MARCH 6, 2022 | Issue 05
WHAT'S YOUR VANTAGE POINT?
Real estate agents are uniquely situated to see challenges from many perspectives.
Your client is a seller or buyer, but the deal will not close unless a long list of people are onboard – the buyers or sellers on the other side of the transaction, the other real estate agent, attorneys, everyone involved in the mortgage approval and title, the appraiser, home inspector, and others.
Communicating thoughtfully and empathetically with these parties when issues arise is an essential skill.
You may even surprise yourself when non-real estate issues arise and you're able to ask the right questions to find solutions.
This has happened to me over the past two weeks as I watched the Ukraine invasion through the lens of a real estate agent trying to get my arms around the myriad of crypto issues.
I was ignorant about how countries can impose economic sanctions against a targeted nation. However, as economic sanctions dominated the news, I realized that my understanding of crypto gave me the ability to grasp the impact of these sanctions.
I am currently reading about our financial system because enhancing by knowledge of money will enrich my understanding of crypto.
When President Biden announced the freezing of Russia's central bank reserves, I knew this was going to rattle the world's financial system.
The Wall Street Journal ran this story...
This means that other than gold, only bitcoin is outside the control of a government.
As one bitcoin analyst wrote: "Many nations are likely reconsidering how they defend themselves from a financial lockout in times of crisis. The game board has changed."
The world is shifting, and educating yourself about crypto will prove invaluable as it seeps into our lives.
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Enjoy the newsletter, have a great week, and stay crypto curious!
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CRYPTO REAL ESTATE NEWS
▶︎ Austin Property Sells for $18.5 million in Bitcoin
Entertainment industry media mogul Scooter Braun sold a lakeside Austin property for $18.5 million. The buyer was Wayne Vaughn, CEO of Tierion. Tierion provides technology tools to verify trust with blockchain transactions.
▶︎ Crypto Mortgage Lending Is Here In response to homebuyers whose assets include cryptocurrency, some new and existing mortgage lenders recognize crypto wealth.
At least two companies, Milo and Ledn will finance up to 100% of a home's purchase. This will allow a buyer to hold onto their crypto and avoid having to sell it for the down payment. Buyers will receive a 30-year mortgage, which is repaid in monthly installments.
▶︎ Collective Land Ownership in Wyoming Through a DAO Wyoming passed a law in July 2021 that provided legal status to DOAs (Decentralized Autonomous Organizations) if they are registered as a Limited Liability Company (LLC).
The key benefit of LLCs is that they limit the personal legal liability of its members.
A small group of people purchased a 40-acre tract of land in Wyoming intending to sell pieces of the land as NFTs on the blockchain.
They created a DAO, CityDAO, and divided the parcel into 10,000 NFTs. Any interested person could become a member (citizen) of CityDAO by purchasing one or more NFTs.
The DAO members collectively govern and manage the land.
▶︎ Ukraine Invasion Crypto Update
● Ukraine crypto donations exceeded $56 million from over 100,000 transactions. This is the first time in history that citizens across the globe are funding a war involving two different countries.
● Bitcoin has outperformed equities since the Russian invasion, but not because the Russians are buying BTC. According to NYDIG, there is no data to support that the increasing volume of Russian trading is driving up the price of bitcoin.
● Sanctioned Russians are not moving assets to crypto.
After sanctions were announced against individual Russian oligarchs, some politicians expressed concern that the sanctioned oligarchs would simply move their assets into crypto.
This concern was dispelled by the US Treasury Department this week.
Treasury stated that moving funds through crypto exchanges is not an attractive option for sanctioned Russians. The existing anti-money laundering safeguards used by exchanges are effective.
● Crypto Not a Feasible Alternative for Russia
On March 2, 2022, the National Security Council's director of cybersecurity Carole House said the scale that Russia would need to circumvent all financial sanctions “would almost certainly render cryptocurrency as an ineffective primary tool for the state."
▶︎ Venture Capital Floods Crypto Sector
Crypto news publication, The Block, reported that more than $4 billion of venture capital funding was given to crypto startups in February. The startups that build infrastructure tools received most of the funding.
▶︎ Bitcoin Miners in Georgia Offered Tax Incentives
A bill was filed in Georgia exempting a "sales and use tax" for commercial mining of digital assets. Kentucky passed a similar law to attract miners to their state.
CRYPTO CLASS - Central Bank Digital Currency (CBDC)
Bitcoin and other cryptocurrencies threaten the authority of central banks. Central banks will respond by issuing their own digital currency.
The Federal Reserve System (Fed) controls the nation’s banking system. It uses monetary policy to control the growth of the money supply.
Controlling the money supply drives interest rates up or down.
A surge of money in the economy means lower interest rates and consequently an increase in spending by consumers and more investment by businesses. The downside is inflation.
The high inflation that we are experiencing right now is the hangover from years of low interest partying.
The Fed controls the money supply in three ways:
1. Adjusts the reserve requirements for banks. Reserve requirements are the percentage of deposits that a bank must retain. The lower the reserves, the more money the banks have to loan out.
2. Changes the discount rate (interest rate) that member banks pay when they borrow money. The lower the bank's interest rate, the lower the rate they can offer its customers. 3. Buys and sells treasury securities (bonds). Buying bonds increases the money supply. If the Fed had a CBDC, it could issue money directly to people.
Some countries are testing their CBDCs - China, Sweden, and Australia.
On January 20, 2022, the Federal Reserve Board published a report on the Fed issuing a CBDC.
The report cites benefits and risks. Some benefits include: ▸ Supports the US dollar’s international role as the world’s reserve currency.
▸ Improves cross-border payments, making it easier to send money to other countries.
▸ Reduces barriers to banking that some lower-income households experience. The primary risk is that a CBDC could “fundamentally change the structure of the US financial system by altering the roles of private sector banks and the central bank.”
INFLUENCERS - People to follow
Michael Saylor – @saylor
Saylor is the CEO of MicroStrategy, a publicly-traded data analytics firm that has been buying bitcoin since August 2020. The company holds 125,051 bitcoins, valued at $5.31 billion. MicroStrategy owns more bitcoin than any other corporation in the world.
By comparison, Tesla owns 42,000 coins. The company’s shares have doubled in price since the company first started buying bitcoin. Saylor actively promotes bitcoin.
He tweeted on March 3, 2022: "'What is money?' is a question that economists have pondered for centuries, but the blocking of Russia’s central-bank reserves has revived its relevance for the world’s biggest nations –particularly China. Bitcoin is money. Everything else is credit."
RESOURCES – Books, websites, podcasts, articles NYDIG delivers Bitcoin products for banking, fintech, nonprofits, and insurance companies. Their research page has interesting reports and their emails are packed with great insights.
CRYPTO WORDS – Sharding is when a blockchain is split into multiple, identical chains called “shards.” These shards each execute transactions and smart contracts in parallel, making a network more efficient and scalable. Sharding does not undermine blockchain's security.
OH, ONE MORE THING – Baseball card trading company Topps sold its first edition 1952 Mickey Mantle baseball card as an NFT for $471,000. This is the highest-priced sports NFT ever sold.
The NFT was officially licensed by MLB and sold in cooperation with the Mantle estate. The winner also received a 30-minute interview with Mickey Mantle's two sons.
Thanks for reading! See you next week.
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