If you have turned on the news, logged online, or even follow rapper 50 Cent, you may have heard about BitCoin and how prices have ranged from a few dollars per coin a few years ago, to a high of $17,900 USD for a single coin (currently valued at $10,411 a coin). Maybe you have heard about other digital coins too, like Ethereum (trading at $863 a coin) or Litecoin ($207.78) or even Ripple (trading at 0.89 a coin) or you could be like me, a 34-Year-old tech enthusiast who had to google top Crypto Currencies to finish off that list! I have heard several people say “this is just a fad” but just recently, I had a chance to sit with some tech experts and some Millennial’s and I can honestly say, that I believe, as a realtor, I will soon be negotiating your next home purchase, not with dollars and cents, but with a Crypto Currency. Below, I am going to talk about what is Crypto Currency, why Block Chain Technology is a Game Changer, The Future Of Banking, and of course, Purchasing a Home! I am also going to share how I see this impacting my personal and business life. So, please enjoy the write up below!
What is Crypto Currency and BitCoin?
I am not a financial expert nor a Crypto guru or a tech master, but I will explain this as easily as I can. Let’s start with what is CryptoCurrency. In a whole, it means it’s digital money. Bitcoins, Litecoin, Ripple, Ethereum, are all types of Crypto Currency and all use the same tech called Block Chain. 1 Bitcoin in Canada may have different buying power in Canada dollars than in the States or China, but if I wanted to buy something in China, I could, without any exchange rates or banks. This will make international trading and work outsourcing a heck of a lot easier, and we could see people ditching the US dollar (the current international standard) for the CryptoCurrency (Venezuela stopped trading Oil in US dollars in Sept 2017…tides are turning for the US Dollar) as the currency is not tied directly to one economy but a worldwide economy.
“Mike, no one is going to ditch the Red White and Blue dollar for some silly Internet money!”
(Oh, just wait until you understand Block Chain!)
Between 1933 and 1971 the United States had something called the Gold Standard. That meant that every dollar floating around the states could be tied back to gold. This was important because it was the countries “wealth” and you could buy and sell based on the amount of currency you had but the overall amount of currency was limited. The problem was, you can’t keep growing the country if you don’t have the funds (wow, the life of a business owner right there!), so after 1971, the Gold Standard was removed, and the federal bank could essentially “print money” as they needed (when I do that, the cops come, wtf!). The issue is, is that over the years, the more printing of money means that the actual value of the dollar decreases. Of course, there is inflation, and a gallon of milk would not cost 5 Cents forever, but by throwing Millions, Billions and then Trillions of dollars into an economy, it will eventually have a world-wide effect. So, why is Crypto Currency different? Because of Block Chain Technology. Block Chain is a very complicated computer code that grows in length with each transaction and will always be unique (so you can’t “hack it” or duplicate it or just print more ???? ). Think of each Crypto Currency that uses Block Chain as a gold mine. There is one mine (the start of the computer code), and people mine “gold” (CryptoCurrency). The gold is easy to get at the beginning as it is at the surface, but after time you have to dig and dig until more gold is found (meaning the codes start out “simple” but does not stay that way) Now, when the miner comes up from the mine, you can purchase the gold, but once that person hands it over, it’s gone from that seller and no middleman was paid. The only thing left from the previous owner was a small line of code, making that coins “make up/code” even more unique. The transaction was person to person, no banks involved. Your “Digital Wallet” is the only way to transfer these funds. All these transactions are done user to user with no outside interference (government, banks, etc). Yes, Crypto Currency does have a dark side, and was originally used on Internets Black Market (Think Silk Road) but the technology, a digital, non-regulated, international currency that can not be manipulated or duplicated (I tried Ctrl + C… it didn’t work!) was the good that came out of all that evil. I have placed a link here to learn more about Block Chain technology.
I’ll Just keep my money in a bank thank you very much! That’s the Evil I know!
Okay, Grandpa, or some of my friends point of view. I get it, the bank has been around for 100’s of years and they are not going anywhere. True… but they will lose some power. Millennials have seen or felt the banks and Wallstreet screw them for their whole lives. They have witnessed plenty of stock market manipulation, house prices rise and crash with families losing homes (and then Banks foreclosing on these homes to let them sit vacant), Credit Card rates of 20%, student loans they can’t pay and then, when you finally get a little bit of money in your saving account, you are making 2% on those funds. The same funds that the bank is loaning out for 10 times that. And then, to get a final kick in the teeth, the last day of the month, you get $50 taken from your account for “account services”. You know, using the bank to pay my bills and hold onto my money, or do the odd E-Transfer, costs me a fee which there is no way around if you want your money. Crypto Currency takes the bank out of it and since my money is just as safe as it would be in the bank, but without the fee’s, It starts to become attractive.
