As our world continues to advance technologically and things that were once commonplace become high-tech. For example, we can now turn on and off lights, sprinklers, thermostats, and unlock the doors of our homes remotely or by using smart home assistants all thanks to technology. These advances are also making their way into how we use and perceive currency. Bitcoin is a perfect example. Known as cryptocurrency, this form of digital payment is becoming more mainstream and is even making its way into the world of real estate in Silicon Valley and beyond.
What Is Bitcoin?
Bitcoin was created in 2009 by an unknown person or persons who used the alias Satoshi Nakamoto. Not tied to any specific currency or subject to regulation, Bitcoin is virtual money that is paid using a digital wallet without the use of financial middlemen. Fees are minimal to nonexistent and they can be sent directly from payer to payee 24/7 to anyone in the world. Because the digital wallets are pseudonymous, the sender’s identity can remain unknown. Another plus is that Bitcoin cannot be counterfeited.
How does it work?
Digital currency like Bitcoin uses distributed ledger technology (DLT), otherwise called blockchain technology. This digitized, public ledger alleges to reduce both transaction costs and the dependence of intermediaries such as banks, savings and loans and credit unions to conduct currency transactions.
Forbes published an article in 2016 that stated blockchain technology was “the most game-changing technological advancement since the Internet.”
For many people, the concept of Bitcoin is outlandish, much the way the idea of credit cards once was, though Bitcoin is undeniably much more complex. Though it has its risks and still requires more people and companies to understand and accept it, there are those who have adopted it and use it everyday to make purchases, including real estate.
What does this mean for real estate?
As Bitcoin becomes more mainstream, more and more companies and individuals are adopting it as a viable payment method. There are approximately 14 million Bitcoin wallets in existence (though many people have more than one wallet), over 2.5 millions items that can be purchased using Bitcoin, and to date, over 125,000 merchants worldwide accept this digi-money, including Dell, Tesla, Overstock.com, and Microsoft.
It is no wonder that this method of payment is making its way into the realm of real estate. Some states are revising their laws and regulations to allow Bitcoin to be used to finance the purchase of real estate. Arizona and Vermont have been pioneering the use of Bitcoin to pay for property and other states are sure to follow suit.
Currently, the volatility of Bitcoin places all the risk on the buyer side. As of this writing, 1 Bitcoin equals 1 US dollar but it fluctuates wildly. Bitcoin tends to be used by Millennials but is also a preferred option for some international buyers who prefer not to pay in a specific country’s currency.
Legislation surrounding Bitcoin and other digital currencies still needs to be fleshed out to minimize misuse. But the blockchain technology that backs the virtual money appears to have a positive impact on real estate transactions. Immediately verifiable and secure, this public record could “transform and speed up the mortgage and title process. It could also lessen fraud by preventing the forgery of documents.”
The use of Bitcoin and other cryptocurrencies have just begun to make headway as a form of purchasing power for real estate. It seems only a matter of time until more and more homebuyers begin making payments for property using this digital money, especially here in the Silicon Valley.
For more information on Blockchain Technology, check out this post from investinblockchain.com.
The following infographic has been provided by: BitFortune.net