3 Ways How to Use Cryptocurrency in Real Estate
The process of buying a property with cryptocurrency has become more convenient and profitable. Experts expect a cryptocurrency to become a full-fledged type of payment. Many real-estate agencies and stand-alone homeowners adopted this new form of payment — and nowadays, you can buy properties with crypto.
In addition to the fact that cryptocurrency brings many changes to the payment system, it also leads to the creation of new marketplaces.
The development of crypto reality can be assessed from different perspectives. The knowledge threshold is higher than people are used to on the real estate market. It will take time to research and really understand everything crypto transactions are made of. But, there are positives to this advancement: alternative kinds of payment, increased safety in deals’ transactions, new forms of small-scale investments, and so on. So, let’s talk about what can be done with crypto on a real estate market in more detail.
Bitcoin is a real discovery of the twenty-first century. Over the past decade, the value of this asset has increased thousands of times — the price of one bitcoin is approximately $43,000 — and now, you can buy real estate with it.
People buy luxury real estate around the world exclusively for bitcoins or divide the price tag between cash and a cryptocurrency transfer. Right now, more than 40 million Americans have bitcoins — and, apart from simply buying the house, they now turn their coins into more stable assets.
Blockchain For Real Estate
Transactions in real estate spaces are full of fraud. Most often, fraudsters falsify apartment ownership documents: for instance, change the names of the previous owners or remove information about the unpaid mortgage. This creates enormous difficulties for the new owners.
Blockchain is a network that eliminates the involvement of man in the middle in any transactions, and it has many benefits for the industry that are rooted in its very structure.
Firstly, all information about real estate will be fragmented and stored across multiple computers all over the world: all documents, property rights, names of previous owners. Only the owner of the info will have the cryptographic key that gathers it from across the distributed network and assembles it into its initial form. Secondly, everything that happens on the network connected to this info is recorded. There’s no way to delete transactions that have occurred. Each new transaction carries the history of edits, changes, and attempts to interact with the info into the next one. Finally, the distributed info itself is unchangeable. Safer transactions equal, obviously, better deals in the industry.
The ICO (Initial Coin Offering) is gaining great popularity among real estate sellers and investors. If ICO in its classical understanding is a way for the crypto industry to attract investors’ find for a new blockchain-based app, new currency, or service. In the case of real estate, ICO is used to create platforms, in which sellers would be able to list their property for what’s called fractional ownership by investors. That’s nothing new in the world of fiat transactions, but pretty fresh in crypto world. It’s also more affordable in the crypto industry, according to investors, because it’s much cheaper to maintain the assets’ security on the blockchain.
Basically, investors are paying for the part of the house in crypto — the common one, like bitcoin, or the one that’s specific to a platform. Of course, then the ICO-specific coin — a tokenized equity — is entering circulation. Its value may drop or rise, subsequently decreasing or increasing the cost of the house. When the owner decides to sell the property, all parties — a seller and the investors — would enjoy the gain in value.
Tokenized real-estate shares have the potential to make the real estate market more volatile and add up liquidity. Of course, many traditional investors appreciate this industry precisely because it is known as one of the most stable ones, but a new generation of crypto-first investors would likely prefer investing in houses in that way than by simply buying shares. Besides, while regulations for this investment method are unclear right now, it’s pretty obvious that blockchain-based transactions with real estate are more flexible. People can sell and buy houses being hundreds of miles away from each other.
Cryptocurrency can be a great opportunity. Using this type of payment when buying real estate, you get many benefits: privacy when shopping; tighter control over transactions and no in-between parties’ involvement; etc. International transactions are easier to conduct. Relying on blockchain gives you a higher level of security. Finally, in general, if you own crypto and don’t know what to do with it, investing in real estate is one of the best ways to gain something solid for pretty volatile assets.