That’s 4.5 Million people per show! Thank You, Tony Khan!

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Bitcoin is the only way to solve the housing crisis - but is it going to be a painful transition?

I have been thinking about what crypto would look like in a regulatory tailwind. Would it look like Albania circa 1996, with the entire society, including the political elite, getting absorbed into a network of ponzi schemes?

Obviously the ICO fad of 2017-18 was a precursor to how some of our financial elite, the Larry Finks of the world, see the tokenisation of everything, a massive deregulation of securities. In this context Bitcoin is clearly the safe haven, as the only cryptocurrency that is truly decentralised and not subject to the whims of egoistic founders and insiders who pre-mine in order to maintain their position as protocol dictators. This is why they love proof of stake over proof of work.

But what if the next phase of this tokenisation of everything is mediated by the established banks or property developers, who put their brands and credibility behind it, rather than a bunch of kids scamming themselves and others.

Put a pin in that, I want to come back to it and show how the principle of an ICO, tokenisation, and therefore Bitcoin, can support the value of real estate rather than collapsing the economy.

The internet developed with a regulatory tailwind, in spite of a range of societal ills. Progress is painful, and bad people will do bad things no matter what the medium of action. But Bitcoin was never given the same level of charity and understanding, because it directly threatens the power and privilege of both state regulators and the collateral base of the retail banking system - property. Bitcoin is better collateral, but regular banks are not set up to incorporate it into their systems, and regulators are terrified of a wave of bank failures.

But would a migration towards a Bitcoin-collateralised banking system collapse the value in real estate, and therefore the traditional financial system itself? Lets go through some of the obvious arguments:

1. Reduced Demand for Real Estate as Collateral

• Current Role of Real Estate: Real estate serves as a primary form of collateral in traditional banking because it is considered a stable and tangible asset. Banks' willingness to lend against real estate drives demand for properties, supporting their market value.
• Bitcoin as an Alternative Collateral: If Bitcoin replaces real estate as the primary form of collateral in banking, the demand for property as a financial instrument would decline. This reduced demand could lead to a drop in real estate values, especially in markets where property prices are heavily influenced by mortgage lending.

2. Liquidity and Utility of Bitcoin

• Liquidity of Bitcoin: Bitcoin is more liquid than real estate. If banks prefer Bitcoin as collateral because of its liquidity and ease of transfer, this could diminish the perceived value of real estate as a less liquid, more cumbersome asset.
• Speculation on Bitcoin: However, Bitcoin's volatility might deter widespread adoption for collateralized lending. If Bitcoin’s price remains unstable, it could limit its use in replacing real estate as the dominant form of collateral.

3. Shift in Wealth Allocation

• From Real Estate to Bitcoin: In a Bitcoin-collateralized system, individuals and institutions might allocate more of their wealth to Bitcoin rather than real estate. This shift could reduce the flow of capital into property markets, further suppressing real estate prices.
• Generational Preferences: Younger generations, already more inclined to invest in digital assets, could drive this trend further, reducing the role of real estate as a traditional store of wealth.

4. Macroeconomic Effects

• Impact on Credit Markets: Real estate-backed loans are a cornerstone of the current credit system. A transition to Bitcoin-collateralized loans might disrupt traditional credit markets, leading to tighter lending conditions for property buyers, thereby suppressing demand for real estate.
• Deflationary Pressures: If Bitcoin, with its fixed supply, becomes the primary collateral asset, its deflationary nature might discourage borrowing altogether, reducing demand for all collateralized assets, including real estate.

5. Regulatory and Institutional Resistance

• Banking and Government Resistance: Real estate is deeply embedded in financial systems and government policies. Governments often use real estate markets as tools for economic stability and taxation. A shift to Bitcoin might face significant institutional and regulatory pushback, limiting its impact on real estate markets.
• Stability Concerns: Policymakers might resist Bitcoin-based banking due to concerns about volatility and systemic risk. Real estate's stability makes it preferable for many regulatory frameworks.

6. Regional Differences

• Emerging vs. Developed Markets: In regions where real estate is already overvalued or speculative, the shift could be more dramatic. Conversely, in markets where real estate remains affordable and tied to local demand, the impact might be less pronounced.
• Cultural Factors: In countries where real estate is deeply ingrained as a store of wealth (e.g., Europe, China), the transition could take longer, muting the impact on property values.

7. Long-Term Effects

• Valuation Reset: Real estate will always retain intrinsic value as a utility (e.g., housing, commercial space), but speculative and investment-driven demand could diminish, leading to a reset in valuations.
• Diversification of Collateral Assets: Real estate would not necessarily lose all value but might become just one of many collateral options alongside Bitcoin and other digital assets.

