Is it possible to buy or sell a house using Bitcoin? Is it safe and legal?02nd Dec 2017 48805 Views
Is it possible to buy or sell a house using Bitcoin? Is it safe and legal?
Bitcoin is getting a lot of press lately, mainly because of the significant increase in the value of bitcoins over the last 12 months. Many people are looking at Bitcoin as potential alternative investment strategies and today I want to talk about whether or not you can use Bitcoin to sell your home or to buy a home. Bitcoin is already in retail and restaurants — so it was only a matter of time before the cryptocurrency took on real estate. That time is now. Bitcoin is slowly making its way into closings on everything from Lake Tahoe land in California to Manhattan condos to single-family homes in the heart of Texas.
Well, there was recently a story of a person who was selling their home in Perth Hills, so in Western Australia, and they were only accepting bitcoins as the form of payment for this home. So this is potentially the first time in Australia that will be sold using bitcoin only and not actually being able to purchase this home in cash.
So it got me thinking can you purchase a home using bitcoin and should you go about doing it? Well, obviously the answer to can you do it is yes.
What is BitCoin?
So what is bitcoin roughly? Bitcoin is a decentralized digital currency also known as a cryptocurrency and basically, it’s created on the Internet and it was created using the software.
And bitcoin is designed in such a way that you don’t need banks to hold money, you don’t need to go through a central system like you do in Australia where you have to go through banks in order to pay people or through PayPal. It’s decentralized so you can send money directly from one person to the other which means fees are a lot less.
The risk associated with Bitcoin
One of the major risks is the fluctuating exchange rates of bitcoin at the moment. Bitcoin stayed pretty stable in its exchange rate and the growth of that product in its early days but in the last twelve months, it has gone from something like $10 per bitcoin to over $7000 per bitcoin.
But there have been instances where bitcoin has dropped dramatically in value. One of those instances was when China, the Chinese government, actually closed down a lot of the exchanges of a bitcoin and automatically overnight that product, the bitcoin, the exchange rate almost halved.
So fluctuations in the exchange rate are extreme and that is a risk if you’re going to be buying or selling a home using bitcoin. There was recently a story of Mount Gox where there was a robbery of bitcoins worth $470 million. So someone came and obviously robbed all these bitcoins of huge value, that’s the moments when people start panicking and doubt the reliability of Bitcoin.
There was also a story of a guy who had thrown out a hard drive probably a year ago or a couple of years ago but now with the value of bitcoin, he realizes that there was actually over $14 million in value in bitcoin on that hard drive but he had thrown it away. So if you’re storing bitcoin on your computer or your hard drive and it crashes, well it’s going to be pretty hard to access that. So that’s a risk as well.
And then lastly, you’ve got a risk of hackers. A lot of the bitcoin exchanges that have come up to help people I guess use bitcoin have been severely attacked by hackers.
Why bother selling your home using Bitcoin?
At the moment, many people consider Bitcoin to reach $1 million of value. But everyday investors, everyday home buyers are going to look at that and are going to immediately be turned off and ask “bitcoin? What the hell is Bitcoin? That sounds too risky for me, I’m not going to go ahead and do that.”
So I think bitcoin is not mainstream enough, there is not enough of people who are confident in the currency and happy to use the currency that it would be worthwhile for your standard home seller in Australia to try and sell their home using bitcoin.
Now you could offer it as an option, maybe you can purchase it using cash or you can purchase it using bitcoin and maybe that opens you up to some press and maybe some extra buyers but realistically if you’re just saying you can only buy using bitcoin, my thoughts are that you are going to close off a lot of your potential buyers and that is actually going to make it harder for you to sell your property. But let’s consider cities where that let you buy Real Estate with the BitCoin?
5 Cities That Let You Buy Real Estate with Bitcoin
A Miami man recently made news by selling his home in Coral Gables for over $6 mln — or approximately 1,600 BTC.
The steep selling price is enough to rattle the headlines, but Bitcoin has been a part of the Miami real estate market for several years. Although it was only launched in 2009, tech-savvy real estate agents, investors, and buyers quickly embraced the new cryptocurrency.
2. Dubai, UAE
The United States isn’t the only country to capitalize on the growing Bitcoin trend. A developer located on the Isle of Man recently announced plans for a joint residential-commercial development valued at $325 mln. Prospective residents will be able to use Bitcoin to purchase their property, with studio apartments starting at 33 BTC and one-bedroom apartments from 54 BTC — or approximately $250,000.
3. New York
Investors and real estate agents in The Big Apple also believe Bitcoin is the way of the future. The team with Magnum Real Estate is assuming a huge risk by accepting Bitcoin for deposits and purchases for recently converted apartments in Manhattan’s East Village. Known as Liberty Toye, the property represents a huge shift in the way we conduct business this century.
4. Lake Tahoe, California
The popular vacation destination of Lake Tahoe accepts Bitcoin, too. An unnamed buyer recently purchased a 1.4-acre property with Bitcoin on a 42-site resort. The undeveloped property sold for $1.6 mln, or 2,739 BTC, making it the largest Bitcoin-driven real estate transaction at the time it happened in 2013.
5. Bali, Indonesia
The island of Indonesia isn’t the first place you’d expect to see a Bitcoin-backed real estate transaction, but it was actually among the first locations to support the cryptocurrency. An unnamed buyer spent more than 800 Bitcoins, totaling approximately $500,000 at the time, for a villa in Bali.
Although residential real estate agents and buyers are comfortable with using Bitcoin to purchase real estate in Bali, we have yet to see any listings in the commercial or industrial markets.
Bitcoin and the future of real estate
There are many advantages in doing so, but the risks are too steep for some to take the plunge. Anyway, we believe that cryptocurrency as the Bitcoin will grow and will be a future of general transactions.
Written by: Mark Daniel Zalomajev