By Brooke Chaplan
The growth of cryptocurrencies (crypto) and blockchain is huge news. Whether you're on board with the idea of digital currency or not, it's one of the most significant advances in the financial world in recent years. Bitcoin (BTC), Litecoin (LTC) and Ethereum (ETH) are still confusing and sound foreign to many business people.
Still, these currencies are becoming more pedestrian and may even be as common as traditional currency one day. Bitcoin, Ethereum, Litecoin and other cryptocurrencies can be used to pay for everyday items. And while you can currently buy thousands of things with cryptocurrency one question still stands: can you buy real estate with Bitcoin?
Buying Real Estate With Crypto
In some markets, the answer is "yes." For example, cryptocurrencies are making their way to the real estate market, and there are documented cases where crypto has been used to buy a property. The first property to be sold for Bitcoin was in Austin, Texas, in 2017.
Understanding What This Means for You
If your goal is to buy property and you want to pay in full, then an option may be to buy BTC. Over the period of a year or two, you can watch your investment grow and may be able to put your property sooner than you thought.
Learning to Buy Property With Crypto
Basically, the sale of property requires a buyer and a seller. In most cash transactions, there's no need for an agent or a mortgage lender. If you want to buy a property with crypto, you need to pay for the property in full. It’s just a matter of negotiating the currency with the seller. Both the seller and the buyer need to agree on the value of the home in crypto. Talk to the seller and see if they're willing to negotiate the payment.
Once an agreement is made, the crypto is transferred to the seller, and they can always convert it into dollars whenever they want. For example, some services can convert BTC to dollars.
Calculating the Risk
Depending on your situation, there may be a risk when you do this type of real estate transaction. This risk is due to the inconsistencies of digital currency. For example, if you decide to sell your property for $500,000, and BTC is at its highest value of $56,800, you would receive about nine bitcoins.
If you convert those bitcoins immediately into dollars, then everything's fine, but if you plan on keeping the investment, those bitcoins could lose value at some point.
Despite the risk involved, there are still developers and sellers advertising their willingness to accept crypto as a form of payment.
Finding Out How Real Estate Transactions Are Made
Currently, any property sale using crypto requires that the transaction be paid for in full. There is no mortgage service, although there is news that they plan to roll out mortgages in some form.
It's too early to tell whether or not cryptocurrencies will replace cash. When it comes to taxes, you still have to pay them, no matter where you are purchasing the property. Different states and countries have different regulations in regard to this. While it is certainly possible to purchase property with crypto, it is imperative that you do your research first!
Brooke Chaplan is a freelance writer and blogger. She lives and works out of her home in Los Lunas, New Mexico. She recommends that you do your research before you buy BTC crypto. For more information, contact Chaplan via Facebook at facebook.com/brooke.chaplan or Twitter @BrookeChaplan