Choosing between real estate and cryptocurrency (crypto) isn’t the most straightforward choice. Real estate has always been a timeless investment, yet cryptocurrency is a relatively new and unique investment opportunity.
Unfortunately, as with any investment — you can make a fortune if appropriately played or risk losing all your money following flawed investment principles. Therefore, it’s essential to choose the best option for you.
Real estate has always been a robust, stable investment. As a result, you can enjoy various tax advantages, consistent passive income, loan paydown (increased equity), and appreciation over the years. Alternatively, cryptocurrency gives you complete control, the potential for appreciation, and it’s accessible 24/7.
Let’s compare the two options in detail.
The benefits of investing in cryptocurrency
1. Low fees
Although you might have to pay fees when you invest in cryptocurrency, the fees tend to be small. For example, you might pay a 0.1 to 0.2 percent trading fee on various platforms. You should use platforms with the lowest fees to maximize investment returns.
2. Potentially fast returns on investment
Even if you have no interest in the cryptocurrency market, you’ve probably seen the Bitcoin boom in 2017. The world saw an astonishing Bitcoin explosion. As a result, Bitcoin grew to $20,000 per coin. It made many investors wealthy, and it’s not the only time bitcoin has exploded in value.
3. A better payment structure
Cryptocurrency has a better payment structure than many conventional financial institutions. For example, you can send money without the middleman, you can send payments within a second, and cryptocurrency prevents fraudulent chargebacks because nobody can reverse blockchain payments.
4. Financial stability
If you’re not living in the United States and using the stable U.S dollar, cryptocurrency might be more steady for you. Some traditional currencies are volatile and susceptible to political manipulation, and although governments are starting to regulate cryptocurrency, regulation remains low.
The downsides of investing in cryptocurrency
Cryptocurrency is highly speculative
In recent months, cryptocurrency has become increasingly volatile. Changes in government policy worldwide — in significant markets like China — have caused cryptocurrencies’ value to jump up and down. As a result, many economists believe crypto is a speculative bubble about to burst.
The security of cryptocurrency is controversial. Investors store the coin digitally, leaving it prone to hackers and thieves. In 2020, hackers stole $40 million of cryptocurrency from the Binance Cryptocurrency Exchange. That shows the dangers of having a digitally stored investment.
Most of us have heard the buzz around cryptocurrency when it’s booming, but we’ve also heard about the dramatic crashes. The 2017 crash became the most notorious. Bitcoin rose to almost $20,000 in December 2017, but in the next four months, it dropped to below $7000.
Increasing government regulation
When cryptocurrency burst onto the scene in the last ten years, it was like the wild west. Governments didn’t know how to handle the digital currency, and for the most part, they left the currency alone. However, that’s starting to change in 2021. Various countries have begun to restrict and even ban cryptocurrency use.
The benefits of investing in real estate
1. Real estate is a tangible asset
You can feel your real estate investment. It’s physical, and it’s yours. On the other hand, cryptocurrencies aren’t backed by land or physical structure, and that’s unattractive to many investors.
2. It’s a source of passive income
Investing in real estate is a stable source of passive income. You can rent the house out to tenants, or you could turn the investment into a popular AirBnB option. In addition, you can make money while you’re on the beach in Thailand, making it an excellent passive income investment option.
3. It’s a stable investment
Real estate is a long-term investment, but it’s also a stable investment. You don’t have to worry about dramatic dips and overnight losses in value. Although real estate has gone through difficulties during the 2008 banking crisis — it’s almost always a safe option.
4. You’ll enjoy various tax benefits
When you become a real estate investor, you’ll enjoy various tax benefits. Benefits may include tax deductions on repairs, insurance, commissions, utilities, and much more.
The downsides of investing in real estate
It could be a slow ROI
The world has seen a cryptocurrency boom on various occasions, making many investors millionaires within months. Unfortunately, you’re not going to get the same quick ROI in real estate because it’s a long-term investment. Of course, if you’re flipping real estate, that’s a different ball game.
Real estate can be time-consuming
Real estate investment is worth the extra time and effort, but it can take a long time to find suitable investments. However, once you’ve found the right investments, you’ll have a robust long-term investment.
You could have problematic tenants
Some states and parts of the world can protect tenants over landlords. In turn, you might find difficult tenants that abuse your real estate and don’t pay rent. However, a good letting agency or team can help find the best tenants to stop this.
Real estate requires money
It’s possible to buy cryptocurrencies with very little investment. Alternatively, you will need some solid cash reserves to make your first real estate investment. You’ll need to consider property taxes, maintenance, tenant issues, and insurance costs.