Is There Place for Bitcoin in Real Estate?
Bitcoin: You have certainly heard this word floating around in the past couple of years, but do you truly understand what it is? This article will walk you through the basics of this crypto-currency and venture to question the future role of Bitcoin in real estate.
Bitcoin (BTC) is a digital currency that was created in 2009 by a person under the alias Satoshi Nakamoto. Transactions are made without a middleman, namely without banks. There are no transaction fees and no need to give your real name. Bitcoin’s biggest attractive characteristic is that is gives you the ability to purchase things anonymously. They are not tied to any one country, nor are they subject to the regulations that regular currencies are.
How are they stored if they are anonymous? Users have a “digital wallet” either in the cloud or on the user’s personal computer. The wallet is what allows the users to use the Bitcoins for transactions. Unlike a normal bank account, a user’s digital wallet is not insured by the FDIC.
But is there a place for Bitcoin in real estate? How does it fit in, you may ask? At the moment, there are more than 2.5 million items that can be purchased with Bitcoin, including real estate. One man made headlines in 2013 when he advertised that he would accept Bitcoin as payment for his $800,000 Southampton house.
Listing specialists and real estate professionals are accepting this cryptocurrency as payment for real estate more and more each year. They want to treat Bitcoin buyers the same as they do cash buyers.
There are, however, risks involved. Real estate transactions that use Bitcoin do eventually have to involve normal currency in the transaction. The risk does not fall on the client, it primarily falls on the title company of the transaction. If a title company accepts Bitcoin from a buyer, the seller isn’t going to walk out of closing with a strip of paper from a Bitcoin ATM. They’ll get their money in U.S. dollars. If you or one of your agents is representing a seller, and the purchaser wants to use Bitcoin like cash, you can turn it down.
If property titles could be secured in the blockchain of cryptocurrency, it could transform and speed up the mortgage and title process, in addition to lessening fraud by preventing the forgery of documents.
While the risk and volatility of Bitcoin’s value makes some investors hesitant to accept it, cryptocurrency is here to stay and its role in the real estate market is only growing. Get with it, because one day you might be buying your dog food and cleaning supplies with Bitcoin!