Many industries are starting to be penetrate by cryptocurrency. Disruption is occurring, something that seems to be accelerating.
Because of this, it is important to keep an eye on where things are going.
One of the largest industries is real estate. Globally it amounts to hundreds of trillions of dollars in value. Suddenly, real estate transactions are occurring using cryptocurrency. This opens up the door to enormous possibilities.
A few months back we discussed Access To Real Estate Through Tokenization. While this is still something in the future, we are seeing the potential of what is shaping up.
Source
New Forms Of Financing
Real Estate is fairly straight forward when it comes to financing. Typically, the two options are to pay cash or get a mortgage. While there are all kinds of nuances to the latter, the basic premise is to get a loan secured by the property. This is how real estate worked forever it seems.
Of course, to prevent default, the homeowner simply made the payments each month. Over the years, that would reduce the balance owed (unless the property was refinanced), ultimately leading to true ownership.
Due to the total value of the properties, another huge industry formed, one that dealt in mortgages. This form of secured lending is worth billions of dollars annually.
Cryptocurrency is now entering the mix. But how is it doing this and will it be revolutionary?
Bitcoin loans are nothing new (relatively speaking). They are a part of Decentralized Finance (DeFi) for the past few years. Essentially, the idea is to put up Bitcoin to receive a loan against it.
This was done by one engineer who bought his mom a home. Instead of the house serving as collateral, the Bitcoin is the asset at risk. If the payments are made, the Bitcoin is safe.
We do have an additional layer of risk. If the price of Bitcoin falls, relative to the loan value, some more collateral could be required.
This does not exist with a traditional mortgage. The home value only applies upon initiation of the loan. Outside of refinancing, it has no bearing.
Cryptocurrency Used For Unsecured Real Estate Loan
How will the situation change if we switched to unsecured loans? This is how credit cards operate. There is no collateral backing the money lent. Hence, if default occurs, we see a loss.
DeFi is introducing new innovations in the lending world. We already witnessed the first evidence of this.
An Austin apartment was sold for $680,000. This was purchased with a $500,000 unsecured loan. How was this structured?
The buyer put up 20% as a down payment. USDC was used as payment, sending 500K over the Polygon network. The interest rate was set at 5.5%.
Here is where innovation enters the picture. The down payment was staked, allowing the earnings to be used to pay down the mortgage. According to this article, that amounts to 68% of the loan repayment.
The financing was secured using nothing other than a credit score and analysis of online activity. Obviously, the fact that the down payment is farming yield helps to reduce the risk to the lender.
Stablecoin Coupled With Yield
Hopefully people are starting to see the potential of a stablecoin coupled with yield. By increasing utility, the potential expands due to innovation. When cashflow is built into the models, like was done here, a host of possibilities open up.
We discussed the Hive Backed Dollar and what is can offer. Here is another example how building out use case would foster greater adoption of the token.
Too many focus upon the speculation aspect of things. In this instance, we see $500K worth of commercial business carried out in a single transaction. If this were done using HBD, the down payment of $180K could be placed into the Hive Savings Program, earning 20%.
This could even be taken one step further and tied to a time locked vault, such as a 30 year. Here we see the lock up period matching use case. This would, of course, be at the base layer, meaning we remove some risk from the equation. Many wonder why anyone would lock up HBD for that long? Here is a prime example. The HBD, under this scenario, is used to match a longer term debt obligation. With this transaction, the "security" comes from the cashflow being provided by the staking of cryptocurrency.
In fact, an entire bond tree could be built to satisfy different use cases.
Here is why we see so much potential in the stablecoin market.
A Banker's Mindset
To fully realize what is possible, we have to adopt an entirely new mindset. What this essentially means is starting to think like bankers.
It is no secret that the banks run the world. This was the case for the past 70 years. Once they fully go hold of the money making machine, their power grew exponentially. By operating outside the reach of any government, or even central bank, the international bankers were able to amass power that is unrivaled.
Cryptocurrency along with its associated tentacles has the ability to combat that. Since we now see the ability to create money, we are able to apply the same ingenuity as they do. By moving into different sectors, we can see the transactions occurring in cryptocurrency increasing.
It is in this way that cryptocurrency can become the true threat to the international banking cartel. When see the possibilities, it is eye-opening.
Ultimately, it all revolves around the idea of creating pristine collateral. This is the opportunity that is afforded the cryptocurrency industry.
And as we can see, it can add up to some big money very quickly.
Cryptocurrency is now making moves into real estate. This is a realm worth hundreds of trillions of dollars. We are seeing the innovation just getting started. Over the next few years, this will likely expand.
Expect to see more articles along these lines detailing expansion in this area. There simply is too much money on the line.
What are your thoughts? Let us know in the comment section below.
