Why Real Estate Investors Should Love Bitcoin Today

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This article is a follow up to “Bitcoin Is A Better Store Of Value Than Real Estate,” which made the case for bitcoin being the world’s best store of value. Even if real estate investors disagree with the conclusion, it doesn’t have to be binary. There are a number of reasons why they are ideally suited to invest in bitcoin as well, which this short piece will outline.

Low Time Preference

The absolute scarcity and perfectly known deflationary supply schedule of bitcoin means that holders maximize benefits by having a low time preference — that is, they are willing to forgo immediate benefits for the potential of increased returns in the future. The opposite of this is having a high time preference — being focused on immediate well-being or fast returns — often at the expense of the long term (or at least having limited regard for it). Real estate investors generally also have a low time preference: Institutions model 10-year cash flows as a market standard and most mom-and-pop home buyers enter into multi-decade mortgages or at least acknowledge the drawbacks of buying and selling too often (e.g., significant transaction costs). This mindset is well-suited to holding bitcoin, where, historically, returns have been maximized by holding through one or more four-year halving cycles and high time preference, short-term trading is incredibly risky due to bitcoin’s volatility.

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