Bitcoin recently made the news between its record gains, corporate purchases by companies such as Tesla and several investment firms discussing its merits. What is Bitcoin, and should you, as the owner of a real estate investment, sell and buy Bitcoin?
This should in no way be interpreted as investment advice. Bitcoin is a speculative and volatile investment, while the sale of investment real estate will have substantial tax ramifications.
What is Bitcoin?
There are mysteries about the founder of Bitcoin, who is said to be Satoshi Nakamoto. No one knows the person or their location. Many believe that it is in fact the pseudonym of another person, group of people, or government entity.
Bitcoin is a cryptocurrency, or an electronic version of value, that uses the blockchain to verify and store ownership and transactions. Bitcoin has several advantages, such as anonymity and ease of exchange, but can be easily stolen if it is not stored and its price is extremely volatile.
In 2011, Bitcoin was around $ 1.00 per coin. Today, it fluctuates around $ 50,000. If you bought $ 1,000 worth of Bitcoin in 2011, it would be worth $ 50,000,000 today.
Sell your real estate investment
Take the example of a strip center bought in 2011 for $ 650,000. This investment could be sold today for $ 2,000,000. In this example, we are looking at a snapshot in time. In reality, the homeowner’s income and tax benefits over the past decade will not be discussed in this example.