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In essence payment of asset could come from one blockchain, contracts from another where track and trace on documentation is performed.
My thought a couple years back in purchase/sale on Bitcoin, while Ethereum deal with contracts.
Your thoughts?
@tipu curate 2
Since they are layer 2 applications, you can use anything.
These days, there are wrapped versions of the major coins like Bitcoin so it is easy to integrate into a ETH or BSC smart contract.
We are really getting to the point where the token/coin is actually located is less relevant. The applications will figure out to tie into the proper chains.
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Interesting to learn and see developments as they arrive!
Not having managed to keep up with research as I did in earlier years really appreciate your updates!
Upvoted 👌 (Mana: 25/55) Liquid rewards.
Getting that 180k downpayment into HBD would be a feat right now. We really really need to up the HBD lIquidity game!
I know that crypto in many ways is nothing like banking but needs to adopt a bank like mindset, but as soon as I read this section, the old Who tune came to mind.... Meet the new boss...Same as the old boss. Really hope the decentralized nature of crypto can avoid this and is why we need to focus more strongly on decentraliztion than we alreay are. Problem is decentralization makes it hard to do banky like things :-) Tough dilemma.
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DeFi is going to overtake it. Ultimately, the banks will end up being nothing more than front ends. They will have control over those who allow themselves to be controlled. Outside of that, it is going to be tough for them to compete.
This is still the early days so the platforms are not set up. Give it another couple years and we will have a completely different situation.
As for HBD, there is about 140K put on the market each day by HBD Stabilizer. People just need to go to the internal market and start buying it. Sure you have to do it in 500 or 1000 HBD blocks, but it is there.
We need to get that out into the free float.
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I have hope that this is the case. I also have fear that without a change in people's desire to be ruled (I do see hitns of this -- just not quick enough for me), it will be a tough go. I want to see it before I get too old to enjoy the fruits of my labor :-) Haha! Selfish old me.
Yeah. Khal is right. Free floating the HBD supply and liquidity is crucial. Not just for polyCUB, but more importantly for HIVE.
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This is actually very interesting and I am sure there are going to be so many clever ways of untapping endless possibilities. How great would it be to have HBD paying off your mortgage/bond. All we need is HIVE to start climbing up in value so we can really put more into HBD and receive the benefits.
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Innovation is just getting started. It will spread like wildfire once the platforms start appearing. This is how things grow rapidly.
Open source software helps a great deal also. Provides a lot of shortcuts for developers.
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There are so many interesting things happening around us, cryptocurrency is the future and people with crypto are going to have some good ways i think.
Yes man. Cryptos are going to boom sooner or later as the metaverse is the future. Cryptos are about to capture the big market in the upcoming decade. Someday, the currencies of paper will only be in the history book chapter.
It is a progress of building and expanding. Slowly slowly then explosion.
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Interesting read. Cryptocurrencies will capture almost all the industries for sure. When reading your article the Bee token came to my mind. It's a project similar to what you are discussing here. Isn't it ?
I am not sure how BEE is similar to what is being discussed here but I am not too familiar with it.
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I actually saw this coming and I'm excited about it too. That's why I got HodlEstate.com a while back but I've been busy with other things. If anyone likes the name and wants to help me fix that website then I'd be happy to talk. Not trying to sell the domain, I just want some help with it.
I am not a dev but I am sure there some options. We are awaiting some of the proper infrastructure to be built. What the Spk team is doing is really interesting. A few months down the road we might be ready to look at some of these different solutions.
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surely in the coming years we will see many more Transactions with Cryptocurrencies in the real estate world for loans. It is a relatively new market and in which much remains to be discovered in both financial markets that have the opportunity to grow together.
Cryptocurrency is going to change the world, maybe that why bank and some government is against it because it might be against them
The fact that crypto are making moves into real estate is one of the best thing.
Our wallet is our bank, why stress yourself with bank issues and problems
Nice writeup
I reblogged😉😘
I would say there is a good chance. We are going to have to be mindful of how we construct our systems. There are going to be some heavy hitters coming after them.
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That's true
We should just be preparing
Thank you for sharing this lovely piece
Today I deposited Bitcoin on the polygon network with AAVE and borrowed stable coins in return. I used these stable coins to invest in the USDC-pHBD pool on Polycub.
If houses were represented by NFTs we would have many alternatives financially.
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That is going to be tough since there are still a lot of laws pertaining to real estate. It is definitely a sector that is behind the times in terms of technology.
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This is so interesting and worth to follow all the developments over the next years. I have been in real estate in the early 2000, had my own company.
If they will adopt and perfect the integration of cryptocurrency into the real estate market fully. Nobody can touch Crypto.
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There are a lot of different layers where it all can penetrate.
Cryptocurrency, or more accurately, defi, is going to penetrate everything.
