Billionaire Rick Caruso plans to launch a variety of cryptocurrency programs for consumers, including a customer rewards option as well as the ability to pay rent with bitcoin.
Billionaire California real estate developer Rick Caruso announced this week that he plans to let tenants in his properties pay their rent in Bitcoin.
Caruso made the announcement during an interview Wednesday on CNBC. Although he offered few details on when a Bitcoin rental program would specifically begin or how it would work, he said that he believes “cryptocurrency will stay here”.
“We believe Bitcoin is the right investment for us,” Caruso continued. “It’s part of our treasury management. So we have invested a percentage of what is normally found in the capital markets in Bitcoin. “
Caruso’s real estate is one of the most iconic developments in the Los Angeles area. In downtown LA, he owns The Grove, an open-air mall near Beverly Hills that houses a functional, old-fashioned trolley. The mall is a popular destination with tourists.
About 13 miles northeast, Caruso also owns the Americana at Brand, a similar open-air mall that includes luxury residential units above shops.
Caruso’s company of the same name did not immediately respond to Inman’s request for more information on its Bitcoin program on Thursday.
However, during the CNBC interview, Caruso said he has partnered with Gemini, a cryptocurrency exchange run by Cameron and Tyler Winklevoss – the twins best known for their litigation with Facebook founder Mark Zuckerberg. In the 2010 film The Social Network, Armie Hammer portrayed both twins.
In addition to the rental payments, Caruso’s company plans to use cryptocurrency in its customer rewards program. And Caruso said during his CNBC interview that he believes consumers will return to properties like his after the coronavirus pandemic subsides.
However, it remains to be seen how many consumers will actually want to use cryptocurrency to pay their rent. When Bitcoin was first invented in 2008, the idea was that it would be a new type of decentralized currency, meaning that it would not be controlled by any person or government like other currencies.
This dream seemed achievable for years and led to strange experiments. For example, in 2013 a newly married couple started an experiment to find out whether they could only pay with Bitcoin. They raised at least 82 bitcoins through a Kickstarter campaign, which at the time was about $ 7,000.
But over the years the price of Bitcoin has skyrocketed, and as of Thursday, a single coin was trading for over $ 57,000. The result of this explosive price growth is that investors are treating Bitcoin less as a currency than as an asset.
This, in turn, begs the question of who would actually want to pay the rent with a bitcoin when there is a good chance it will be worth much more just days or weeks later. If this newly married couple had just kept their bitcoins instead of spending them on gasoline, burritos and rent, for example, they would now be worth a whopping $ 4.7 million. Given these sorts of profits in the recent past, why would anyone want to spend their bitcoin and risk missing out on massive profits?
During the CNBC interview, Caruso was asked about the volatility of Bitcoin price, even though the CNBC host phrased the question as if the problem was a potential risk to the business, not the consumer. It is true that the price of Bitcoin has crashed in the past and if that happens it could reduce the value of the Bitcoin company that Caruso is collecting. So far, however, the price has rebounded every time, meaning that it has always been beneficial to collect Bitcoin – as Caruso’s company plans to do – and spending it on things like rent has always been a bad idea.
In any case, Caruso said during the interview that Gemini will help fight volatility. And by and large, he talked about his company’s cryptocurrency program, including rewards and other things, and said it will “literally change the retail experience for consumers.”
“Our consumers,” he added, “will benefit greatly from this.”
Email Jim Dalrymple II