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Here’s Why Crypto Mortgages Are The Next Big Disruptor

Crypto mortgages are bringing in a new wave of onlookers, wondering if this is the next avenue to securing a home? Well it makes sense, but we’ll see if there’s a catch to it. Say you’ve got $300,000 in crypto currency, this can be leveraged against a mortgage company’s $300,000 cash for a home with no taxes paid because you never cashed out of crypto!

Why crypto mortgages do make sense

When you cash out of crypto you pay huge amounts of taxes, short-term investments get hit harder than long-term investments. The trick here is that the bank will hold your crypto equity as collateral, so it’s like you never cashed out and those taxes are out of the equation of your new home. This is especially helpful for those who are self-employed or a regular trader since qualifying isn’t easy traditionally.

The end all is crypto mortgages allow you to pay off your house without meandering through the traditional process, with large dollar signs sitting in your crypto wallets it makes perfect sense to skip all of that lousy traditional process!

Why crypto mortgages are insane 

Okay really, what’s the risk?

Okay, so the thing is, like everything in the crypto world, crypto mortgages are an amazing idea that can go south for you very quickly.

Let’s say that your $300,000 in crypto tanks and now it’s worth $100,000. Your bank will perform a mortgage call and you’ll either need to put up more equity, refinance your home, or otherwise come up and with the cash. 

And let’s be honest, crypto is very volatile. So, the odds are that this could happen.

It’s a gamble. If everything works perfectly, you disrupt the mortgage industry and get an amazing house without paying taxes. If everything goes poorly, you’ll be back on your Robinhood app trading penny stocks in no time at all.

As you should know, the crypto world is very volatile and can make your life either Heaven or Hell depending on the market. How you could end up losing out on big dollars is, say that $300,000 in your wallet tanks down to $100,000 your bank will either require you to refinance your home, put more equity, or otherwise come up with the cash. The odds of this happening are probable as the market fluctuates consistently, so the gamble is up to you. The pros are getting to disrupt the mortgage industry by securing an amazing home without paying taxes, versus the cons of a major setback in your crypto wallet and the bank leveraging you (they know you’re likely to pay considerable fee and high interest to avoid hefty taxes).

What crypto mortgages mean for tech disrupters 

The larger picture is mortgage is a highly regulated and controlled industry. You’re not going to be getting FNMA mortgages, however the fact that you can get a subprime mortgage with crypto makes crypto continue to take over the conventional mainstream spheres.

So, what industry will be next? Travel and hospitality? Restaurants? Manufacturing? As cryptocurrency continues to tumbleweed in support and reach, it can also spread into any of these other sectors and more. Just as Blockchain technology is changing everything from the Metaverse to legal contracts, crypto can be slotted into any type of equity or asset-based transaction. 

Years ago, crypto fans on Reddit rejoiced when they could suddenly order a pizza through BTC. Being able to buy cars, houses, or even just groceries with crypto doesn’t put crypto closer to adoption, it opens new opportunities more widespread than the eye can meet. It’s not just about building some crypto mobile app anymore. Now it’s about what traditional industry you want to disrupt.

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Crypto Mortgages May Be the Next Big Disruptor

Alright, well—it almost makes sense. Crypto mortgages are the new fad. You’ve got $300,000 in crypto. The mortgage company has $300,000 in cash. You leverage your crypto for the cash then you leverage that cash for a house and you’ve got it made. No taxes paid because you never cashed out the crypto.

But surely there’s a catch?

Why crypto mortgages do make sense

When you cash out your crypto you pay huge amounts of taxes, more if it was a short-term investment than a long-term investment. Crypto mortgages make it possible to secure a bank loan with your crypto equity, so you don’t actually have to cash out. The bank will hold your crypto as collateral but otherwise you’ve never cashed out. So, you can buy a house. And if you’re self-employed or a regular trader, you probably won’t qualify any other way.

If you’ve got millions of dollars in crypto, this type of mortgage makes absolute sense. Now, you’re still paying the mortgage, which also means that once you’ve paid off your house you’ll own it free and clear. But you get a great mortgage without having to go through a traditional qualification process.

Why crypto mortgages are insane 

Okay, so the thing is, like everything in the crypto world, crypto mortgages are an amazing idea that can go south for you very quickly.

Let’s say that your $300,000 in crypto tanks and now it’s worth $100,000. Your bank will perform a mortgage call and you’ll either need to put up more equity, refinance your home, or otherwise come up and with the cash. 

And let’s be honest, crypto is very volatile. So, the odds are that this could happen.

It’s a gamble. If everything works perfectly, you disrupt the mortgage industry and get an amazing house without paying taxes. If everything goes poorly, you’ll be back on your Robinhood app trading penny stocks in no time at all.

