The Bitcoin Newsletter 13 - How Bitcoin is changing the housing market
Welcome to the 13th edition of The Bitcoin Newsletter
The transformative potential of Bitcoin's impact becomes most vividly apparent when considering its positive influence on the housing market. In this edition of the newsletter, I will use the example of the housing market to demonstrate the profound impact that Bitcoin can have, shedding light on the extraordinary manner in which these changes can manifest organically, absent the need for a central orchestrator.
Furthermore, there are new podcasts online, in which I had the chance to touch on the positive effects that Bitcoin can have on health, wealth, and overall well-being. Additionally, my latest article in which I elucidated the topic Bitcoin is a possession, not property can be found in the Worth to Know section.
If you find this newsletter interesting, feel free to share it with your family, friends or colleagues. I appreciate your support!
How Bitcoin is changing the housing market
By functioning as an actual store of value, bitcoin will likely absorb the monetary premium that real estate has accumulated over decades of monetary inflation. Since 1971, when U.S. President Richard Nixon announced that the United States would end the convertibility of the U.S. dollar into gold, real estate has served the world as the primary asset to store value and protect wealth from resulting inflation. In addition, deflation will cause real estate prices to fall. Under a Bitcoin standard, real estate will eventually collapse to its utility value. We can already see this development, for those who own bitcoin, housing is becoming more and more affordable, while it is becoming increasingly expensive for all those who hold their wealth in fiat.
As illustrated in the chart below, which shows that from 2011 to 2023, the median sales price of new houses in the United States decreased significantly in bitcoin (BTC), while it increased significantly in US dollars (USD).
Median sales price for a new house in the United States in BTC and USD, Source.
It appears logical in my view that housing will become more affordable over time when priced in bitcoin. The latter surpasses real estate in its function as a store of value. Bitcoin is rarer, more liquid, easier to move, harder to confiscate, and cheaper to maintain. Real estate cannot compete with bitcoin as a store of value. Therefore, bitcoin increases in purchasing power significantly faster than housing.
The diagram below shows the average value of a home in the United States in bitcoin (BTC). While the average price of a house in the US was 125 bitcoin (BTC) in 2017, it was only 20 bitcoin (BTC) in 2020. A decrease of ≈84%. This trend is likely to continue.
House priced in bitcoin (BTC) in 2017 vs. 2022, Source.
Furthermore, with the growing adoption of Bitcoin, it is highly probable that funds that would have otherwise been allocated to real estate, including those already invested, will redirect towards bitcoin. As previously mentioned, this will contribute to affordability in the housing market.
Since Bitcoins inception in 2009, the market naturally reprices housing based on its utility value which is characterised by the fact that it can be lived in or used for production. Over time, housing becomes more and more affordable for long-term bitcoin holders. As we can witness, there is no need for a central authority to regulate the market for this positive effect. This positive change begins with the individual, because in the end the market is a composition of all individuals.
In contrast, the central control of money in the fiat system has led to excessive lending and caused housing to become increasingly expensive. This happened because, on the one hand, construction costs rose sharply due to inflation caused by excessive money creation, and on the other hand, housing serves as a speculative investment tool to protect wealth from inflation.
Historically, economic crises often occurred when the state intervened excessively in the economy. Here are two historical examples that illustrate the similarities to today's economic situation: First, the Great Wall Street Crash of 1929, which occurred more than a decade after the founding of the central banking system in the United States (the Fed) and the subsequent centralization of money. The second example is the social decline in Germany after the hyperinflation of the Weimar Republic from 1918 to 1923. This inflationary period plunged the population into despair, and the resulting economic inequality gave rise to populism. Ultimately, this era culminated in the horrors of the Nazis, who exploited the prevailing fear and discontent.
The most recent example is the devastating impact of the measures against the corona pandemic on the global economy. Fortunately, Bitcoin is independent and, as an accessible monetary network, it allows anyone to build and protect wealth. This strengthens a society and has the potential to create a reality that will be much more livable for many. The affordability of housing is just one of the positive effects.
WORTH TO KNOW
Podcast and publications
Over the past few weeks, I've been featured in multiple podcasts, and one of my articles has been published by Bitcoin Magazine. Additionally, I took part in the Bitcoin and Real Estate Risk panel during this year's Bitcoin Amsterdam conference.
Bitcoin Amsterdam conference
During the Bitcoin and Real Estate Risk panel, I discussed, among other things, how important holding bitcoin in a real estate company is for a company's creditworthiness. I hope the panel was recorded. For now, you can watch a small snippet. WATCH
Niko Jilch – 2-part podcast series (German)
After I had the honour of being a guest on the 100th episode of Niko Jilch's German Bitcoin podcast, "Was Bitcoin bringt," Niko released the second part of our 2-part series entitled “Bitcoin gibt dir Zeit, Ruhe und Gelassenheit” (Bitcoin gives you time, peace, and serenity). We discussed the positive effects that Bitcoin can have on health, wealth, and overall well-being. WATCH
Bitcoin Magazine: Bitcoin is a possession, not property
Recently, I have published a new article in Bitcoin Magazine, wherein I elucidate that the unique nature of Bitcoin as a digital asset renders it impossible to seamlessly align with the traditional framework of property. While one can possess bitcoin, genuine ownership in the conventional sense remains elusive. Possession and ownership are distinct concepts that do not necessarily overlap. The significance of Bitcoin lies in its capacity to establish a paradigm of digital self-sovereignty, independent of reliance on authorities or legal systems. READ
Bitcoin for Millennials - 008 - Bitcoin is Digital Real Estate w/ Leon Wankum
I was a guest on Bram Kantstein's “Bitcoin for Millennials” podcast, where we discussed the opportunity that Bitcoin presents as an accessible, near-perfect store of value for millennials who have been “priced out” from real estate, as it has become increasingly expensive under the fiat system. WATCH
IDEAS OF INTEREST
Jeff Booth - “Navigating Humanity's Greatest Paradigm Shift”. Jeff gave a phenomenal talk to ~1100 Real Estate investors last weekend to show what is happening in the world.
Old Man Yells! - The state of public mining. Examination of the state of the public mining sector, its recent performance and its prospects going forward in the post-halving world.
Remittances due to the US Treasury. The Fed used to make billions of profits and sent those profits to the US Treasury each year. Now because of reverse repos and interest paid on reserves to commercial banks, the Fed is paying ≈ $700 million per day to commercial banks to keep the system from falling apart.
If you want to support me. Feel free. You can send me some satoshi/bitcoin.
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Leon A. Wankum - Bitcoin is Digital Real Estate READ
Leon A. Wankum - How Bitcoin will make housing affordable READ
Leon A. Wankum - Finding a more optimistic future with Bitcoin READ
Two reasons real estate is world’s most preferred store of wealth READ
Disclaimer: the content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Make sure you do your own research before making any investment and be aware of your own risk tolerance. If you like to build on my thoughts, feel free, but please cite me as the source. 2023 - Leon A. Wankum.
Editing and content creation by Clemens Haidinger.