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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The Bahamas: Reborn as a Blockchain Real Estate Hub?

The Bahamas and blockchain real estate

Bill Clinton, Tony Blair, and Andrew Yang made appearances at the Crypto Bahamas conference this year. The blockchain company FTX, one of the event’s hosts, boasts Tom Brady in an Ambassador role. Co-hosting the event was SALT, the geopolitical thought leadership forum.

The Bahamian Prime Minister, Philip Davis, opened the event. Clearly, cryptocurrency is welcome in The Bahamas today.

The country regulates digital assets with a set of laws that includes the Digital Assets and Registered Exchanges Act of 2020. Bahamian residents can pay their taxes with digital assets. And the Bahamian digital coin, the Sand Dollar, is a leader among central bank digital currencies.

What are people buying in The Bahamas with their digital assets?

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The NFT House on Florida’s Gulf Coast

Gulf Coast of Florida

A First for U.S. Real Estate

This year, the California real estate tech company Propy directed the first U.S. real estate NFT auction. The asset was a four-bedroom, 2-and-a-half bath house in Gulfport, on the western coast of central Florida. The Spanish-style building looks like many other Florida homes (readers may view a picture of the actual home by Josh Rojas for Spectrum Bay News 9 of Tampa). It sold for about $655K — which translates to about 210 Ethereum (ether) coins.  

The key parties to the transaction were:

  • Leslie A., the seller. Founder of DeFi Limited and a real estate investor.
  • Amanda J., the buyer. The new owner received a non-fungible token (NFT) encompassing the house title. This is a unique unit of data, etched on the blockchain as indelible proof of ownership.
  • A company named Never Forget to HODL LLC, which had been created to transfer the property rights.

What’s “never forget to HODL” about? Depending on who you ask, HODL is either a legendary typo made in a chat forum by a frazzled crypto owner, or the acronym for “hold on for dear life.” In any case, it’s well-known slang in the cryptocurrency world.

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Airbnb Could Decide to Accept Cryptocurrency in 2022

Image of a phone screen with icons on it.

Meanwhile, the Homesharing Platform Is Helping Homeowners in Ukraine

This might just be the year Airbnb meets bitcoin. A team of Airbnb employees is currently looking at how the platform could accept cryptocurrency payments. Airbnb co-founder and CEO Brian Chesky has said the most requested feature for 2022 is a crypto payment option.

It’s likely to happen. Chesky has been tweeting since 2014 about Airbnb taking bitcoin. And other players in the short-term home rental world have already taken the plunge.

Binance is the largest cryptocurrency exchange. It has formed a blockchain-based homesharing service, Dtravel, with a presence at Travala.com. Blockchain-based Dtravel, which announces itself as the next evolution of homesharing, is decentralized — “community owned” and run by its participants, not by a company. That said, Dtravel is being guided through the process by people from established companies, including Airbnb.  

Dtravel charges less than Airbnb does, and the profits go back into Dtravel. This enables the project to hire developers and cover travel insurance for homeowners who rent out their properties. Spending decisions are made through community votes.

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Going All In: Why South Koreans Are Keen on Metaverse Real Estate

Person outside standing near a fence rail gazing over a bury city.

South Korea — renowned for its pop culture and a $16+ billion gaming sector — is perfectly poised to flourish in digitized worlds. K-pop singers have launched hits in the metaverse and real estate is popping up to host future concerts. Naver Z’s World, a metaverse leader based in South Korea, has attracted international fashion brands and individual creators alike to do business through its platform.

The South Korean government is acutely aware of the ramifications of all of the above. President Moon Jae-in’s administration is investing in the metaverse, encouraging interest in digital tourism and real estate.

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