If you haven’t been living under a rock, you’ve most likely heard of cryptocurrencies.
Bitcoin, in particular, has been on everyone’s lips recently. Since the third quarter of 2020, the gold standard for cryptocurrencies has been continuously hitting new highs.
Many people have been wondering what else they could hypothetically buy with the cryptocurrency after a crypto enthusiast used his Bitcoins to buy pizza.
What about a vehicle? Perhaps even a house?
Is it even possible to purchase a physical asset using a currency that does not technically exist in the real world?
How would you go about making such a deal? What about the value of things?
The good news is that cryptocurrencies can be used to purchase a home. It requires a willing buyer and a willing seller, just like any other transaction.
If both sides agree to proceed with the transaction, then it’s done. You’ve successfully closed the sale. With that in mind, let’s examine the mechanics of purchasing a home using Cryptocurrency.
Get Some Real-World Experience
While bitcoin is fashionable and soon becoming a vogue among high-net-worth individuals, it is not for the uninitiated. Do your homework if you’re thinking about using digital currency to buy or sell a home. Learn about the market, the risks, and how everything works.
Get some practice by signing up with trusted exchanges that allow investors to buy and sell Bitcoin and Ethereum. Several platforms verify users easily and allow them to link their bank accounts. Individuals will be able to learn the ins and outs of digital money by starting with this form of transaction before moving on to larger pools such as real estate.
Click here to start trading cryptocurrencies and get real-world experience.
Locate the Right People
Blockchain technology will become the standard with which we conduct all transactions in the future. Until then, individuals who are interested in pursuing it must face the difficulties that come with it. One of the most challenging aspects of adopting cryptocurrencies for real estate deals is convincing people that it is not “fake internet money.” Many sellers are still averse to dealing with it. As cryptocurrency becomes more popular, this stigma is dissipating. Anyone who is open to learning about the technology and how crypto works can begin using it in real estate right now.
However, while crypto is still in its infancy, you can protect yourself by working with the appropriate individuals. Make sure the agents you’re interviewing are conversant and experienced with cryptocurrency transactions.
Set the Rules
Using cryptocurrencies to buy or sell real estate comes with its own set of obstacles. The buyer bears the brunt of cryptocurrency’s volatility. If you’re dealing with a bitcoin real estate transaction, always utilize the house’s fiat price as a benchmark. The contract must include detailed language describing how the cryptocurrency will be settled at the conclusion of escrow.
For example, if the residence is valued at $1,000,000 and the price of cryptocurrency is lower at the time of closing, the buyer will be required to make up the difference. If the price of cryptocurrency rises after the transfer, the excess should be repaid. Make sure your contract has all of the specifics stated out for you.
Few Things You Need To Take Into Consideration
On paper, purchasing a home with bitcoins appears to be relatively straightforward. You must, however, take into account a number of factors.
1. Governmental rules and regulations
Because cryptocurrencies are entirely decentralized, governments all over the world are wary of them. If you’re buying a residence with cryptocurrency, check with your bank or local tax authority to see if there will be any consequences.
2. Changes in price
Cryptocurrencies are, without a doubt, incredibly volatile. Your purchasing power may be eroded as a result of random price variations. Because the seller has already agreed to a dollar amount, you bear all of the risks as a buyer.
Once again, some sellers may be hesitant to accept crypto payments. It may become even more challenging to find a seller who accepts bitcoins as a result of this.
If the seller knows, he or she may be persuaded to raise the price of their property or demand that you cash in your cryptocurrency.
Given the volatile nature of cryptos, few banks or credit organizations would be prepared to back a transaction with such risky assets.
World’s First Bitcoin Real Estate Transaction
In 2017, the world’s first bitcoin real estate transaction took place in Texas, United States. Kuper Sotheby’s International Realty completed the transaction for an undisclosed sum.
The property that was bought is a brand-new bespoke home in Austin, Texas. The house has vast entertaining areas, a large kitchen, a luxury master suite, and a beautifully landscaped lawn. The hotel is a short distance from the city’s downtown district, which is also recognized as the Live Music Capital of the World. The neighborhood is becoming a burgeoning hotspot for technological firms.
While buying and selling real estate with Bitcoin may be considered too dangerous for the time being due to the massive quantities of ‘cash’ changing hands, there is one industry where cryptocurrencies could become mainstream very soon: lettings. The rental market is rapidly expanding, particularly among those under the age of 35. Therefore providing an alternate payment method could be beneficial.
Millennials are less afraid of Bitcoin than previous generations, and rental payments are clearly less expensive than purchases. So, paying your rent with a cryptocurrency like Bitcoin could become a common occurrence in the not-too-distant future, leading to additional cryptocurrency sales.
Only time will tell how Bitcoin and other cryptocurrencies will affect the real estate market, as it will with so many other things in life, but we’ll be watching with bated breath.