Will the Fed End Cryptocurrency? Realtors Plan for Blockchain’s Future

College of Real Estate CORE Will the Fed End Cryptocurrency Realtors Plan for Blockchain's Future

Hello, people. Welcome to the REH Real Estate Heaven Youtube channel. Before blockchain technology can change industries as large as real estate, there have to be a lot of developments that happen first.


Real Estate Heaven REH Will The Fed End Cryptocurrency Realtors Plan For Blockchain's Future AnalysisFinancial instability is driven by the precipitous decline of cryptocurrencies and increased government regulation. Many regulators are championing the development of their own currencies, based on geographically sensitive data, personal relationships, and property, with the goal to create less volatile markets. If you want more of this content, subscribe to the REH Real Estate Heaven Youtube channel and hit the notification bell.

However, some real estate professionals believe the fall of private tokens will lead to more innovation in the home.

Teresa Grobecker of the Grobecker Holland International and Kevin Cottrell of eXp Realty will join a panel at Inman Connect Las Vegas in August to discuss their independent firm Real Estate Consortia that standardizes the role of blockchain in home transactions.


The cryptocurrency Bitcoin was born out of the 2008 financial crisis and serves as an alternative to the centralized banking system. With its decentralized nature, peer-to-peer technology, and link between a country’s inflation rate, Bitcoin may have the power to dismantle the current banking system built around a central authority. But there are some drawbacks that make Bitcoin difficult to cozy up to.

Bitcoin’s decentralized system has the potential to upend the role of central banks in modern financial infrastructure. Bitcoin uses peer-to-peer technology that enables a society without central banks or even traditional banking systems.

Proponents of central banks say they are vital to the economy to maintain and stabilize employment, prices, and help keep the financial system going in times of crisis. Critics suggest central banks have a negative impact on consumers and the economy and are responsible for debilitating recessions.


Real Estate Heaven REH Will The Fed End Cryptocurrency Realtors Plan For Blockchain's Future BitcoinBitcoin has a lot of potential as a replacement for central banks. It will likely have that capability sooner rather than later, but Bitcoin itself suffers from multiple drawbacks. Its supply is limited and it doesn’t have legal currency status in most countries.

The United States Federal Reserve released a paper “The US Dollar in the Age of Digital Transformation” over the last few weeks. We have been reading through and analyzing the ideas for this article. This is our first attempt to scrutinize the ideas presented and discuss their implications.

The Federal Reserve paper defines Central Bank Digital Currency (CBDC) as a digital liability of the central bank that is widely available to the general public. The Fed appears less than enamored with properties of paper money, when it’s presenting ideas around the implementation of CBDC. This will be discussed here in further detail.


In the mind of the Fed, central bank digital currencies (CBDCs) would serve the US by being privacy protected, fully traded on decentralized markets and highly transferable. Many would agree that privacy protection is important, but many would also agree that intermediation is not. There is not enough evidence that intermediation has any benefits to consumers or businesses. It causes inefficiencies due to it being an intermediary layer. Moreover, it is proven that intermediation can give arbitrage opportunities to the intermediary.

Ultimately, the Fed is interested in a new model of money called the CBDC because this type of digital money would be different from any other available forms of money.

With Bitcoin’s recent surge in price to over $60,000 a coin and talk of government intervention, many people are trying to answer one question: will crypto be allowed to compete with the U.S. dollar?


Real Estate Heaven REH Will The Fed End Cryptocurrency Realtors Plan For Blockchain's Future BehaviorElon Musk believes Bitcoin is here to stay and that the governments can’t eradicate such a widespread phenomenon.

Although he may be right, institutions that have their power threatened must be taken seriously. If the government wants to shut down the crypto market, it has enough resources to do it. Regulators like to take sides on winners and losers.

Tesla faced impending bankruptcy and major financial institutions refused to provide loans. However, NASA partnered with Tesla as a generous investment into the company’s future. This led to SpaceX being saved from immediate bankruptcy.

For blockchain technology to be adopted in industries as large as real estate, many things need to happen.

The price of blockchain assets is crashing. The process is still complex, and the US government is looking at new regulations on existing private cryptocurrency slates. Furthermore, it’s even considering its own alternatives to bitcoin in that light.


Nonetheless, some experts in the real estate industry believe that by reducing the number of private tokens. it may speed up the process of finding sweet products which could revolutionize property transactions.

