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Bitcoins vs. Property Crowdfunding

November 8, 2017

They are both proving popular with punters and represent exciting new ways for investors to try and make a return on their money. One is currency powered by a relatively new technology which only a handful of people understand called ‘blockchain’; it has a marmite-like divisiveness with some people saying that it will herald ‘the fourth industrial revolution’, and others saying that it is heading for a dotcom-sized crash. The other takes us back-to-basics and is a modern take on property ownership, one of the oldest ways of creating wealth, where properties are bought on behalf of a crowd of investors who all get their share of the rent and any capital appreciation. 

In this blog post I highlight two key similarities and differences between Bitcoin and Property Crowdfunding.

Both can be used to earn a return on your spare cash. 

UOWN is primarily a financial product designed to let people get the benefits of property investment without having to part with a boatload of cash. Bitcoin on the other hand is a cryptocurrency, and as with all currencies it can be used as a store of value. Property was initially created to answer our basic needs for shelter and security, whilst Bitcoin was initially designed to be a mathematically secure method of electronically transferring cash; however both also lend themselves to investment.

A supply shortage is driving the price of both upwards. 

In contrast to other currencies there is a hard limit on the number of bitcoins (21 million), and this limit in supply combined with its increasing popularity has led to a meteoric rise in its value - at the time of writing one Bitcoin is worth £5,716. The very same supply-demand dynamics have led to a massive rise in house prices in the UK over the last 25 years - house prices have risen 400% since 1993. Whilst this is not as quick as the staggering 57000% rise in Bitcoin’s price over the last 5 years, fundamentally the key driver in both prices is a lack of supply.

Only one is income generating. 

Investors in Bitcoins and Property Crowdfunding are hoping that the value of their investment will rise, however investors in property crowdfunding also have the possibility of earning rental income every month. Investors in Bitcoin have to sit on their investment and sell before they make any money. People get around this by speculating on the wild fluctuations in the value of Bitcoin, and whilst this can be successful it is much more of a gamble then collecting rent.

One of them is asset-backed. 

Unlike Bitcoin, property crowdfunding involves investments in a physical property that you can see or touch. Investors in Bitcoin own a piece of digital currency that is currently very highly valued and popular. Whilst many think the value of Bitcoin will continue to rise, investors in property crowdfunding can be certain that they are investing in something that’s value is derived from the very real human need for a roof over our head.

Investing in property puts your capital at risk, and returns are not guaranteed. Please read our full risk warning on our website before deciding to invest in UOWN