For the bank, they’re basically leveraging you. They’ve hedged their risks because either way, you’ll be left holding the bag. And they know you’re likely to pay considerable fees and high interest to avoid those hefty taxes.

What crypto mortgages mean for tech disrupters 

Big picture time. Mortgage is a highly regulated and very controlled industry. Obviously, these aren’t going to be FNMA mortgages. But the very fact that you can even get a subprime mortgage with crypto means that crypto continues to bleed into conventional, mainstream spheres.

So, what industry will be next? Travel and hospitality? Restaurants? Manufacturing? As cryptocurrency continues to grow in adoption, it can also spread into other sectors. And just as Blockchain technology is changing everything from the Metaverse to legal contracts, crypto can be slotted into any type of equity or asset-based transaction. 

Years ago, crypto fans on Reddit rejoiced when they could suddenly order a pizza through BTC. Being able to buy cars, houses, or even just groceries with crypto doesn’t just put crypto closer to adoption. It opens new opportunities. It’s not just about building some crypto mobile app anymore. Instead, it’s about what traditional industry you want to disrupt.

Stablecoins and the Crypto dash: What Happened?
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Stablecoins and the Crypto dash: What Happened?

Hey, on the bright side, cryptocurrencies have finally untethered themselves from the market. On the downside, it was stablecoins that did it. To some, a new economic platform. To others, a transparent Ponzi scheme. Let’s take a look at how stablecoins are going to permanently disrupt the crypto market.


What is a Stablecoin?


Cryptocurrency is now fairly mainstream. You can buy cryptocurrency on the Robinhood app. You can buy it on Cash app. But that doesn’t mean there won’t be bumps in the road.

A stablecoin is a coin that’s pegged to the value of something else. It’s designed to be, well, stable. For instance, the U.S. currency is technically backed by a gold standard (although it hasn’t really been for some time). Ideally, stablecoins should be a hedge against other risks.

Cryptocurrencies are, of course, notoriously volatile. Just load up Reddit and you can see photographic evidence of people losing millions (and gaining them).


TerraUSD, the Stablecoin That Couldn’t


TerraUSD/Luna was a stablecoin locked into the US dollar. It should, ideally, peg its price on the USD… largely in a way that no one really understood. TerraUSD/Luna was two coins in one. One was stable and pegged (again, theoretically), while the other coin was burned to create that stability. 

What you need to know is that a stablecoin can either be truly backed by a product (such as the stablecoins that are backed by pools of Bitcoin) or a stablecoin can be algorithmically backed. The algorithm seeks to course correct the coin any time the coin diverges from its backer. 

The problem comes when the algorithm needs to create increasingly more volatile swings to compensate for existing instability. With TerraUSD, the adjustments compounded in such a fashion that what should have been a stablecoin catastrophically tanked. As TerraUSD/Luna lost its value, it tried to print more Luna to compensate. This created a virtually infinite loop.


The Consequences of TerraUSD

TerraUSD lost its value within minutes. And that’s not a great thing for cryptocurrency as a whole, because the whole reason people were invested in TerraUSD was to keep their money safe. So, you’ve got this technology that promises that it’s going to be less volatile than crypto, and a great place to save your crypto money, and then it absolutely tanks.

On the one hand, most people investing in AltCoins pretty much know what they’re doing or know what they’re getting into. But on the other hand, anyone investing in stablecoin isn’t looking to engage in risk or make a buck; literally the only reason to be in a stablecoin that matches USD is to keep your money safe, whether it’s between transactions or part of a larger, more diversified portfolio.


Bottom line: Not only did TerraUSD absolutely obliterate its own value, but it also shook investor faith. More and more, cryptocurrency investors are starting to wonder whether crypto is really all that it’s cracked up to be.

The Follow Up Crypto Crash


Well, though, crypto is decentralized, right? So, if crypto is so decentralized, why would TerraUSD cause the entire crypto market to crash?

Actually, there’s good news and bad news there. Good news: a single AltCoin isn’t going to cause the market to crash. If it was going to, Dogecoin would have already done it like eight times.


The bad news is that there were entirely separate issues going on during the whole TerraUSD frenzy; probably issues that also caused TerraUSD to spin out. Part of it started when Coinbase, one of the largest cryptocurrency exchanges, announced that if it had to declare bankruptcy (which, it was going to do), all its wallets would need to be liquidated.


Because, of course, cryptocurrency isn’t considered to be an actual currency, and Coinbase isn’t a bank. That means the wallets that other people had stored on the exchange would be liquidated to pay Coinbase’s debts. 


That led to people mass panicking, selling, liquidating—just generally getting out. That introduced churn that was quickly followed up by the TerraUSD crash.


That doesn’t mean crypto is over, certainly. It’s a great way to transfer wealth, for better or worse. But it does mean that investors need to be a lot more cautious when they read a prospectus. Certainly, don’t just load up any mobile app and start buying coins.