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Yes I understand. Exciting times ahead 🤓🤩
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What is going to be really exciting is the fact that we are going to see the ability to earn in most everything. Rewards are going to be everywhere. This will be tied with DeFi so people can swap in and out of things.
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Yes, and we are right in the middle of it all.
And learning along the way…
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Yes. I have already seen ads where the offered price can be paid in crypto.
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All of that is coming. We are moving into the direction where the use cases for crypto is growing.
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The next step is for notaries) ... how they will conduct such transactions and tax them, that is the question.
Some countries will require proof of income when making a transaction. I doubt that notaries will take note of the exchange summary, or an extract from your crypto wallet.
This could blow everything Out of the water. We could have crypto back REITs...
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You really then done even need REITs.
Simply tokenize a project and let people get involved. If the platform is truly decentralized, that could easily be done. Set it up as a DAO.
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With the polycub upcoming Collateralized lending, I guess I can do the same, besides it’s a self repaying loan right?
When you have yield, it is a great way to establish a repayment system for collateralized loans. This is especially true when it is all on platform i.e. collateralizing one of the Kingdom and using the proceeds to enter another, all which are paid in POLYCUB. That can be used to pay back the loan reducing risk a great deal.
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Yes, cryptocurrency comes with so much power. This is a perfect example. I think the bankers and the government in Nigeria saw this and put the relationship between crypto nd banks.
It's crazy how much money could be generated from crypto. Real estate is huge. More deals will easily occur with loans.
Mass crypto Adoption....
Yep. It is also showing the power of the stablecoin market. That is why I included the section about HBD.
We could build an application similar to this using HBD, if enough was out there.
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For the house, did the person have to make monthly payments still? The 20% itself staked could earn a decent amount but I have a feeling the lender would usually keep the extra and force the person to continue making payments.
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Since the staking doesnt cover the full loan, I am going to presume still have to make payments. I have no detail on the numbers other than what was given.
That said, we are not going see the same payment since the staking APR covers a lot of it.
With HBD, the 20% could end up covering it all.
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Just that many companies are tokenizing their business so that it will be working with crypto currency.
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Who's gonna be the first to start Hive Town?? Or at least Hive Street??
We prefer to live in the digital world as opposed to physical. Harder for them to control or regulate.
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Ha I dig that...maybe it can be a hard forked community!
Can be an online community very easily. Extending out into the real world of regulators, politicians and bureaucrats is another level of danger. That is a very scary world.
We need to strengthen our online realm before branching out.
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betting on DeFi is a thousand times better than a bank, many times the State or the people in charge hate Cryptos because taxes cannot be collected. The people who live with their necks tied due to the very bad economic policies of the country opt for the cryptos and even so they see us as anti-country
I wouldnt say that taxes cant be collected. Much of this is for public view. And they have ways of tracing wallets to real people.
We do need more privacy features/applications. If we can get that, it will be a different ball game.
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Was that a person to person purchase of the house or did they go through some kind of intermediary. I am guessing you would need to have "buy in" on both sides for something like that to work. I know you get tired of me saying this, but I am still trying to wrap my head around how this works. It just feels too easy or too much like a free lunch to me. Give me a couple hours to crunch some numbers and I will see what I can figure out! :)
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I am not sure how the buyer and seller were brought together. The mortgage lender was involved.
At closing, the payout would likely be in USD with typical deed transference.
As these ideas expand and applications are built out, it will be easier to bring buyer and seller together.
In the end, as long as the seller gets paid, he or she doesnt care how the funds were financed.
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Okay, I was assuming it was a buyer to seller transaction with no middle man and the part I couldn't understand was why the seller would stake the down payment and allow the buyer to keep that interest as part of their payment. I mean if you are giving me 130k in HBD, I'd probably stake it for sure, but no way would I let you use the 20% towards what you owe me. I am guessing there are some details I am missing.
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No the seller is being cashed out in exchange for their house.
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Hummm. If I tokenized my home for the current market value.. how could that be done? Used that to pay off the bank. Put the rest into HBD at 20 percent. Turn my Fiat monthly payments into crypto to pay back the lender...
Who wants to loan me 200K in Bitcoin?
!BBH
!ALIVE
Well using the home as collateral, at this point, isnt possible. But using Bitcoin as collateral on a loan for a home is.
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@taskmaster4450! You Are Alive so I just staked 0.1 $ALIVE to your account on behalf of @bradleyarrow. (22/30)
The tip has been paid for by the We Are Alive Tribe through the earnings on @alive.chat, feel free to swing by our daily chat any time you want.
Because this is such an awesome post, here is a BBH Tip for you.
. Keep up the fantastic work
Transformation is unstoppable...but to that end we have to be patient and endure the growing pains. Can't wait until it's all point, click, and complete!