Bitcoin comes with a unique value concept. It is a protocol for exchanging value. It lets you own part of it directly. The network of Bitcoin is a transaction processing system. From it comes the ability to exchange money, mainly Bitcoin. It is the native currency of the network. It represents the underlying system’s value. It is not only a payment network. But an asset. It is backed by the most resilient computer network worldwide.
With Bitcoin, it will be possible to take any ownership stake in the whole internet of value. It was not possible with the internet of information. Ownership, along with value capture, is directly built into the network. It is a paradigm shift that some new investors require to look out for. Thus they will understand the full potential of Bitcoin.
Owning real estate is desired as it produces income. You can use it as a means of manufacturing. Now real estate serves a different purpose. Considering the high levels of monetary inflation recently, keeping money in your savings account is never enough to preserve the value of money and keep up with inflation. Thus, wealthy individuals, institutions, and pension funds usually invest most of their disposable cash in real estate. It became a preferred store of value. Most individuals do not wish to have real estate. So they can reside in it or use it for production. They want real estate because they wish to store value.
A digital store of value
Bitcoin is hugely accepted as a digital store of value. It is logical in a world with an increase in monetary expansion. Bitcoin supply is finite. But the properties associated with it make it a perfect store of value. It is portable easily. It is also divisible, fungible, and divisible, apart from being non-custodial and censorship-resistant. Real estate is incapable of competing with Bitcoin as a store of value. The well-known crypto is rarer, easier to move, more liquid, and harder to confiscate. You can send it anywhere in the world without any cost at the speed of light.
On the other hand, real estate is easy to seize. It is challenging to liquidate during a crisis. Ukraine recently illustrated it. After the invasion of Russia on 24th February this year, many Ukrainians switched to Bitcoin. It was for protecting their wealth, accepting transfers or donations, bringing their money, and meeting their everyday needs. Real estate is left behind.
Bitcoin as collateral
Real estate is one of the most common collateral forms. It is used in the conventional banking system. It is commonly used as collateral from one borrower to one lender. It is for securing a loan’s repayment. Banks lend to individuals and institutions owning real estate. For comparison, Bitcoin ownership became synonymous with creditworthiness in the space of Bitcoin and the preferred collateral that Bitcoin financial service providers accept. Using Bitcoin as collateral for securing a loan’s repayment has some advantages for both borrowers and lenders.
As digital property, Bitcoin comes with a much higher velocity than real estate, which is physical. You can access it quickly and buy and store it. You can also use or maintain it. You may be residing in a remote village. Yet as long as you use a smartphone, you can buy or hold your Bitcoin. It includes all abilities to get used anywhere in this world. You may reside in Germany yet get a loan from a US bank if they asset your Bitcoin as collateral.
Real estate includes property as collateral. It makes conventional banks select it over Bitcoin.
They are less volatile. Conventional financial service providers are not aware of the high volatility of crypto. Every asset comes with its specifics. The volatility of Bitcoin can be dangerous for any market participant not expecting it. It is usually beneficial to the economy. Its volatility will most likely result in a more adaptable market.
Companies must be better capable of saving, and not leveraging as much as price falls could fast cause a margin call. It is similar to what happened after the recent crash of 70 percent in Bitcoin. After it, a lot of hugely indebted firms faced bankruptcy. The market of Bitcoin is continuously testing its innovations in this competitive market.
Real estate is unlike Bitcoin, literally. Yet it is the most suitable metaphor for describing the different applications of Bitcoin and some opportunities it presents. Bitcoin is a part of an essential step toward digitizing the world surrounding us. It is a tool that will aid society in organizing itself efficiently. The introduction of rights of private properties enabled city creation. Similarly, Bitcoin allows a new way to create wealth in the space of digitization. It is a basis to reach the next huge phase of economic advancement and the betterment of life on earth. Remember that bitcoin circuit trading platform is the best trading bot used by millions of investors you can invest in cryptos on this platform.