The Simple Path to Wealth is Paved by Real Estate & Blockchain
Statesman, Inventor, Diplomat, and noted Philanderer Benjamin Franklin, in a letter written in 1789 to his friend and fellow scientist Jean-Baptiste Leroy, noted: “The Only Two Certainties in Life Are Death and Taxes”. While this quote remains true to this day, this author would like to append it based on a historic trend which, at least in the United States, seems to be just as certain: “The Only Two 3 Certainties in Life Are Death, Taxes, and the Rich Getting Richer”.
Before the COVID-19 pandemic altered our everyday lives, the distribution of wealth in the United States, and the gap between the “Haves and the Have-Nots” was widening at a pace matched only by the speed of rockets hurling billionaires into orbit.
-Gaps in income between upper-income and middle- and lower-income households is rising
-Upper-income households have seen more rapid growth in income in recent decades; Therefore, a greater share of the nation’s aggregate income is now going to upper-income households and the share going to middle- and lower-income households are falling
-And middle- and lower-class median incomes have indeed risen by what one would believe to be exceptional rates (49% and 43%, respectively), the fine print puts us back in our place and reminds us that between 1970 to 2018, median:
-Lower-class income increased from $20,000 to $28,700 – a gain 43%
-Middle-class income increased from $58,100 to $86,600 – a gain of 49%
-Both CONSIDERABLY LESS than Upper-class income which increased from $126,100 to $207,400 – a gain of 64%
These changes to income occurred over Forty Years.
Using the Annual Rate of Inflation, a middle-class household from 1970 would need to be earning $412,808 today in order to maintain their place in our society. Together with these inflationary pressures, U.S. households had to deal with economic ripples in the form of international conflicts, multiple recessions, geopolitical upheaval, and a government hesitant to tackle systemic failures in banking, the workplace, and propagated by our elected officials. Given the challenges facing middle- and lower-class Americans, how are we expected to achieve what has been sold to us through the single greatest marketing &advertising campaign which has ever existed in the history of mankind: The American Dream
A Wife, Two kids, A dog, Two Cars, and a white picket fence. Achieved on a single income earned Monday through Friday, 9a-5p.
We haven’t even begun adding in other factors such as a household’s age, gender, ethnicity, education, and geography. And even though we are now a few paragraphs in, we should tread lightly when using the word household.
Lack of appropriate credentials put in place by lenders to qualify for a mortgage, little to no disposable income (i.e. saved money for a down payment), and scarcity of housing due to the demand stemming from upper-income households with their savings accounts, we find ourselves well beyond pondering the questions “If?” or “How?” – now we have to contend with “When?”; as in “When will the demand curve shift for upper-income buyers towards “Others”?.
A Digital Savior
From a technological standpoint, there are many lessons that can be taken from both consumer behavior in the crypto space as well as the under-riding blockchain technology powering alt currencies. Historically It has been most difficult to own a fraction of tangible goods – let’s use a chair as an example. We can certainly purchase a chair together by splitting the price, however, functionally it will be very difficult to split our ownership.
As the internet has democratized information over the decades, what principles can be applied moving forward to improve our reality in the “real world?” Enter fractionalized ownership, which provided individuals an opportunity to purchase a small percentage of ownership intangible assets in our “real world,” such as real estate, art, collectibles and music.
Emerging technology companies, such as SolidBlock, are stepping in to remove the traditional obstacles required to invest in real estate and build their wealth. While systematic change is a long road ahead, it’s inspiring to witness the next wave of fintech (financial technology) creating change in our society one investor at a time.