When bitcoin was released to the public in 2009, it was worth less than a cent. By 2011 when it went mainstream, it was worth less than a dollar. Now, each bitcoin is worth nearly $6,000. Those who purchased bitcoin in its first two years are now millionaires, thus explaining the luxury real estate’s interest in bitcoin.
As bitcoin’s value increases, investors are looking to divest their funds into tangible assets, such as real estate. Thus encouraging more companies to begin exploring how bitcoin could be used within their industry, as well as how to help with anticipated issues. For example, Cumberland Mining, a Chicago-based company works to help people buy and sell cryptocurrencies for cash. BitPay, another company offering bitcoin services, converts bitcoins to cash. These services are created and provided in efforts to help merge the markets. For example, if one party prefers a traditional route, while the other wants to use a cryptocurrency, Bitpay can be used to make the transaction possible and efficient. The seller opens an account and sends an invoice to the buyer for the purchase price. Then the party utilizing the cryptocurrency will pay a 1% fee and transfer the funds, which are immediately converted to cash. It makes the transaction more like an all-cash deal, although there is typically an escrow period.
Many properties are now advertising their acceptance of bitcoin in hopes to appeal to more buyers, but more specifically, younger and international buyers. The risk in accepting a somewhat speculative currency falls directly on the property seller; even if the purchaser wants to use Bitcoin like cash, the agent or seller can turn it down.
It is almost certain that cryptocurrency will be a part of the future of real estate transactions, although whether it’ll be Bitcoin or another cryptocurrency is yet to be determined. As cryptocurrencies continue to develop, sellers and buyers will need and look for licensed agents, reputable lenders and title companies to secure their transactions.
Regardless of bitcoins success or failure, it’s blockchain technology is here to stay. The compelling technology is public record and is instantly verifiable, making information readily accessed. If possible to secure titles in the blockchain, this would be huge for property titles and the mortgage process. It would not only speed it up but also lessen fraud and prevent document forgery.
As organizations such as IBREA, or the International Blockchain Real Estate Association, works to mainstream the blockchain technology, they are also working to promote and set standards for real estate transactions using cryptocurrency.