Crypto Vs. Real Estate: Which is a better investment?

crypto vs. real estate - smartcrowd

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Without any doubt, the real estate and crypto market has been on major spotlight in year 2021. With both markets heating up, a lot of skepticims and concerns rise along. It’s possible to become filthy rich investing in cryptocurrency yet lose everything instantly if you invest irrationally. On the other hand, for a long time, real estate has proved to be a major source of wealth for 90% of millionaires, as stated by the famous billionaire Andrew Carnegie. But, before digging deeper into crypto vs. real estate, one must carefully examine historical performances of each along with the regulations tied with such investments.   

In this blog, you will be able to: discern crypto vs. real estate, breakdown pros & cons, and more importantly, learn how to reinvest your profits in a less riskier environment.

Let’s start with the hype behind crypto…

Bitcoin, the world’s first full digital currency and the most popular, revolutionized the way transactions are made. More and more institutions are now accepting bitcoin and other cryptocurrencies as payment. Most cryptocurrencies actually are backed by blockchain technology. This brings us to the numerous perks associated with cryptocurrency.  

Some fundamental benefits of cryptocurrency include:

  • Decentralization: cryptocurrency has no central governing authority. Unlike currencies such as Dollar or Euro, cryptocurrency isn’t regulated or controlled by the central bank. Basically, the currency is governed based on economic principles. No external party can monitor or track what transactions you’re doing. This means the government cannot manipulate the supply of bitcoin for example. In fact, the cryptocurrency can never be inflated due to the limited amount of bitcoin available.
  • Anonymity: since cryptocurrencies use blockchain technology, all confidential transactions are stored in blocks of data which are added to an existing blockchain. This way you can complete transactions marked in the blockchain without having to reveal your identity.
  • Transparency: not only are all transactions stored in the blockchain permanently but are also available to the public. The blockchain transaction is a quite astounding process which we highly recommend you look into more closely in this article.
cryptocurrency - smartcrowd

So what explains the growing interest in crypto investments?

Well, investing in cryptocurrency, especially in Bitcoin, is due to several reasons:

  • Low costs and barriers to entry: since bitcoin is divided into smaller sub-units called satoshis, you can start buying bitcoin for as low as 100$.
  • Upward price trend: with rising interest in bitcoin and other cryptocurrencies, more and more people are joining the trend and opting for a share of the pie. Furthermore, speculations show that prices will continue to increase, making it a long-term potential asset. The price of bitcoin for example is projected to surpass $100000 in a couple of years.

On the other side, however, many investors have certain concerns and doubts against the popular crypto investment. Due to its high price volatility, there is still an ongoing debate whether the currency will still be valuable in the future, as many believe it could be a bubble.

Difference between Crypto vs. Real Estate

Unlike real estate, cryptocurrency is an intangible asset. It’s completely digital, which makes it prone to cyberattacks and operational glitches. In fact just 2 days ago, on the mentioned date, 10-08-2021, one of the biggest crypto heists in history occurred. Poly Network disclosed that hackers have stolen around $600 million. Moreover, because cryptocurrency is not regulated by any government entity, it can be easily used for money laundering or tax evasions. Overall, although cryptocurrency may generate extremely high returns, it can be also very risky. As a result, in order to avoid falling into the trap of suddenly losing your money, you may reinvest your cryptocurrency profits in a less riskier environment.

That’s where real estate jumps in.

Although real estate isn’t a fluid asset, but at least it’s a tangible asset that has demonstrated to be the largest asset class in the world. With the right investment, your property value will continue to appreciate. Residential real estate in particular serve as an ideal choice since you can generate a second income all year long. How so? Well, in case you didn’t know…Rents and household prices typically increase in direct proportion to inflation. No matter what’s happening in the market, people will always need a place to stay and live in.

Nevertheless, you need to keep in mind that yes real estate investments are definitely more stable and safer than investing in cryptocurrency but returns aren’t as fast and liquid. You must be looking for long-term commitments.

Adding to that, with real estate or real estate crowdfunding, you can simply diversify your portfolio and limit your risks. In fact, MENA’s first real estate crowdfunding platform, SmartCrowd, allows you to easily invest in multiple properties freely and could be a great starting point for you to reinvest your cryptocurrency profits. 

Now to tackle the elephant in the room, which is the better investment?

There is no right or wrong answer to this question. It all comes down to what type of an investor you are. What matters is that you NEVER jump into an investment before doing your own research or consulting a financial advisor. Just because cryptocurrency is a hot trend, doesn’t make it completely suitable for you to invest in. The trick here is to leverage the trends and different options available for getting a bigger bang to your buck.

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