Two pizzas cost Laszlo Hanyecz 10,000 bitcoins back in 2010. Then, just a couple of years later, in 2014, someone purchased a villa in Bali for 800 Bitcoins — the equivalent of an unbelievable $500,000. This shows how much the price of Bitcoin (BTC) has changed as well as the attitude towards it.
Soon, buying a house with BTC could become a common occurrence. Let’s take a closer look!
Bitcoin — Basic Overview
Bitcoin is a digital currency designed specifically as a peer-to-peer system for online payments. Its transactions don’t need to be overseen by a central authority, which is why it’s so intriguing and also described as decentralized.
Another reason why BTC is so attractive is that it offers a high level of security and anonymity that other financial institutions don’t provide. It can be used for large-scale transactions as a replacement for paper-based money.
How to Buy a Home with BTC
Before you go ahead and buy a home with BTC, there are certain things that you need to complete the deal:
- Agreeing on the transaction. The first step is for the two parties (buyer and seller) to agree on the structure of the deal and acceptability of Bitcoin as the payment method. If you have Monero, then you can convert XMR to BTC to complete the transaction.
- Bitcoin accounts. Both parties must have Bitcoin accounts and understand how it works so that there are no disputes in the transaction.
- Mutual trust. Both parties should be familiar with one another and develop mutual trust. This is because Bitcoin transactions are irreversible once completed.
- Escrow services. There are already BTC escrow services emerging that would be able to handle real estate transactions.
Buying a Home with Bitcoin: For and Against
- Buyer autonomy. Autonomy is a BTC feature that makes it a viable option for users. People can control their spending without going to a bank.
- Fewer fees. Most overseas investments are expensive because of the numerous fees involved, such as transfer and broker fees, taxes, etc. The accumulation can become massive. However, all of these fees are suspended through tokenization.
- Safer and faster transactions. Real estate transactions are usually completed offline and require a physical connection. However, the efficiency and security that smart contracts offer are revolutionizing this. The lack of intermediaries also makes it faster.
- Diversification. It’s never smart to put all your eggs in one basket. All smart investors know this and invest their cryptocurrencies in real estate, which is more stable and not as volatile as the crypto market.
- Anonymity. The anonymity of Bitcoin is an advantage but it is also a reason why it’s hard to create safeguards for sizable exchanges.
- Fluctuating prices. Cryptocurrencies are very volatile. Every day the exchange rate changes, and you need to recalculate the coins frequently.
- Money laundering. Cryptocurrencies can be used for money laundering and putting this in real estate then makes those assets and the possible criminals legitimate.
- Inability to perform credit checks. Sellers are not able to determine the reliability of their buyers as there’s no report for owning Bitcoins or the amount owed.
The introduction of cryptocurrency into the real estate industry has started to modernize this age-old industry. Shortly, we expect that it will become a common occurrence to use Bitcoin in order to buy real estate.