Hello, Blockchain! Welcome to Wall Street

People with Fidelity 401k or retirement accounts might have noticed a new addition to their home screens: listed among the daily commodity prices is the price of bitcoin. Looks like Fidelity is now poised to allow bitcoin trading in some 34 million individual investor accounts. 

Meanwhile, the Bloomberg Crypto Outlook Report points out that bitcoin can’t be printed, and with a finite supply, it’s likely to grow in value over the years ahead. One of Bloomberg’s senior strategists has spoken of bitcoin’s potential when the economy improves.

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Deloitte Calls Blockchain “Next Big Thing in Commercial Real Estate”

The leading international accounting firm Deloitte has announced a new blockchain report. The firm says blockchain-based smart contracts could “revolutionize” commercial real estate.

Deloitte says blockchain will work for leasing and selling real estate. Indeed, Deloitte says the technology is poised to take on 50% of all commercial rentals and sales.

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Hype and Innuendo: Who’s Talking About Blockchain in Real Estate Now?

Marc Andreessen is concerned about the state of U.S. housing. (If the name sounds familiar, but you can’t pinpoint it, Andreessen co-founded Netscape, and serves on the board of directors of Meta/Facebook.)  

Observing that “our country is creating households faster than we’re building houses,” Andreessen lays out several other issues that point to the need for change:

  • Long-time renters never receive a penny of equity.
  • The barriers to home ownership connect with “inequality and anxiety.”
  • After the advent of Covid, many workers joined the “Great Resignation” and left “traditional economic hub cities” to work remotely.
  • The housing market is unprepared to address these realities.

For all of these reasons, Marc Andreessen’s high-profile venture capital company, Andreessen Horowitz, is now helping former WeWork CEO Adam Neumann create a business by investing $350 million in the startup. The new venture is focused on residential real estate — which, Andreessen notes, is “the world’s largest asset class.”

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Philly Agent Sells a House That Mines Crypto…For a Purpose

Mark Masih is a Philadelphia real estate agent and an investor. Masih has been an agent for some time with Compass Realty, selling homes in Philadelphia.

Recently, Masih bought a West Philly property, then nicely renovated it. When Masih listed it, the home was described as containing a unique and special “fixture” — a closet cryptocurrency miner. A miner is a piece of computer equipment that generates cryptocurrency. And there it was, waiting for a buyer willing to pay $240,000 for a newly spruced-up house in the Belmont section of West Philly, where the average home sells for just under $100K.

A good deal? Masih called it an investment within an investment.

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An Update on El Salvador’s Bitcoin Experiment

Blockchain Blues?

In El Salvador, people can use bitcoin to buy houses — or most anything that’s sold in the streets, shops, and malls. President Nayib Bukele’s quest to make bitcoin the nation’s legal tender means it’s gradually being phased into the economy through a suite of incentives.

The plan is bold. For a nation tethered to the U.S. dollar and U.S. economic planning, the bitcoin quest is freeing. But the value of bitcoin dropped from around 69K in November 2021 to around 19K a few months later. No surprise, then, that Nayib Bukele — quite popular on other scores — has received plenty of criticism over bitcoin.

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Blockchain and Cryptocurrency: NAR Dives In

The National Association of REALTORS® is the largest U.S. real estate trade group. Now, it has a Cryptocurrency Presidential Advisory Group. The reason? To learn and think about crypto in real estate — now, and in the future.

Leslie Rouda Smith, president of NAR, wrote in June:

I’m excited to tell you that I’ve appointed a presidential advisory group on cryptocurrency — a member-driven group of issue experts who will explore in detail the expected impact on consumers and on our profession.

The Cryptocurrency Presidential Advisory Group will make recommendations to the NAR president later in 2022. The idea is to guide the association and industry professionals into a new financial era.

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Not Slowing Down: Miami Real Estate Becomes Crypto Focal Point

Last summer, Peter Lane Taylor first reported on a story about the Miami Beach penthouse that sold for a stunning $22.5 million worth of cryptocurrency. Taylor wrote:

At $4,440.50/SF, the deal broke every previous Miami Beach record for price per square foot. Yet it raised more eyebrows for what it didn’t do: close in American dollars.

This summer, says Taylor, Miami’s real estate market is still going strong. And it’s the focal point of a cryptocurrency boom — likely setting the stage for similar energy in Austin, New York City, Los Angeles and San Francisco.

Coastal Miami, Taylor notes, has shown them all that crypto-based real estate sales are “legit, legal, enforceable, efficient, and here to stay.”

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New Regulation for Digital Assets

Here It Comes…

Internet-assisted real estate investing keeps evolving, just as the internet itself does. Now, it’s possible to convert stored value — even real estate — into digital assets. Fractional shares in a property become securities, issued as tokenized shares to be traded on a secondary market. These investments and trades are verified and etched into a digital ledger, known as the blockchain.

Of all the kinds of assets that can be tokenized, real estate is the fastest growing sector. The multi-billion-dollar global market for tokenizing real estate is an area of promising opportunities.

Here’s the thing, though. These fractional shares are bought with cryptocurrency. While there’s a great advantage in profiting from properties without having to own the buildings, the question is whether crypto assets are adequately guarded from risks.

Buyers, businesses, and regulators want clarity.

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Bitcoin or Real Estate for the Investor: Which Is Better?

If you ask J.P. Morgan, you might be surprised at the answer.

At a time when real estate and other private investments are undergoing a valuation reset, a recent J.P. Morgan report highlights cryptocurrency. It says digital currencies have overtaken real estate as a “preferred alternative asset class.” (Alternative assets are investment choices that don’t fall into the stocks-and-bonds category.)

Bitcoin is quite a bit down (~60%) from its all-time high. In the “crypto winter” of 2017-18, it lost more than 80% of its value and took three years to rebound. In 2022, crypto assets are showing jittery reactions to inflation and rising interest rates.

But with bitcoin trading around $30,000 in May 2022, J.P. Morgan’s latest note to investors indicates “significant upside for digital assets from here.” The bank ascribes a fair value of $38,000 to bitcoin.

J.P. Morgan stands out among large banks for its early and significant investments in the world of crypto. This, although Jamie Dimon, the CEO of JPMorgan, called bitcoin out in 2017 as “worthless.”

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Blockchain Makes Headway in Carbon-Busting

Not Ready for Prime Time in Mortgages, But…

Despite the growing pains and the volatility, crypto assets (the good ones, at least) are finding their use cases. Numerous financial and tech giants are offering customers digital asset options, and investing in the sector in various ways. The federal government recently put all hands on deck to find ways of keeping crypto assets useful, fair, and secure.

The mortgage industry, though, has done no more than dip a toe into distributed ledger a.k.a. blockchain technology. But the industry has to get to grips with the digital age. It has to smooth out the experience for borrowers of mortgages and home equity financing. Today’s mortgage applicant has to submit stacks of paper statements. Underwriters reject copies of webpages because they could be falsified. Title searches involve multiple sources of data when one ought to be enough. And so on. The process is antiquated and stressful, to put it mildly. “We’ve always done it like this” seems to be the only justification for much of the mortgage and title processes. Perhaps distributed ledger technology can help reinvent it. We’re not there yet.

Meanwhile, blockchain and real estate seem to be meshing quite well in the area of greenhouse gas emissions tracking.

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