The American dream of owning a home and financial freedom has been killed by the inequality of our inherited system. But Bitcoin offers a new dream.
For decades, home ownership has been the vehicle through which the middle class has thrived. Unfortunately, with institutional and foreign investors driving up real estate prices and the money printer becoming brrr, the “American Dream” is now out of reach for many. Indeed, in 2017, there were more US households renting than at any time in the previous five decades.
It is for this reason that I am offering bitcoin as an alternative to home equity. While the American dream may be dying, the Bitcoin dream is just beginning. Using the lessons of history, I will lay out eight reasons why bitcoin is far superior to residential real estate:
1. Bitcoin is numerically scarce
There will never be more than 21 million bitcoins. Even though your grandfather may have said to you, “Buy land, they don’t do anything with it anymore”, that’s not quite true anymore.
As technology advances and government regulations change, humans are able to “create” more land, increasing supply by building taller apartment complexes and developing areas that were previously uninhabitable. With Bitcoin, you opt instead for a network with predictable issuance and known money supply.
2. Bitcoin is divisible
Anyone can buy $1 billion or $1 billion worth of bitcoin. Divisibility makes bitcoin accessible to everyone and allows investors to average the dollar cost instead of having to time the market with a single large investment. Instead of having to spend a decade saving a depreciated currency in hopes of accumulating enough for a down payment, investors can start stacking sats as soon as they earn their first dollar. Additionally, by consistently buying small amounts of bitcoin, buyers don’t have to worry about buying cycle top the same way buyers buy real estate.
History lesson: In July 2006, tens of thousands of Las Vegas residents bought homes that today, 15 years later, have just reached the break-even point. These unfortunate residents took out loans at the height of the housing bubble and were then forced to spend the next 15 years of their investable income servicing their mortgages.
3. Bitcoin is fungible
A bitcoin in Canada is no different than a bitcoin in El Salvador. The non-fungibility of housing complicates the purchase decision. Is the house close to a good school? Is it near the metro? Is it a good size? Is it in a growing city? These are just a few of dozens of constantly changing factors that affect the value of your home.
What happens if the subway is moved, the school closed or the zoning laws changed? Although real estate as a whole may appreciate, your home may fall in value for reasons beyond your control.
History lesson: in March 2020, the shift to working from home has caused a strong real estate sale in New York. As downtown apartment owners watched their savings evaporate, less than 100 miles away, property owners in the Hamptons experienced record appreciation and record price. In this case, a random set of owners were rewarded while others were crushed.
4. Bitcoin is low maintenance
Bitcoin can be bought, stored and sold for virtually no fees. For most US homes, maintenance, repair and depreciation costs are estimated to be approximately 3% of property value per year. In addition, owners must pay significant transaction costs and property taxes. In contrast, bitcoin can be purchased securely for fees as low as 20 basis points (bps) and can be stored for free with a paper wallet.
5. Bitcoin is transparent
All market data is available on-chain for everyone to see. Like institutional investors like Blackstone and technology companies like Zillow become increasingly important for buyers in the housing market, the information asymmetry of the market widens.
Now, in addition to very limited pricing data, ordinary Americans are entering into bidding wars with companies managing hundreds of billions of dollars and thousands of transactional data points on which to base their decisions. Unlike the obscure housing market, the Bitcoin network allows any participant to access and analyze every historical transaction, dating back to its inception.
6. Bitcoin is liquid
Bitcoin can be bought and sold anywhere in the world, 24 hours a day, 365 days a year. This constant-price discovery not only results in fewer price anomalies, but is also incredibly valuable in an emergency.
History lesson: In 2013, when China established its first cryptocurrency ban, bitcoin owners were able to instantly sell or transfer their holdings. Conversely, in July 2021, when China seized property of anti-Communist protestersthe owners were helpless as their savings were confiscated.
7. Bitcoin is freedom
Bitcoin allows you to move when and where you want. Although often used ironically, the saying “the ball and chain” is apt when it comes to housing.
Locking yourself into a 30-year mortgage that eats up half your disposable income is a recipe for disaster. As the speed at which people change careers and shift geographies increases, having the ability to pack up and go with minimal friction is increasingly valuable.
History lesson: At the beginning of the 20th century, more than six million African Americans displaced from southern rural towns to the north to avoid strict segregation laws and seek better opportunities. In order to move, these residents were forced to sell their homes and bear all transaction costs and associated inconveniences.
8. Bitcoin is hope
Bitcoin gives you a call option on the future. Bitcoin is an open-source protocol that has a built-in virtuous cycle: as the network grows, developers are incentivized to build on it, which, in turn, makes the network even stronger. If you think the future of payments, investments, or even money itself could be built on top of the Bitcoin network, owning the asset gives you upside exposure.
The American Dream is the Bitcoin Dream
With the desire for home ownership so firmly embedded in the American subconscious, influencing public opinion is no easy task. By starting from the basics and building on the lessons of history, I hope this article helps introduce bitcoin as a better, safer, and more accessible alternative to home equity. While the American dream may be dying, the bitcoin dream has only just begun.
This is a guest post from Leo. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.