get a good estimate of what it's worth right now with this calculator that takes into account recent St. George home sales:

Enter your street address here to find out what your home is worth

Finally, if you've got any questions about current conditions in the St. George real estate market, or if you want to talk about cryptocurrencies and how they connect to property, give us a call at (435) 215-4533. We're always ready to help.