Is the Future of Real Estate Digital? Crypto Whiz Lane Rettig Weighs In

What are your thoughts on the trend, and the future, of crypto and real estate? 

Real estate represents a natural diversification strategy for people who hold crypto. Those who are strong believers in crypto like Bitcoin tend to dislike fiat currency such as U.S. dollars. Since the end of the gold standard there’s nothing fundamental and scarce (like gold) backing up the value of those dollars, which means the government can effectively print as many dollars as they like, debasing the value of all existing dollars and leading to inflation. 

By contrast, there will never be more than 21 million bitcoin and no authority, including any world government, can ever mint more. This makes bitcoin a “hard” currency, a concept from Austrian economics. Real estate isn’t as “hard” as bitcoin, but it’s much “harder” than dollars.

I think we’ll continue to see big crypto players, individuals as well as organizations, diversify into real estate, and I think we’ll see even more exciting things like tokenization of real estate into NFTs [non-fungible tokens, a non-interchangeable unit of data stored on a blockchain]—or, as a fun example, a “digital twin” of a real-world property that exists in a metaverse—over time.

Crypto investors who have no interest in buying real estate in traditional markets, or, for that matter, even investing in things like REITs, are more likely to buy, hold, and trade these cryptographic tokens that represent real estate. 

NFTs and virtual real estate seem to be buzzwords as of late. Tell us more.

By far the most interesting recent trend to me is NFTs, and one of the most interesting use cases for NFTs is virtual real estate. This is something I’ve written and spoken about quite a bit recently. Sales of virtual land have exploded recently, out of nowhere. It’s very early days for these assets and for the “metaverse” in general, but long-term I think it’s an exciting trend, and it’s a practical use case for crypto and blockchain that makes a lot of sense. 

It’ll be fascinating to see how it develops, to see some traditional real estate service providers, such as brokers, begin to move into metaverse real estate, and to see what happens to the intersection between physical and virtual. Imagine using crypto to buy an NFT for a virtual home in the metaverse that also gives you access to the same home in NYC!

Can you share any insight into the dark side of using crypto in real estate?  

It’s a common misconception that crypto is anonymous. It’s pseudonymous, in the sense that you transact using opaque wallet addresses rather than a personal ID, but nearly all transactions are totally transparent and visible to the rest of the network, and the on-ramps and off-ramps (moving between crypto and fiat currency, such as U.S. dollars) all require going through stringent KYC/AML [know your customer/anti-money laundering] checks with reputable institutions like Coinbase and Gemini. 

It’s next to impossible to move between crypto and dollars without passing through these checks. There have been a number of high-profile cases recently of the government successfully tracking down criminals attempting to use networks like Bitcoin and Ethereum to launder money: See, for instance, the Colonial Pipeline hackers and the recent case of Ilya Lichtenstein and Heather Morgan. 

So, in my opinion, trying to hide or launder money using these crypto networks is dangerous and a bad idea. I doubt you’d be able to successfully off-ramp crypto funds anonymously in any meaningful amount into New York real estate. Of course, there are very few direct crypto real estate transactions taking place today, and I expect that having better tools, more mature service providers, and standards around these KYC/AML checks for real estate transactions will make them more common and smoother.