A comparison of the two most competitive asset classes in 2021 so as to establish which is the superior investment.
Technological advancements have led to cryptocurrency being a viable asset class that can compete with traditional asset classes such as real estate.
- Asset Class
To begin with, let’s look at the time-tested asset class that is real estate. Compared to cryptocurrency, real estate is a tangible asset that investors can touch and see. It is the only asset class that has been in existence since the beginning of time and is beneficial in all aspects of human life. As an asset class, the use cases of real estate are numerous as they range from farm-land, residential housing, commercial real estate, to warehousing, just to mention a few. This implies that real estate is valuable and has the additional benefit of appreciating over time.
Another notable benefit that real estate provides investors is market stability. Unlike cryptocurrency, real estate is a stable asset whose economics have withstood the test of time. Primarily there is a limited supply of land on earth resulting in real estate appreciation over time. Furthermore, population increase leads to increased demand for land. Consequently, this increases land prices over time. The market stability of real estate leads to it being the most preferred form of collateral for loans and other credit facilities. In addition to this, the value of the real estate is not susceptible to key-person risk as is the case of cryptocurrency. Elon Musk’s tweets cannot lead to a market crash in real estate.
3. Demand & Supply
How does cryptocurrency compare? To begin with, cryptocurrency is a relatively new asset class with Bitcoin being introduced in 2009. The selling point of Bitcoin, and other cryptocurrencies such as Ethereum, Binance, Akita Inu & Shiba, is the distributed ledger technology aiming to combat fraud while eliminating the need for centralized authority in banking. This leads to cryptocurrency being a financial innovation that is supplemental to the financial sector. It is not a stand-alone asset class as is the case with real estate.
Moreover, the technical nature of cryptocurrencies and their lack of regulatory oversight leads to them being rife with market fraud. The only market barrier for cryptocurrency is a technical whitepaper and a hype train. This leads to cryptocurrency having an investment structure that resembles a pyramid. The coins supply is arbitrarily decided by the inventors. As a result, the underlying value of cryptocurrency is based on belief and the constant recruitment of unwitting investors. This leads to market instability with more hype leading to improved prices and as the hype dies down the price depreciates. If you want your coin to appreciate, just have Elon Musk tweet about it as demonstrated by Dogecoin.
For cryptocurrency, the seed capital can be as low as 1 USD and gain value within hours. This is an added advantage over real estate where the minimum investment can be from 40,000 USD. Real estate is considered tangible and appreciates over time, say one year. Property can appreciate by up to 15% as demonstrated by VAAL Real Estate’s properties. Factors such as the high-quality Turkish finishes, property locations, amenities offerings, and land scarcity in the upmarket areas of Nairobi influence this.
If you are risk-averse and planning to invest in apartments in Nairobi, consider VAAL Real Estate’s portfolio; Elite Residence-Westlands, Divine Suites- Riverside Drive, Wilma Towers-Kilimani, and the recently handed-over Moon Valley Apartments in Kileleshwa. These guarantee you the highest return on investment in Africa pegged between 10% and 15%. Make your inquiry today for the best apartments in Nairobi. As a serial investor, choose the long-term investment option in 2021 that’s reliable, honest, and secure.
Digital Marketing Executive- Vaal Real Estate