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Is Cryptocurrency the Way of the Future in Real Estate?
Currently, there are 17 homes for sale in California—12 of which are in Los Angeles county—that will accept Bitcoin as partial or full payment, according to Bitcoin-RealEstate.com, a brokerage website specializing in digital cryptocurrencies. Bitcoin is just one of several new peer-to-peer digital currencies that use encryption as a way to regulate currency and offer a decentralized alternative to government-regulated moneys. As of February 5, 2018, one bitcoin traded for $8,000 US dollars, down from $20,000 in December 2017. This volatility makes for riskier business for both buyers and sellers, yet the Bitcoin trend is on the rise.
New York City, California and Miami lead the way in Bitcoin residential real estate transactions in the U.S., but homes are listed across the country, including several in Texas, Arizona and Illinois. While bitcoin may be becoming a more acceptable form of payment, not everyone is on the bitcoin bandwagon. In Austin, Texas, a buyer who works in the tech industry used bitcoins to purchase a new home. The seller, a custom homebuilder, wanted the currency converted to dollars, so they used Bitpay, a global bitcoin payment provider, who converted the bitcoins into dollars to complete the transaction.
Foreign Investors and Millennials Lead the Way in Blockchain Technology
Bitcoin’s popularity has been slower-going in the real estate industry compared to other industries, although it continues to pick up steam—especially with millennial and international investors. Some of this hesitation may have to do with volatility of the bitcoin markets and both a lack of regulation in cryptocurrencies and a lack of understanding on how bitcoins are taxed. Buyers and sellers are wary, but as more transactions take place, more folks are inquiring about it.
Foreign buyers seem the most comfortable with cryptocurrencies. This may be because these digital currencies allow investors to circumvent government controls and regulations, such as restrictions on how much money residents are allowed to transfer abroad through banking systems. Real estate transactions using cryptocurrencies are increasing worldwide, most notably in Japan, the UK and Dubai.
Bitcoin is Here to Stay
Like it or not, cryptocurrencies are here to stay. How to fully integrate Bitcoin into the real estate market will likely take some time. Local and state laws, title and escrow fees and of course agreeing on a price with widely fluctuating valuation create both new challenges and new opportunities in the marketplace. The most important thing for both buyers and sellers to do is to educate themselves, look for real estate professionals who have knowledge in alternative currencies and be aware of the risks involved.