Pile of cryptocurrencies

An Introduction to Using Cryptocurrencies in Self-Storage

Most self-storage operators have likely heard of cryptocurrencies such as Bitcoin but aren’t sure how these new payment methods work. Here’s an introduction to “cryptos” and why they should be on your radar.

There has been much hype in the media over the past year related to Bitcoin, Ethereum, Litecoin and the cryptocurrency market in general. As Bitcoin quadrupled in the latter part of the year, many began to take notice. Detractors proclaimed it a “scam,” while others heaped praise on this emerging form of global payments. Noted Wall Street gurus went from hating it to loving it and back to questioning the entire concept. Suffice it to say it's been a wild ride in terms of pricing and perception.

What’s undeniable is cryptocurrency is more than likely here to stay in some form or fashion, even though the present volatility scares most who consider using it in day-to-day transactions, especially when the price of the currency fluctuates inexplicably from minute to minute. Cryptos (what the cool kids are calling it) trade 24/7, and there's no market open and close like on a traditional exchange. They can be also be traded in fractional portions, not a whole share like a stock. So, even though Bitcoin may be trading at more than $10,000, you can send just a few hundred dollars’ worth, down to the 10-thousandth of a coin.

The evolution of more secure systems and larger companies accepting payments in cryptos will continue, becoming more commonplace in the months and years to come. Millennials seem to like the idea of them and are comfortable using them, not only as a form of payment but also for investing. And if you're up on trends in the self-storage industry, you know this generation is your next big source of customers.

Cryptos Simplified

So, what is a crypto? Primarily, it’s a digital asset. Think of the days when you wanted a book, visited a bookstore, looked for something that interested you, and purchased it. Now you just download the book to your tablet. That book is a digital asset you paid for and never have to lug around when you move or find a place for in your home.

Cryptos exist in the digital world like many other assets. If you consider how money flows through the banking system, there isn't much difference. What the future will determine is how easily these assets can be converted into usable form so they’re as ubiquitous as using your debit card. That time is coming, and the investors in the space are pouring in big money to get a piece of what will likely be a very large pie.

The main difference between cryptos to other types of investments is ownership. They’re truly more like a currency. There are varieties of structure, and regulations continue to impact that. For the most part, a digital asset exists almost solely on supply and demand, since there’s no liquidation value, no price-earnings ratio and other metrics.

Now, let’s talk briefly about blockchain, the technology that enables the existence of cryptocurrency. Though it serves as a framework for many different applications, what you need to understand in relation to cryptos is it’s the basis for security. With it, a person can send you Bitcoin, for example, and cannot send that same Bitcoin to someone else.

Adoption Is Coming

The reality is we still live in a dollar-denominated world! You have to pay your bank, along with property taxes, payroll and every other expense with dollars. It's doubtful that will change even within the next few years, but the trend is coming whether we like it or not.

The adoption of various forms of customer payments will become necessary in the years ahead, but there’s time to examine this trend and see how to position your storage business in this unique market. This change will slowly work its way into our daily lives, and exchanging digital currencies for real things will become easier and more secure.

One of the most important developments has been how cryptos are viewed by various governments and their regulators. We know from trying to develop properties, paying taxes and sorting through regulations—whether simply operating a storage facility or attempting to rezone a prime tract of land—that the process can be mind-numbing. At this point, it's unclear exactly how agencies around the world will deal with this, but the genie is out of the bottle, and there's no foreseeable way to put it back in.

For sake of conversation, I’d argue there really isn't much difference between a crypto and a fiat (government-sponsored) currency in theory. If you have dollars, euros, yen or yuan in your account, that value is represented by what you can exchange them for and how many the seller of an item needs to agree to the exchange. It's not like if you own so many dollars you can go somewhere and claim your piece of the assets of the United States. You simply trade it or invest it in something else.

The same principle holds true for all Altcoins, digital assets or cryptos. In fact, the issuer of these coins is more akin to a federal reserve chairman than a CEO, whether many realize it. That role was originally intended to provide stability to the currency, and is truly the position Altcoin issuers should take to defend the value and price of their currency long term.

It’s Just Currency

Even though there are many comparisons between cryptos and stocks, there’s a clear and distinct difference (and this is an important point). If you own $20,000 of Apple stock and $20,000 of Bitcoin, these aren’t the same. The ownership of Apple gives you a miniscule proportional ownership in that company, but your money in Bitcoin just gives you Bitcoin. Remember it’s only a currency, not a share ownership. It's a method of payment, a method of exchanging one item for another.

If you own two Bitcoin, regardless of what the current trading value is, you still own two Bitcoin. This is probably the single biggest misconception regarding the crypto market in general and confusing the perception as an investment.

Of course, if you bought Bitcoin for $3,000 and you can now sell it for $10,000, then it’s a pretty good investment. It can be used as an investment no different than if you traded currencies like the dollar or euro; but the wild fluctuations and dramatic price increase have made this market and most other cryptos enticing. However, they’re still just currencies. You don’t own a piece of the company that issues that coin. You only own the currency. There's no Bitcoin office to go to or call.

What will make cryptos usable in the self-storage industry? The main issue being developed rapidly now is the conversion back into the local fiat currency, and the potential transaction speed and greatly reduced cost to process payments and move money. Blockchain is sound and durable; but if a customer can't exchange his crypto into an acceptable form of payment quickly, then it just becomes an interesting conversation and that's all.

However, embracing this new paradigm may provide new ways to profit, and to reward customers and employees as well as market facilities as its acceptance expands. There’s much more to come in terms of advancements for use in payments, not only in daily and monthly small transactions but in large dealings where value can simply be e-mailed from sender to receiver instantly.

One thing is certain: It’s coming, ready or not. Some companies will be ahead of the curve if they embrace this inevitable trend and take advantage of the marketing opportunities cryptos represent. Many of us can remember when the Internet was just a neat idea. Can you imagine living without it now?

Charles Anderson is the founder of Self Storage Coin LLC, which is working to promote and expand the use of STORcoin, a cryptocurrency designed for the self-storage industry. As a licensed commercial real estate agent, his experience includes residential and commercial acquisition and development of self-storage projects from ground-up to Certificate of Occupancy. For more information, e-mail [email protected]; visit www.selfstoragecoin.com

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