8. Bonus Points: Demographic Decline and Population Growth

• Shrinking Demand for Housing: In regions experiencing demographic decline—such as many parts of Europe and East Asia—a reduced population naturally decreases the demand for housing. If Bitcoin-collateralized banking systems further reduce the financialization of real estate, this decline in demand could exacerbate falling property values.
• Aging Populations: In aging societies, a large portion of wealth is tied up in real estate. As older generations downsize or pass on assets, a surplus of housing could flood the market. If Bitcoin offers an attractive alternative store of value for younger generations, real estate demand may not rebound, leading to long-term declines in property prices.
• Population Growth in Developing Markets: Conversely, in regions with growing populations (e.g., parts of Africa and South Asia), the dynamics could differ. Bitcoin adoption in these regions might not immediately reduce the demand for real estate, as housing demand will likely remain tied to population growth. However, the overall system could create uneven impacts globally.

Cumulatively speaking, this is what terrifies financial regulators, who have spent the past 16 years fighting off banking crises caused by a collapse in property prices, which rapidly spread to sovereign debt crises, especially in Europe.

The Alternative Argument

Bitcoin is excellent collateral in cases where loans are very difficult to collateralise, or where the collateral typically depreciates. For example, a house or building renovations (you cannot repossess a part of a house or building), car loans (which depreciate rather than appreciate in value), and houses that are planned but which have not started construction.

So lets imagine an environment where credit starts drying up, due to high interest rates curbing inflation. Capital is sitting on the sidelines, which is expensive to dispose of. As a bearer asset, with the aid of 3 of 4 multi-sig escrow wallets held by a set of trusted third-parties, more borrowers seek alternative models for accessing credit at viable rates. For more information on this model I refer you to the FAQs of Debifi.

• Car Loans: Bitcoiners agree to tie up the value of the car as collateral for the loan. If the Bitcoin goes down in value then the lender can choose to repossess the car or the Bitcoin, or encourage the borrower to increase the collateral. At worst this is a better situation than today, where the asset used as collateral depreciates, and can never appreciate.
• Renovations: It is difficult to repossess a part of a building, so loans for renovations are typically non-collateralised, at least for individual homes. There is also the matter of the uncertainty of starting a renovation based upon the guarantees of the contractor alone, having to take out a loan to pay for a project that may go sour. So let's be creative with how we use our Bitcoin by hypothesising a new type of company, call it Bitcoin Construction Ltd ("BC"). This company has expertise in construction and property renovations, servicing the market of Bitcoiners who want to use their Bitcoin to renovate their properties. On the website of BC are a list of contractors that specialise in different locations and different types of projects. The Bitcoiner chooses a contractor in cooperation with BC and they start planning the project. When they agree on a project scope and budget the Bitcoiner sends double the value of the project to a multi-sig wallet (either 2 of 3, or 3 of 4) which holds the Bitcoin until the quorum agree that the project has been completed to spec, or when they agree a settlement in the event of a dispute. In this context BC can lend the money to the Bitcoiner knowing they are guaranteed to access the Bitcoin collateral, and have the leverage to ensure that the borrower adds adds Bitcoin to their collateral in case the value decreases.
• Self-Builds: Property developers can take a full year to build a house. If the buyer has land, planning permission, and the Bitcoin then they can post the Bitcoin as collateral for the construction project without disposing of it. Banks will not accept Bitcoin as collateral for a mortgage for the reasons laid out above, but a Bitcoin Construction company may accept it as collateral for a new build home.
• Internationalising the Mortgage Market: If this model of accessing capital through Bitcoin collateralization expands from small scale short-term loans then one can imagine new projects with new models emerging to displace regular mortgages. Mortgages from abroad are typically extremely difficult to get due to the differing national laws pertaining to property rights and taxes, and the difficulty in repossessing a home from another jurisdiction. But one can imagine a scenario where Bitcoin is deposited as collateral in lieu of the deeds of the house, meaning repossession is automatic and CGT is not a factor because the gain is not realised as collateral for a long-term loan.
• Investing in Property via ICOs: In a hypothetical future marked by extensive financial deregulation, the widespread use of Initial Coin Offerings (ICOs) to fund property developments could transform the real estate market into a highly decentralized and speculative investment landscape. Property developers issue blockchain-based tokens representing fractional ownership, rights to rental income, or even future property appreciation, allowing them to bypass traditional financing methods like bank loans. These tokens attract a global pool of investors, democratizing access to real estate investments but also amplifying risks. Tokenized real estate investments become highly liquid, enabling investors to trade their stakes in real-time. ICOs enable innovative developments and reduce barriers to entry for smaller developers.

Will Tether become insolvent in 2025? Will it be part of the next economic collapse?

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Today's Top #2: Ancient Bitcoin Address Awakens After Lying Low for Over a Decade, Moves $34,070,177 in BTC at 10,150% Profit

tldr; A Bitcoin wallet inactive for over a decade has moved 357 BTC, valued at $34,070,177, marking a 10,150% profit since its last activity in January 2014 when Bitcoin was priced at $862. The wallet's reactivation was detected by Whale Alert, a platform tracking large crypto transactions. The wallet had received small BTC amounts over the years, possibly due to dusting attacks, where small crypto amounts are sent to addresses to breach privacy. This event highlights the significant value increase of Bitcoin over the years.

*This summary is auto generated by a bot and not meant to replace reading the original article. As always, DYOR.

https://www.reddit.com/r/CryptoCurrency/comments/1hr1rli/ancient_bitcoin_address_awakens_after_lying_low/