Teresa Grobecker, a Corporate Associate at Grobecker Holland International, is scheduled to join the next panel, and eXp Realty will participate as well. Inman Connect Las Vegas in August, the corporate employees discussed their efforts to standardize the role of blockchain in housing transactions with ours.

These three executives with deep experience in the real estate industry join us for a video call ahead of next week’s Inman Real Estate Conference to give us some insight.

Because this video discusses a rapidly evolving area, let’s address some terms.

Blockchain is a distributed digital ledger of transactions, which cannot be changed because it is decentralized. Blockchain has been deployed to revolutionize various fields, like the cryptocurrency and the non-fungible token economies.


Real Estate Heaven REH Will The Fed End Cryptocurrency Realtors Plan For Blockchain's Future Bitcoin 2Non Fungible tokens exist uniquely on the blockchain, changing ownership when they are sold. They often represent digital or real-world assets that can be bought and sold through an LLC tied to a specific nonfungible token. For example, NFTs have been used to purchase real estate properties by tying ownership of the property to a specific NFT (token). When the NFT is sold or traded, then so is the LLC (or computer system) associated with it.

Stability is a guaranteed way to make cryptocurrency transactions. Balanced and stable in value, these coins are a reserve for people investing in cryptocurrencies. But as of recent weeks federal regulators have become concerned about the situation and some of the largest stablecoins (Tether) have traded for less than one dollar. Smaller ones (Terra) did not survive at all.

“Fedcoin” is short for the U.S. government’s efforts to create its own cryptocurrency, set to compete with Bitcoin. In March, Joe Biden signed an executive order that pushes the government to invest in research and development of a centralized digital currency. While some see this as a threat to private blockchain assets like Bitcoin, others refer to it as an effort for the government to take control of their economic influence and compete with cryptocurrencies like Bitcoin or Ether.


Central banks are exploring the use of central bank digital currencies (CBDCs) that would allow for digitized monetary transactions. Bitcoin is familiar to these institutions for its usability, security and transparency.

Before exploring the effect of Bitcoin on central banks, it is important to understand the role that central banks play in an economy. Central bank policy making underpins the global financial system. The mandates for central banks vary between countries. For example, the North American Central Bank in the United States has a mandate to control inflation and maintain full employment while the British Central Bank ensures the stability and solvency of their economies

Central banks use a variety of tactics to reach their mandates. In addition to manipulating the money supply and interest rates, central banks also try to impact economic activity by increasing or decreasing the quantity of money circulating in an economy. More money circulating in an economy leads to more spending and, consequently, economic growth. The opposite situation—i.e., less money circulating in an economy—leads consumers to spend less and a recession ensues.


Real Estate Heaven REH Will The Fed End Cryptocurrency Realtors Plan For Blockchain's Future Bitcoin 3The impact of a central bank on imports, exports, and overseas investment is important to consider. For example, high-interest rates can discourage investment by foreign entities in real estate, while low-interest rates promote investment.

Will the new CBDC make commercial bank money redundant? Will it lead to incentives for consumers and businesses to use commercial bank money, instead of the CBDC?

The Fed believes a CBDC will be safer and more widely transferable than commercial bank money. Concerns that commercial banks may lose business due to competition in incentivizing holding the new CBDC to the detriment of consumers, who may be attracted to riskier companies, are also an issue. However, the CBDC may disrupt cross-border payments as it becomes more widely transferable, thus rendering current payment services obsolete.

Central bank money carries no credit or liquidity risks, but it has lower cost for liquidity and credit risks. This privilege of central bank money provides access to lower cost ways to hedge risk in other markets.


The current payment system has ACH, which is essentially an outdated batch-based system that can take a day to clear. ACH processes billions of transactions and the equivalent of trillions of dollars. The system also has wire transfers that utilize the SWIFT network and the famous FedWire system, like ACH, these systems process billions of transactions and trillions of dollars; however, transactions on these systems can take multiple business days to settle.

Tesla faced bankruptcy in 2008, and the Obama administration swooped in to bail it out. The price of electric vehicles exceeded their market value, so the government offered tax credits to make up the difference. Even now, with the company valued at over $1 trillion, the Biden administration is creating lucrative subsidies within the current infrastructure package that will further fund Musk’s overflowing piggy bank.

In these two examples, the government has the power to either force companies and people into carrying out specific tasks or to completely destroy them. Bitcoin is a threat because it’s seen as taking credit away from the government, which puts it in “dangerous territory.”


