Cryptocurrency as an idea first emerged in 1983, a concept named by American cryptographer David Chaum, who envisioned an untraceable currency outside of the control of centralised entities such as banks.
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But the start of cryptocurrency trading as we know it today came through the mysterious Satoshi Nakamoto, a person (or some say group) who introduced Bitcoin via a published white paper in 2008, followed by the first Bitcoin transaction in early 2009 – paving the way for other cryptocurrencies since.
While the last decade has seen the interest and investment in cryptocurrency rise, the Covid-19 Pandemic years have arguably brought crypto-trading into the mainstream, with a reported market cap that surpassed $3 trillion in 2021 despite its volatility.
In a recent cryptocurrency workshop organised by KSK Land at its 8 Conlay Gallery in Kuala Lumpur, Jason Kwong, CEO of Imperium Universe – a sales-and-marketing firm servicing technology innovators such as blockchain or non-fungible token (NFT) product creators – says this is indicative of the value people are placing on cryptocurrencies and NFTs.
Kwong believes that cryptocurrency and real estate are a great match
“It used to be seashells, and then precious metals and stones, modern currency, credit cards, cheques, and more recently, cashless e-wallet payments and now cryptocurrency,” he points out.
And among industries where cryptocurrency has increasingly come into play, real estate has become popular ground for this new category of wealthy investors.
The ideal match
Analysts have said that the two are a “natural fit”. A property sale can leverage on the contractual security of blockchain technology that underscores all cryptocurrency transactions, while enjoying a more freeing, fluid and potentially less bureaucratic process.
Meanwhile, “Real estate is also a perfect safe haven for crypto investors should they wish to manage risk by taking profits into a relatively more conservative real estate portfolio,” shares Kwong.
Of course, with regulations and control still at the early stages, there is the possibility of abuse and difficulty in tracking the flow of funds. Still, it would seem crypto investors and property owners alike are willing to bear the risks in favour of the benefits.
Last May, the “most expensive penthouse” on Miami Beach, USA, sold for US$22.5mil – the largest-known cryptocurrency real estate deal.
In Braga city, Portugal, earlier this year, another history-making property sale was made, albeit with just under three bitcoin’s worth transferred for a €110,000 apartment in the city. Here, various parties came together to create a sort of check-and-balance that a normal property sale would have. It was a culmination of an almost year-long process of discussions and navigations between tax, financial and notary authorities.
One of the parties who worked to make the first-of-its-kind sale happen, Jorge Silva, the president of the Portuguese chamber of notaries, said meaningfully after that “crypto is a reality”. This suggests that legal and regulatory structures need to catch up.
A participant at KSK Land’s Into The Future NFT Workshop held at 8 Conlay Gallery
Cryptocurrency and real estate in Malaysia
Still, it hasn’t stopped transactions which bypasses the bank, even here in Malaysia, though perhaps under-reported for obvious reasons.
“For now, digital assets are not considered legal tender in our country,” says Kwong, “Because it is not issued by our central bank.”
However, the Malaysian Inland Revenue Board declared that all property transactions in Malaysia made via cryptocurrency are still liable for Real Property Gains Tax, as reported in Property Guru.
Kwong points out one notable example where a land sale in Sabah was executed by using Bitcoin as payment in 2018.
What was key here was that the necessary stamp duty fees, sales and purchase agreement and verification followed the traditional rules of Malaysian property transactions, which legitimised the whole process.
Going forward, it would seem the ability to work out the loopholes and a clear structure for cryptocurrency property transactions would determine how things go.
Virtual and real playground
There’s another reason why real estate companies and property developers are looking towards cryptocurrency, blockchain technology and NFTs. South China Morning Post (SCMP) reported that NFTs are increasingly being explored as promotional tools for property projects.
For one, NFTs can be an attractive value-add to a property purchase. Yet the more interesting aspect is the NFT as a virtual showcase of the property, “developing an emotional connection between buyers and owners and their properties”, wrote journalist Cheryl Arcibal for SCMP.
Justin Bieber performed a live concert in the metaverse last November (Photo: WAVE)
But Kwong highlights that real estate has transcended just the physical realm. “What piques the interest even more these days is the idea of the metaverse and the virtual land“, he says.
In April this year, US rapper Snoop Dogg launched a new music video that takes place entirely in his own ‘Snoopverse’. Before that, someone paid US$450,000 to be his virtual neighbour, buying a parcel of metaverse real estate. Late last year, pop superstar Justin Bieber also held a concert live in the metaverse, using a motion-capture suit.
“The NFT virtual land has experienced surprisingly tremendous growth, attracting real estate developers and international brokerage houses even, who believe their skillsets are transferable to the metaverse,” Kwong continues. “So, the very definition of real estate is being challenged as it is no longer physical or tangible to the touch.”
This is perhaps an acceleration brought on by the pandemic, where virtual meetings and socialising have become normalised, coupled with increasing growth and spread of Web3 applications. With this increasing blurring of lines between the online and offline, cryptocurrency, blockchain and NFT looks set to continue the shift in the real estate landscape more in the days to come, and the creative digital possibilities are tremendous.
If you are a cryptocurrency investor interested in exploring prime real estate in the heart of Kuala Lumpur, contact us here.