• The American Dream Is Dead, and Bitcoin Has Taken Its Place

  • The inequality in our legacy system has killed the American dream of home ownership and financial freedom. However, Bitcoin provides a new dream.

    For decades, home ownership was the means by which the middle class prospered. Unfortunately, with institutional and foreign investors bidding up home prices and the money printer going brrr In fact, there were more renting households in the United States in 2017 than at any point in the previous five decades.

    As a result, I propose bitcoin as an alternative to home equity. While the American dream may be on its way out, the Bitcoin dream is just getting started. Using historical examples, I will outline eight reasons why bitcoin is vastly superior to residential real estate:

    1. Bitcoin is a digital rarity.

    There will never be more than 21 million bitcoin in existence. While your grandfather may have told you, “Buy land, they’re not making any more of it,” this is no longer entirely accurate.

    Humans are able to “create” more land as technology advances and government regulations change, increasing supply by building taller apartment complexes and developing previously uninhabitable areas. Instead, with Bitcoin, you are opting into a network with predictable issuance and a known money supply.

    2. Bitcoin Is Dividend-Proof

    Bitcoin can be purchased for as little as $1 or as much as $1 billion. Divisibility makes bitcoin accessible to everyone and allows investors to dollar-cost average rather than trying to time the market with a single large investment. Rather than having to save a depreciating currency for a decade in the hopes of saving enough for a down payment, investors can begin stacking sats the moment they earn their first dollar. Furthermore, by consistently purchasing small amounts of bitcoin, buyers do not have to worry about buying the cycle top in the same way that real estate buyers do.

    History lesson: In July 2006, tens of thousands of Las Vegas residents purchased homes that have only recently broken even 15 years later. These unfortunate residents took out loans at the apex of the housing bubble and were forced to spend the next 15 years of their investable income servicing their mortgage.

    3. Bitcoin Is a Fungible Currency

    A bitcoin in Canada is the same as one in El Salvador. Housing’s non-fungibility complicates the purchasing decision. Is there a good school nearby? Is it close to the subway? Is it the right size? Is it in a developing city? These are just a few of the dozens of constantly changing factors that influence the value of your home.

    What if the subway is relocated, the school is closed, or the zoning laws change? Although the overall value of real estate may be increasing, your home may be losing value for reasons beyond your control.

    History Lesson: In March 2020, the transition to working from home resulted in a sharp drop in the value of New York City real estate. While downtown apartment owners watched their life savings evaporate, owners of Hamptons real estate experienced record appreciation and all-time price highs less than 100 miles away. In this case, some homeowners were rewarded while others were crushed.

    4. Bitcoin Requires Little Upkeep

    Bitcoin can be purchased, stored, and sold for almost no cost. The annual maintenance, repair, and depreciation costs for most American homes are estimated to be around 3% of the property value. In addition, homeowners must pay substantial transaction fees and property taxes. In contrast, bitcoin can be purchased safely for as little as 20 basis points (bps) and stored for free using a paper wallet.

    5. Bitcoin is a transparent currency.

    On-chain, all market data is available for anyone to view. As institutional investors like Blackstone and technology companies like Zillow become more important to home buyers, the market’s information asymmetry grows.

    In addition to very limited pricing data, everyday Americans are now engaged in bidding wars with companies that manage hundreds of billions of dollars and thousands of transactional data points on which to base their decisions. In contrast to the obscure housing market, the Bitcoin network allows any participant to access and analyze every historical transaction dating back to its inception.

    6. Bitcoin Is a Liquid Cryptocurrency

    Bitcoin can be bought and sold anywhere in the world at any time of day or night, 365 days a year. This continuous price discovery not only results in fewer price anomalies, but it is also extremely valuable in times of emergency.

    When China imposed its first cryptocurrency ban in 2013, bitcoin owners were able to instantly sell or transfer their holdings. In contrast, when China seized the property of anti-communist protesters in July 2021, homeowners were powerless as their life savings were confiscated.

    7. Bitcoin Is Liberty

    Bitcoin enables you to transfer funds whenever and wherever you want. Although often used ironically, the phrase “the old ball and chain” is appropriate when discussing housing.

    A 30-year mortgage that consumes half of your disposable income is a recipe for disaster. As the rate at which people change careers and relocate geographically increases, the ability to pack up and leave with minimal fuss becomes increasingly valuable.

    History Lesson: During the early twentieth century, over six million African-Americans relocated from rural South Cities to the North in order to avoid strict segregation laws and seek better opportunities. These residents were forced to sell their homes and incur all of the associated transactional costs and inconveniences in order to relocate.

    8. Bitcoin Is a Sign of Hope

    Bitcoin provides you with a futures call option. Bitcoin is an open-source protocol with a built-in virtuous cycle: as the network expands, developers are incentivized to build on top of it, which strengthens the network even more. Owning the asset gives you upside exposure if you believe that the future of payments, investments, or even money itself could be built on top of the Bitcoin network.

    The Bitcoin Dream Is the American Dream

    With the desire for home ownership so deeply ingrained in the American psyche, swaying public opinion is a difficult task. By arguing from first principles and drawing on historical examples, I hope this article contributes to the presentation of bitcoin as a better, safer, and more accessible alternative to home equity. While the American dream may be on its way out, the Bitcoin dream is just getting started.

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