It is no secret that Crypto has taken the investing world by storm in the last couple of years. Anyone who says that Crypto is a fad must be mistaken – the public has invested trillions into this new asset class which undoubtably shows the demand not only to acquire but to exchange this form of asset.
I, like everyone else, read the investment headlines on CNBC, Yahoo Finance and the Wall Street Journal so I will not bore you with the same old clichés that are discussed there. Instead let’s discuss the similarities between Crypto and Real Estate.
Can Use for Speculation – you can buy a cryptocurrency and sell it on the open market for a profit in the future, as you can with real estate.
Ability to Leverage – you can borrow on margin to buy more cryptocurrency than the cash you have to today. In the real estate world this is a mortgage.
Ability to Hold Long Term – you can hold your crypto forever and pass it down in your will as you can with any asset, of course like real estate.
Favorable Taxation – if you hold your crypto for more than one year you are taxed at the capital gains tax rate as opposed to the ordinary income rate. The body of tax law around real estate has been developing for well over 100 years now in the US alone, which gives it tax advantages over crypto in the short term. It is very plausible that there will be an entirely new portion of the tax code developed to handle crypto specifically in the near future.
Immense Public Demand for The Asset Class – anyone who says Crypto is a fad is crazy given that the market cap of all cryptos at the time of writing this article is over $2 TRILLION! The estimated global market cap of global real estate is over $325 trillion but real estate has been around since literally the beginning of time so it’s a few years ahead of Crypto.
Shows Strong Growth Potential – the public needs assets to invest in. The ability to take $1 earned and attempt to turn it into $2 is what makes the world go round in many circles, especially for those who are already meeting their cost of living needs through their ordinary income. Whether it’s Crypto, real estate, stocks, mutual funds, ETFs or bonds the world desires investments and this space is constantly developing.
Widespread Creativity in The Sector – have you seen the amount of crypto websites, apps and marketplaces opening lately? There are tons of them because it’s a brand new space so ideas are flowing! When there is money to be made people in an industry people rush in and that is what is occurring with crypto. Real estate is a more mature industry but there are plenty of great new ideas there as well. As long as there is creativity in the sector you know it’s thriving which can be said for both Crypto and real estate.
I never like making predictions as no one can predict the future so I much prefer to lay out points of discussion for you to draw your own conclusions instead. Let me know what you think in the comments section and let’s come back to this article in 5 years to see what happened!