R
eal estate is the world's largest asset class, with a global value of nearly $400 trillion, more than three times the size of the global stock market and almost four times global GDP. As people have increasingly invested in real estate, houses have become not just shelters but also inflation-hedging assets that command a significant monetary premium.

    Despite earning only a 3% net rental yield, landlords continue to invest in new buildings because real estate makes for excellent collateral. Banks are eager to lend against it, making mortgages widely available and allowing property owners to access liquidity through various financing options.

    However, this system has limitations. Gold and luxury items like cars can also be used as collateral, but they lack the security of real estate tied to land. Bitcoin, on the other hand, offers a new form of collateral that doesn't rely on legal enforcement.

    As collateral, Bitcoin outperforms real estate in several key areas: it's always available, globally recognized, instantly transferable, programmable, and secured by cryptography rather than laws. Liquidating Bitcoin collateral is also much simpler than selling a property, which requires navigating local markets, appraisals, fees, capital controls, and regulatory hurdles.

    As institutional adoption of Bitcoin grows, its use as collateral in non-custodial loans will become more widespread. If borrowing against Bitcoin becomes easier, safer, and cheaper than borrowing against real estate, people may stop storing wealth in houses. Real estate's value is determined by cash flows plus a market-driven monetary premium, whereas Bitcoin represents pure monetary value unencumbered by physical constraints or ownership costs.

    Some indicators suggest this shift is already underway. A growing number of investors are turning to Bitcoin as a hedge against central banks and rate cuts. Millennials and Zoomers are increasingly investing in crypto over traditional assets like real estate and stocks. As the ideal store of wealth becomes more portable, global, and digital, Bitcoin's appeal will only grow.

    When this happens, tens of trillions of dollars worth of capital will rotate into Bitcoin, causing a global repricing event that few people are prepared for. The dominance of real estate as an asset class is about to be challenged by the rise of Bitcoin as a frictionless, programmable, and borderless form of collateral.