Bitcoin or Real Estate?

As fiat money continues to evaporate before our eyes, everyone’s desperate to find an alternative to put their money into that will protect their wealth from continued and accelerating debasement.

Most people understand they must acquire assets to outmanoeuvre inflation, but the challenge is knowing which ones to choose.

One option discussed in a previous newsletter was precious metals. They’re durable, relatively finite, fungible, and have been used to store value for a long time.

But when compared to Bitcoin, they’re likely to continue to underperform over the long term, and eventually Bitcoin looks set to absorb their monetary premium entirely, causing them to fall back to their utility value.

But if Gold isn’t the answer, then what about Real Estate? House prices have been on a tear since the 1970’s and it doesn’t look like they’re going to get more affordable any time soon.

This is why everyone talks about getting on the ‘property ladder’ early. House prices have been ‘up only’ for decades, so unless you want to live in a tent, maybe property is the answer for giving you stability and a way to build wealth.

For most people today, their property represents most of their wealth, so it makes sense to explore the premise that this a sensible thing to do and try to understand if real estate will continue to be a ‘safe bet’ for the next few decades.

After all, if that’s where most people’s money is tied up, then the consequences if things go south could be severe. We all remember 2008….

So, will property continue to remain a solid store of value and offer refuge from the money printer? And how will it perform if we do move to a Bitcoin standard?  

Is Property an Asset or a Liability?

Is real estate really an asset? Or is it simply a liability masquerading as one?

To try and answer that, let’s take a look at private boat ownership. Quite famously, boats are typically considered terrible investments. They’re reserved for the ultra-wealthy, dedicated hobbyists, or people on the brink of discovering they’ve made a financial decision they might never recover from.

Before long, you’re drowning in maintenance, docking fees, fuel costs, and insurance.

Property is no different. You’ll face property taxes that climb every year, constant maintenance bills, insurance to fend off disasters, utilities to keep the lights on, and maybe even ground rent if you’re in a leasehold trap. Each month, your so-called “asset” demands you feed it cash to protect your ‘investment’.

If that’s not the definition of a liability, what is? If more people ran the numbers and adjusted for inflation, then more people would realise their wealth isn’t growing through property ownership as much as they think it is, if at all.

So, how have we all been conditioned to view property as an asset?

The answer is simple, broken money.

Property has been riding a wave of counterfeit money since the 70s. By printing the dollar into oblivion the Federal Reserve has destroyed its value and sent inflation through the roof. All that extra cash had to find somewhere to hide, and real estate became the perfect sponge.

Prices have skyrocketed, not because housing is improving, but because the dollar is getting perpetually weaker, and property has been masquerading as a store of value as people increasingly use it to avoid currency debasement.

The result has been the total financialisaton of the housing market. Young people can’t even afford a starter home, and the average age of people involved in property purchases increases every year. Clearly this is not sustainable in the long term. At some point, the music will stop playing.

We have to ask ourselves, would housing still be seen as an asset rather than a liability if the Federal Reserve wasn’t constantly counterfeiting money? And is it really a good thing that property values only trend upwards, pricing out the next generation?

Does any of this really make any sense at all?

Bitcoin Vs Real Estate

Bitcoin is the antidote to this malaise.

Unlike property, Bitcoin is a pristine asset, the ultimate bearer instrument that if you custody correctly, costs nothing to hold. No property taxes, no repair bills, and no insurance. Just your wealth, salable across time, at zero cost.

Not only that, but as the ultimate form of money, Bitcoin is salable across both space and scales as well. You can access your Bitcoin anywhere, at any time, and because it’s divisible, you can access as much or as little of it as you need, whenever you need it.

Property simply cannot compete with Bitcoin when it comes to salability across space and scales. It will always be tied to one physical location, and it comes in a particularly illiquid format. You can access Bitcoin in minutes, but it’s a hell of a lot more cumbersome to release value from your home, and you can spend a fraction of a Bitcoin but not just one room in your house.

As a store of value, Bitcoin leaves real estate in the dust. Ever increasing property values are driven by little more than the Federal Reserve’s egregious money-printing and are likely to correct savagely when the game is up. You face constant ongoing costs, and powers outside of your control can change the rules of the game at any time.

In contrast, Bitcoin’s value is anchored in its fixed supply of 21 million coins that can be altered by no one. It makes your wealth liquid, borderless, censorship resistant and free from government interference or seizure on a network that has 16 years of near perfect up-time. Bitcoin’s not just money, it’s complete freedom.

It begs the question, why pour your future into a property market distorted by fake money?

Real Estate on a Bitcoin Standard

The idea that a world living on a Bitcoin standard might eventually result in properties returning to their utility value rather than their current over-inflated fiat values is a scary prospect to most. Millions of people are relying on their property to either fund their retirements or pass wealth on to their children.

The prospect of this stored wealth one day evaporating is something most have never even considered. An investment in property was always meant to be as “safe as houses”.

While for some people this paradigm shift will be gut wrenching, confusing and potentially financially devastating in the short term, in the long term it will be a positive thing for society. Homes will become more affordable; rent will become a manageable living expense, and it will save countless generations from becoming perpetual serfs who live hand to mouth with no feasible mechanism to grow their wealth.

The current system puts us on a trajectory where we are supposed to ‘own nothing and be happy’. A Bitcoin standard enables true sovereign ownership.

The shift to an entirely new financial system can’t happen without creating some casualties. When the game itself changes at such a fundamental level, anyone still operating by the old set of rules is going to get caught offside. There will be plenty of property speculators left holding the bag and suffering the consequences.

We should accept this difficult reality, prepare for it and consider ourselves fortunate to have had the foresight to see this coming.

Protect Your Wealth - The Bitcoin Way

There’s nothing wrong with owning property and this article is in no way a suggestion to make a rash decision, sell your house, and introduce your family to the nomad lifestyle.

We know that lifestyle doesn’t suit everyone, and we recognise the value of being able to establish roots as part of a stable community and create a home for your family.

Having said that, we would still urge caution if property is a major part of your strategy for maintaining wealth far into the future or safeguarding an inheritance for your heirs. If your wealth is heavily over-indexed to the value of your home or your property investments, then you might find that once the fiat scam collapses, so does your net worth.

The fiat ponzi scheme has conditioned us to think that property is a safe haven. Bitcoin might be about to teach us all that it isn’t.

If you’re overweight on property and don’t want to take that risk, then we can help you reallocate to Bitcoin safely and securely. Our experts will guide you through every step you need to take to protect your wealth for generations. All you need to do to get started is book a free consultation today.