Real Estate Heaven REH Will The Fed End Cryptocurrency Realtors Plan For Blockchain's Future CryptoWith worldwide government crackdowns on the cryptocurrency market, one country has already banned transactions in digital coins. Although Bitcoin values have recently recovered from the ban in China, U.S. consumers should be aware of some troubling signs which became apparent last month.

Last year, the FBI was able to trace over $2 million in Bitcoin that hackers stole from the pipeline company after getting hacked. After the FBI purchased them for pennies on the dollar, the criminals were caught and admitted guilt. The Department of Justice report of this incident is a testament to the power of police.

Question: One of the key goals of blockchain technology is to spark a revolution in how connecting home buyers and sellers occurs. Can the real estate market work its way into the picture?

Steven Globecker, CEO of Real Estate Standards Organization, made the ambitious pledge of making 2018 the year that the industry pushes harder in developing a business model that’s transparent and fair; not only to consumers but also to their agents. A non-fungible token “would be placed on a property.”


In simpler terms, the very first experience on the Internet failed to take into account how social relationships are inherently immaterial. Cite: As Teresa explained, blockchain does not eliminate the need for relationships and people expect that the efficiencies of blockchain can take advantage of what the consortium offers. It is assumed that there will be a reduction in transaction costs and an increase in faster transaction time from using this technology, but it doesn’t break that connection between parties. Furthermore, we can provide our own private blockchain for all parties involved. The public portions of this blockchain will still exist, so it doesn’t change much in reality.

Question: One use of blockchain is to host a public database of home listings and transactions. What other businesses are you describing? And how far are we from seeing the actual implementation?

While there was some fear at first for a platform that would be different from what is already known, people are now showing interest in creating a blockchain version of the MLS Consortium. The goal of the consortium is to provide data and information related to housing in one place.


Real Estate Heaven REH Will The Fed End Cryptocurrency Realtors Plan For Blockchain's Future GraphsHow many of Consortia’s revenue is as a store of information vs. revenue from educational purposes for entities about the blockchain?

Grobecker: Blockchain as a technology enables so many doors to open, and all of a sudden we as practitioners are now dealing with things that have never been on our radar before. So we now have to understand the convergence of SEC laws. We have to know the U.S. Treasury Department financial crimes, their department. That touches on anti-money-laundering laws, and know-your-customer rules. Now we have to say, here’s someone’s crypto wallet. Oh, by the way, where’s this money coming from? Is it coming from the dark web, and the Silk Road?

Or is this legitimate funds from someone’s legitimate wallet? We have to know, are we selling real estate now, or are we selling an SEC-regulated security? For me as a practitioner, especially as a broker, it’s understanding the convergence of all these laws. I just want to make sure that all my friends stay out of orange jumpsuits. It’s really important that they’re all like, “OK, these are the laws — here’s how I stay in my lane and I don’t get in trouble.”


There have been a number of recent major price drops in cryptocurrencies, particularly the ones that represent NFTs. Do you think this will affect the timeline for the further adoption of blockchain technology in real estate? Is it set back?


Real Estate Heaven REH Will The Fed End Cryptocurrency Realtors Plan For Blockchain's Future AppGrobecker: Forward, actually, and at a rapid clip. And the idea here is that crypto is merely a testing ground for a Fedcoin that’s going to be rolled out. And when this project started, that was very conspiracy theory-esque. But the government has since announced that they’re working on Fedcoin. Moreover, in the last couple months, the SEC said they were going to regulate stablecoins. They were going to investigate them, right?

And immediately thereafter, stablecoins started to crash. From there, everything starts unwinding, as far as the validity of crypto. And this is actually a beautiful thing. The SEC and the federal government really cracking down is good for the consumer. Then flushing this out is good for the consumer. It’s also hardening what will become Fedcoin, and what will become the one or two winners in the actual stablecoin space. So I think everything just moves faster from here in a legitimate, legal way.

Cottrell: I think there’s a lot of confusion where people want to equate blockchain with crypto. And that’s becoming clear that blockchain is the infrastructure. It’s the ledger, if you will; it’s immutable. That is going to be the infrastructure that moves forward. We may lose 90 percent of the crypto projects. It should remind you of 1999. Over 1999 and 2001, so much went away [in the internet infrastructure]. I expect the same thing’s going to happen to crypto.

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