Okay, you said I could buy a house, and I have no clue how to get CryptoCurrency.
Crypto Currency is still new tech and the reason I mentioned a few of the other CryptoCurrency out there is because there is no real “winner” yet. I see Bitcoin like the grunge band “The Melvins”, a few people know them and talk about it, but it wasn’t until Nirvana (the game changer Currency) stepped onto the scene that the world took notice. But, I can tell you this, whoever that winner is going to be, is currently writing their songs, and recording… they will emerge soon!
But back to buying large ticket items. Right now, to buy any large item on Crypto Currency you need to find a seller willing to accept, a buyer who has that much CC laying around and then, of course, determining a value for each coin and the value of the product. Below is a video of a guy who bought a Lamborghini in BitCoin. Since only a few people actually fit into that category, its still a pretty niche market (approx. 39 Million people worldwide are invested/trading in CryptoCurrency). But…what if there was someone who would loan you Crypto Currency? Allowing you to make that purchase? That Tech is in the starting stages and will be public in 2019 and the way the technology works, interest rates are lower, the saver’s who put coins into their account have higher interest rates and there are no bank fees.
Unknown water’s ahead – Tread CAREFULLY
Since Crypto Currency is still new tech, we will have some bubbles with some currencies and we will see them come and go. Bitcoin started off “cheap” and peaked at almost $18K and then within 50 Days, was down to $6,000, its now trading at $10K. No one knows the winner, and just like Betamax, HD-DVD and Laser Disk, there will be Crypto Currencies that try, but will ultimately fail due to consumer adoption as another Currency will look more attractive. If you are to invest, I would find people who use Hedge Funds and bet on a few coins.
How is this going to do anything for my small local business? Just seems like a headache.
In my personal life, I am a big believer in giving back to my community and I try to buy as many things as I can from local distributors and this is how I choose to spend my personal income. In order to make that paycheque though, I look to my personal business for that income and as a business owner, I have to find as many corners and cost-saving techniques as I can. One of the easiest cost-saving measures I have is I outsource anything from Print design to web work to video editing, all overseas. I don’t have to pay a $14 min wage when I can log onto a site like Upwork and hire someone from Asia to complete the task, normally before I wake up in the morning! Posting Jobs, finding the right candidate, Skype planning meetings and project execution are all super easy. The most confusing part of the exercise is figuring out the cost. The site charges in USD, my credit card charges me conversion costs and I require the credit card as no other payment is allowed on the sites. Also, I am charged a processing fee. With everyone having the same currency, I would be able to have straightforward predictable pricing on the purchases and services. Also, if I found someone I wanted to retain for the long term, away from the third party website, a payment would still be just as easy.
Who is going to use it daily?
When I go to Tim Hortons and get a coffee, I tap my Android Pay and walk away. I have no thought about what currency I am using, I just know $2.00 is coming out of my bank account. To me, if it was $2.00 or 0.0002BT, it doesn’t matter. I tapped, I got my coffee, I’m on my way. But if I choose to conduct my life using CyrptoCurrency, would it really change my day today? Only if the Timmies does not jump onto the band Wagon.
What is this Guy Doing?
Well, I’m spreading around my bets and looking at Hedge Funds investing in CryptoCurrency. I believe Crypto Currency will take off and I believe there is a need for this. I also believe that it is not going to wipe out all other currencies, but as a Realtor, I could see pricing homes for the local market (Canadian Dollars) and the International Market (CryptoCurrency). When buying a home, one of the biggest headaches newcomers or international investors have is credit. Several countries credit systems are not recognized by our banks, and many newcomers, who are financially strong, must wait on major purchases and get $500 credit cards to just establish credit. The long-term use of these Currencies should establish a credit score with these individuals that should be transferable. Start-up companies are already emerging and creating these platforms which allow investing, purchasing, selling and borrowing these currencies and it’s just a matter of time before more and more people and benefits emerge.
Whenever I talk to my Grand Parents in Law, they brag about how their home only cost $18,000 50 years ago. Maybe, this is our time, our time get in on the bottom floor. Maybe, in just a few years, we will be buying our next, dream home, with a Crypto Currency. And you could buy that home, straightforward, anywhere in the world.
Written By:
Mike Elsey