The development of crypto will cause real estate to lose its importance as a major asset, - investor Maryna Tenditna

Real estate is now the main asset for hedging against inflation. More than 60% of the world's money is invested in real estate. As a result, its value continued to grow for quite some time. However, some investors claim that bitcoin, as the "new gold," can displace real estate. Among them is Ukrainian entrepreneur Maryna Tenditna. She has been investing in real estate abroad for 5 years and is the owner of a crypto exchange. So we asked Maryna Tenditna how the development of bitcoin will affect the real estate market and what investors should expect.

Is bitcoin now in a strong enough position to be a safe-haven asset?

Yes, it is. Bitcoin has already come close to the top 10 in the aggregate ranking of assets and companies by market capitalization. Gold continues to hold the top spot, but that's just for now. I truly believe that bitcoin has every chance of becoming a better alternative to precious metals.

It comes with a defined and unchanging issue, and therefore will become a top defensive asset of long-term value thanks to its deflationary system. In addition, bitcoin can be swiftly transferred worldwide and is available in almost any country in the world. It's easily transferable, divisible, more liquid due to limited availability, and cheaper to store. Doesn't that make it an excellent investment option for private investors?

However, 330 trillion dollars (67% of the world's capital) is still stored in real estate. The market capitalization of bitcoin is 1.3 trillion. It is hard to believe that bitcoin is close to taking the place of real estate as an investment asset.

Nowadays, real estate is actually more commonly bought to hedge against inflation than bitcoin. Besides, it is a more understandable type of investment than bitcoin. And people will always buy real estate, because everyone needs to have a roof over their heads.

A good investor is not someone who only understands the current situation, but someone who can foresee the future. I am not talking about mysticism, rather about very real calculations. Realities today demonstrate the unreliability of real estate as an investment. The world is very unstable. This can be demonstrated by the example of Ukraine, which was attacked by Russia, that the physical means of preserving value can be very unreliable. Unfortunately, Ukraine is not the only country that has been affected by war in the 21st century: Syria and Israel are also affected. Conflicts and radicalization are a global problem, constantly flaring up. It emphasizes the downside of owning real estate: it is a physical means of accumulating value, which makes it physically destructible, and it cannot be taken with you if you have to leave the country or region of its location.

But there were military conflicts before, yet people still invested in real estate...

Yes, there were. But first of all, while earlier war was something distant, Russia's attack on Ukraine showed that war in Europe remains quite real in the 21st century. And secondly, there used to be no alternative to physical assets. Now bitcoin has become an alternative. It is easy to store, and one can easily "take" bitcoins with them when relocating. Even if the topic of military conflicts is left out, it is very practical in today's globalized world, since people often change their place of residence for work, family, or simply because they want to live in another part of the world.

Investing in real estate abroad requires a thorough study of the legislation, the rules of real estate ownership, the political situation, the economic situation in the region where you buy real estate, and even the climate.

There are fewer such nuances with bitcoin. The rules of investing in bitcoin are the same for all countries of the world. Except that in different countries there are different possibilities of cashing out digital assets and the possibility of their use. And this must be taken into account. But over time, this is becoming easier and more accessible.

Real estate is a popular form of collateral in the banking system. Will bitcoin be able to compete with it in this regard as well?

There is a good chance that bitcoin will take over. I'm already seeing the emergence of numerous bitcoin credit products, so it's not just an empty expectation.

In addition to the advantages of bitcoin as an asset that we have already listed, there are additional advantages to it as a form of collateral. These include transparency, because bitcoin transactions and addresses are subject to public verification. Therefore, the financial system is protected from risks.

Furthermore, bitcoin can be stored in a multi-signature wallet. This is very convenient, because in this case both loan holders and borrowers have the opportunity to jointly dispose of funds. Then the borrower is protected from the risk of bankruptcy of the lender.

Besides, if you put the housing as collateral, it must be assessed beforehand. This costs extra money, because you have to pay appraisers and auditors for their work on the valuation of the pledged property. In addition, standards for real estate valuation are constantly changing. The value of the same property is affected by its location and current condition - all of which must be evaluated individually. Whereas bitcoin does not lose its qualities, is durable, and its market price can be easily verified by anyone in real time.

What will be the consequences for the real estate market then? How soon will these changes occur?

Housing prices will fall. They are already falling, and this decline will continue. At the same time, the cost of lending and interest rates will fall. Real estate will lose its margin and only its use value will remain. In fact, there is already a trend around the world: lending rates for home purchases have risen so much that demand for real estate is declining. As a result, its value is decreasing. On the contrary, the value of bitcoin is growing and will continue to grow as long as there is demand. And demand is not decreasing, as bitcoin is a naturally scarce commodity. The supply is limited, and at the same time, more and more people are starting to use bitcoin. While bitcoin's annual inflation rate is already quite low at 1.8%, after halving in 2024, this figure could drop to 0.9%.

The property market cannot match such a strong deflationary trend.Even with a scarcity of land available for development, there is no such severe restriction on the availability of "square metres".