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For many, crypto is synonymous with cryptic. Yet in the luxury real estate industry, the affluent clients we work with are often savvy investors who are keen to learn more about cryptocurrency coins, exchanges, and markets, as well as the opportunities and risks they present. At the same time, as blockchain-based technologies continue to proliferate and evolve, it could change the way luxury properties are bought and sold in the future.
Personally, I’m no stranger to crypto — the concept appealed to me immediately. I was inspired to make my first investments in 2017, and am now the owner of a crypto mining company. Since then, I’ve transacted hundreds of times on a personal basis, including paying for goods, services, and NFTs, along with investing in over 100 cryptocurrency projects.
This space can be a rollercoaster ride, with soaring highs, plummeting lows, and sharp turns. That’s why it’s inevitable that clients will have questions about crypto, and why it’s critical that as agents and trusted advisers, we can share accurate, fact-based insights with them.
The outlook for crypto in the luxury real estate industry
As you’ve likely heard, the crypto pendulum is swinging at the moment, and people have mixed reactions to that volatility. Overall, I find that the main sentiment among the individuals I talk to is curiosity, with many seeking more information about what exactly cryptocurrencies are and what purpose they serve.
As for the sentiment among investors and colleagues in the crypto space, it’s mostly optimistic. That might surprise you, but the truth is there has been a lot of hyped-up speculation in the market, and a correction was unavoidable before it can return to a more stable, profitable state.
And even though it’s still early days for blockchain technology in luxury real estate, we’re already witnessing the emergence of exciting new trends, such as selling luxury properties as NFTs.
When the NFT is created, you can use a smart contract to state that you’ve built a one-of-a-kind property in an exceptional location, and cite that as the creator. You will then receive 1% of the proceeds any time it sells — no matter how many times it changes hands. This is a great benefit for investors and developers who are building iconic estates, and it’s just scratching the surface of what’s possible.
So when your clients come to you seeking a perspective on crypto, what can you share with them to provide a strong foundation for further research and inquiry?
Tip #1: Beginners can familiarize themselves with Bitcoin
I recommend starting with the most tried and trusted cryptocurrencies. Bitcoin is the closest thing to digital gold, because there’s a limited supply of 21 million. My advice to clients is to begin their crypto education with Bitcoin as a way to ease their way into this space.
Tip #2: Help clients learn about the Ethereum blockchain
Another big name in crypto that clients may know is Ethereum, the platform on which most of our Web3 technologies are being constructed. It provides a base layer that approximately 90% of new crypto projects — including NFTs — are built and run on.
Tip #3: With crypto, investors need to see the big picture
When people are fearful or skeptical of crypto’s fluctuations in value, I like to remind them that it’s crucial to look at the long-term growth potential. I strongly encourage would-be investors to have a 10-year outlook: they should designate a portion of funds that are of no immediate need to them, and commit to not touching these initial investments for at least a decade.
Advice for buyers: be sure to cash out ahead of the sale
For luxury home buyers who wouldare considering transacting with their cryptocurrency investments, there are two things they need to know. First, the purchase will create a taxable event, just like any other form of payment. Second, due to the market tendencies and daily fluctuations, it’s beneficial to cash out before the purchase. Buying and selling crypto is very similar to trading stocks.
Advice for sellers: only allow commonly-traded currency
If a seller is considering accepting cryptocurrency as payment for their home, the same advice applies. Valuations can change within a matter of minutes, so to reduce uncertainty, I would recommend only taking widely-used and well-respected currencies — specifically Bitcoin. Then, to maximize the future returns, I would plan to hold onto that Bitcoin for at least five years.
In summary: play the long game, and play it intelligently
There are two main takeaways here. Number one is that at present, clients who are considering cryptocurrency, whether for investments or transactions, should only be focusing on Bitcoin. Currently, most other currencies are too variable and volatile.
Number two is that the likelihood of building and preserving generational wealth will increase significantly if investments are kept for long periods of time. It’s possible that in the long term, cryptocurrency will provide even greater wealth preservation and growth than real estate.
Born and raised in the Pacific Northwest, Brian’s knowledge of the Greater Seattle Area and Eastside is invaluable to his clients. He navigates every enclave with poise, educates his clients through every phase of a transaction, and even gives insights on the best restaurants, shops, and parks in each community. A proven leader in the field, Brian Hawkins leads with integrity, discipline, and honesty. Working alongside Cyrus O’Bryant, Brian has created a top team at Realogics Sotheby’s International Realty, with over 330 transactions and an impressive $154 million in total sales volume.