If you still can’t quite wrap your head around cryptocurrency (or what it has to do with real estate), perhaps John Oliver can help break it all down.
The late-night comedian recently led his HBO show by putting key vocab — bitcoin, blockchain, cryptocurrency and ICOs — in layman’s terms, and the clip has now garnered over 5 million views.
Cryptocurrency, which is a digital form of money not controlled by any government or bank, is recorded in an online log of “blocks” (or records) called a blockchain.
“Like most currencies, the fundamental reason bitcoin has value is because people agree that it has value,” Oliver said.
Bitcoin is the world’s first cryptocurrency and, as Oliver explained, it recently surged in worth — the value of one bitcoin went from $1,000 USD at the start of 2017 to, at one point, $20,000 USD in December.
At the moment, bitcoin’s surging value is having two immediate effects on the housing market: more real estate clients are talking to their agents about the cryptocurrency (and accepting it as payment in transactions), and investors are using their bitcoin gains to snatch up property. If nothing else, a bitcoin price tag generates buzz about a property and may also garner new interest for a listing by attracting more overseas buyers who are drawn by the idea of an easier, more secure transaction.
“Bitcoin became such a hot topic that paparazzi started asking celebrities things about it,” said Oliver in the video that is meant to serve as a “neighbor chat” on cryptocurrency.
As early investors in bitcoin gained massive wealth, interest in the cryptocurrency also grew and started reaching other industries — real estate, in particular. Some real estate startups have launched tokens backed by property assets while another created a blockchain for recording real estate transactions, leading to the first-ever U.S. property transfer recorded using blockchain.
Along with early successful cryptocurrencies such as bitcoin and ethereum, over 1,500 different cryptocurrency companies have, according to Oliver, popped up in recent years.
An ICO, short for initial coin offering, is a way for cryptocurrency companies to raise money by selling early tokens functioning as shares. Currently, there are many new cryptocurrencies tied to real estate in some form — but, as Oliver explained, not all forms of digital money are created equal.
“Right now, this market is essentially the Wild West and ripe for exploitation,” said Oliver. While the worth of established cryptocurrencies has truly skyrocketed, many of the newer startups promising enormous growth are poorly regulated and have been targeted by the SEC.
As a result, Oliver finished the show with a warning:
“If you choose to invest in the cryptocurrency space, just know that you’re not investing — you’re gambling,” Oliver said. “Which is fine but you should know that that is what you’re doing.”