why-cryptocurrency-is-good-for-us.md

## Why crypto currency will make housing more affordable

I'm Roo, I'm a software developer who has been heavily involved in crypto currency and blockchain for some years now. I'm not an economist but I am very curious about the economics of decentralised systems. I have a theory that when more people adopt crypto currency, the world and Australia in particular will be much better off.

First I'll acknowledge that current crypto currencies have some practical issues:

• Performance problems
• Electricity usage
• Soaring prices due to rising adoption

In my mind these are not unsolvable issues, they are being solved and will be solved in the next few years with time and effort.

Problems with todays economy

• Rent is too high
• Mortgage repayments are too high
• It is hard to build up savings

I believe that crypto currency will help make these problems less severe, let's talk through an example of why:

Say you work very hard for many years and are able to save away $200,000. What are you going to do with that money? You have four basic options:


#### Keep the cash *e.g. Trust account, Cash in a safe*

Value is driven by what it can be traded for

• Looses value over time due to inflation
• Very low risk


#### Buy rare tradables *e.g. Gold, Silver, Beanie babies*

Value is driven by what it can be traded for and speculation

• Maintains its value over time due to scarcity
• No passive income
• Risky to store


#### Invest in Land or control of another scarce resource *e.g. Land, Taxi Medallion, Fishing Quota*

Value is driven by scarcity and usefulness of the property

• Maintains its value over time
• Generally a safe investment
• Modest return on investment via rent/fees


#### Invest in shares or a business *e.g. Shares on the ASX, Starting a business, Building a new house*

Value is driven by useful outputs of the business

• Higher rate of return
• Riskier investment

Buying land is the safest bet

Currently, buying gold or other tradables is inconvenient and risky to store. Cash is a bad option because you are guaranteed to lose value to inflation over time. Starting a business is a risky investment as is buying shares of another business. Buying an inherently valuable resource such as land is a much safer use of your money. People will always need land and it requires relatively little management. Houses are in the same category as businesses/shares because they are more like a product produced by builders than a fundamentally rare resources.

But this makes housing unaffordable for everyone

So you would buy land? Well let me tell you this: By investing in land, you've played a part in increasing home prices and potentially just priced another young Australian out of the property market. Your investment will not help people, in fact, it will actively hurt people by making homes more expensive. And we will all have to work longer hours and pay higher rents and mortgages because of decisions like this.

But it's not your fault, we would all do the same, it's the only safe option when inflation is high and business is uncertain.

The crypto currency option

But there is now another option; it is similar to buying gold/silver but with some extra benefits.


#### Let's invest in crypto currency *e.g. Bitcoin, Ethereum, Monero*

Value is driven by what it can be traded for and speculation.

• No intrinsic value
• Maintains its value over time due to scarcity
• Extremely secure if set up correctly
• Easier to spend than gold or beanie babies

A crypto currency means your savings aren't hurting anyone

Now that you have a secure and stable place to store value, you don't have to pump your money into inflating property prices! Before, your money was pricing people out of homes. Now, it's pricing people out of crypto currency. Which is fine! crypto currency has no inherent value anyway. Your money is not helping or hurting society, it's just sitting out this round. You can bring it back in to invest in productive businesses when you want to make some return on investment. Or use it to see the world, for a project that helps people, or anything else that you want. It's not going anywhere.

Productive business and crypto currency will be favoured over land

Now imagine if more people invested in crypto currency. With less people investing in land, house prices would drop. When house prices drop rent would drop. When rent drops, people get to save more of their money and even get to a point where they can invest in their own productive business if they chose to. Land prices won't drop to zero, people will still need land. Businesses will still receive investment, high return for high risk is attractive to many.

Other thoughts:

• Land ownership is nothing to frown upon. But because of inflation, people buy land who just want to hold on to their savings. This drives up the price for people who really need it.
• Even if you already own land, unless it's your primary source of inclome, you're still losing out to inflation.
• Inflation is theft. Banks create money every time someone borrows from them and this is unfair!
• Currently, businesses are expected to grow exponentially just to beat inflation, this is clearly unsustainable and drives environmental damage and harmful consumerism. Not all productive business is helping people.
• Currently, crypto currency is driven by speculation and early adopters have an unfair advantage. This is a bad thing but it's only a one time problem, once they've spent it their unfair advantage is gone.
• Land however, makes an ongoing return which can be used to buy more land.
• Tax collection will probably be harder with crypto currency, this could be a major issue but I don't think it is unsolvable.

What you can do

Let some of your money sit in crypto currency where it isn't hurting anyone. And why not get an unfair advantage as an early adopter =)

Further reading

• Bitcoin is an economic miracle (clickbait headline but real research)
• Land buying vs Productivity
• Wikipedia overview of bitcoin economics
• Economic theories of value