Cryptocurrency has seemingly been the talk of the town for the past few years. The idea of digital currency that isn’t controlled by a central bank has intrigued many investors around the world. However, when compared to a traditional and more tangible asset like real estate, how does cryptocurrency hold up?
That question is something that we’ll come to find a clearer answer to as government interference and attention ramps up for crypto. Many assume that real estate might outpace it in the long run because of federal intervention.
In this article, we’ll be outlining what cryptocurrency is about and how its future compares to that of real estate as investing assets.
What is Cryptocurrency?
Cryptocurrency is a digital currency that is created and held electronically. Many cryptocurrencies, like Bitcoin, use things like blockchain technology to track who owns a certain amount of the currency.
The biggest difference between cryptocurrency and other more tangible currencies like the dollar is that the former isn’t controlled by a central bank. No one owns cryptocurrency by default.
Sounds like a good deal, right?
The Uncertain Future of Cryptocurrencies
Not exactly. There’s plenty of arguments you can place against cryptocurrencies being a viable investment going into the future.
The fact that it’s not tied down to a tangible asset means its value can become volatile if markets lose trust around the product. Security concerns about the storage of crypto as well as its impact on the environment are also prominent concerns.
Most importantly, government regulation of cryptocurrency seems to be on the horizon.
There’s already been talks of the SEC being involved in regulating certain cryptocurrencies because of the public discourse surrounding these types of assets. If the government gets involved, cryptos lose one of their most defining features as a decentralized asset.
But at the end of the day, distributors of cryptocurrencies would be making a bad move if they become government adversaries.
Cryptocurrency vs. Real Estate
As such, government interference can hinder the profitability of cryptocurrencies. When compared to real estate, crypto might be a less viable investment option going forward.
Real estate is tied to a tangible physical asset in land and property. It’s great for diversification and is a proven hedge against inflation. Its cash flow incentives and tax benefits also can’t go unstated.
At the end of the day, real estate is a safer investment than cryptocurrency. In terms of risk adjusted returns, real estate outperforms virtually all other assets. With questions about government interference clouding cryptocurrency’s future, some might be better off opting for real estate instead.
Answering the Question of Crypto or Real Estate
There’s absolutely nothing wrong with investing in cryptocurrency despite some questions surrounding its future. Real estate is technically the safer option now and going forward, but you can certainly reap the rewards of investing in both,
The risks of cryptocurrencies are clear. Use this article to understand those factors going forward and make high-quality investment decisions.
