Investing in Cryptocurrencies Vs Real Estate, which is more congenial for long-term Value!

From both a generalist and a specialized standpoint, most people regard investment as the most logical manifestation of their potential, into objects, assets, or ideas with the ability to create, generate, and establish permanence that extends far beyond the scope of immediate consumption.

The analogy is straightforward here: imagine I had 10,000 rupees in my pocket. I can spend the same amount of money and go to the nearby flea market to get at least six to ten pairs of clothes for myself. Or I may go to a great mall, sashay through some of the more upscale apparel boutiques, and buy a single shirt for the same price. The main differentiator here is that in the second example, I invested in obtaining an asset that I can utilise in the near future, if necessary. If you think I’m joking, consider the rise of platforms such as Meesho, etc.

What I want to touch on here is really simple: investment is a system for curating assets or properties that generate and store value over time. Based on this idea, if we were to assess two asset classes, instruments, or mediums based on how much value they can truly store, our major criterion would be their lifespan.

Following this logic, let us now put into closer scrutiny, the two most trending asset classes, that have caught everyone’s attention beyond the usual bandwidth of a few seconds. These are real estate and cryptocurrencies. Before we start with our comparative analysis, let us all peruse ourselves to a simple definition of both:

  • Real estate basically can be defined as land and anything that is built upon that land, it covers a vast gamut of items from residential apartments, retail spaces, offices, industrial facilities, agricultural land, etc.
  • Cryptocurrencies are essentially objects, mined virtually, which are then attributed with all the properties and values of a currency, and then used as it is. Think of it as pseudonymous forms of a legal currency, the only differentiator here is that this form of value can often be used anonymously for certain transactions, something not quite possible with regular tender. 4 other significant fact to consider is that they have no real underlying value, that it is shrouded in total secrecy that it is highly volatile and finally the consumption of electricity is gargantuan.

Now that we have gained some clarity, in terms of definitions, let us begin our comparison between the two instruments mentioned above, regarding their overall attractiveness in terms of investment. We will apply the methodology of time spans, as enumerated above. Going straight for the jugular, here’s my overall observation.

Real estate is your best chance for longer-term value storage with some continuity and stability in terms of returns. A piece of land or property, whatever its nature, increases in value over time when eco-system-related variables such as connection, etc. improve. Furthermore, the same asset can be leveraged to generate quick wealth, either through a direct sale or the sale of a piece of it through systems such as REITs. Such assets can also be employed to provide a guaranteed income inflow via methods such as a short or long-term lease or rent-out.

The same cannot be said for cryptocurrencies until and unless they are utilised to purchase some digital assets such as NFTs. And it is at this point that the scenario gets fairly intriguing, if not mercurial. NFTs are largely virtual items, which can range from thumbnails to extracts from articles or song lyrics and have the potential to gain exponential value in a relatively short period of time. We’re talking multiples of 100x, 500x, or even 1000x here. Because cryptocurrencies are typically utilised for transactions involving such objects, they can be used as a vehicle to dabble in NFTs and generate big value jumps in a very short span of time. Otherwise, cryptocurrencies cannot be regarded as long-term value storage vessels because they are basically things whose values fluctuate due to a mix of factors such as mining rate, transaction traction, and regulatory inclinations, and they have no real underlying value. Furthermore, because cryptocurrencies largely operate in a legal grey area, there is a greater risk of malice and overambition overpowering the entire field, as seen in the recent FTX collapse. FTX was one of the more premium exchanges where crypto was exchanged for certain real assets as we have always known.

So, to conclude, if one wants to treat the investment as a game of poker, with the goal being to attain and own exponential wealth, in a very short span of time, then cryptocurrency is the vehicle, you can opt for. But if one wants to own value, that is more meaningful, tangible, and physically enjoyable in the long run, then there is nothing more appropriate for you, than investing in real estate.

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