The meteoric rise of cryptocurrency in FinTech has far-reaching implications for other industries, including real estate. Behind every coin is sophisticated blockchain technology that allows transactions to be quickly processed and posted to a decentralized, incorruptible ledger — making it suitable for title, mortgage, and the home buying and selling process.
Cryptocurrencies like Bitcoin, Litecoin, and Quantocoin (QTCt) <https://quantocoin.io/>are already being used for large-scale real estate transactions. In December, US-based broker Redfin reported that 18 Bitcoins will buy the average American home <https://www.redfin.com/blog/2017/12/18-bitcoins-will-buy-the-average-american-home.html>. A Miami penthouse <https://www.redfin.com/city/11458/FL/Miami> sold for 33 coins after the seller stated they would only be accepting cryptocurrency. So who is actually buying these homes with crypto?
The market includes tech enthusiasts, foreign investors, and young people who have profited from cryptocurrency and are now looking to diversify their holdings with real estate. As buying property with cryptocurrency becomes more common, both buyers and sellers will be subject to the implications, including pros and cons.
Pros and cons for buyers
● Diversification: Every smart investor knows not to put all their eggs in one basket, and buying real estate is a great way to diversify their holdings.
● Lock in profits: Buyers who have profited from cryptocurrency may wish to lock in those profits through investment in real estate, a relatively safe investment compared to the volatile crypto market.
● Negotiating power: Like cash buyers, crypto investors who make are prepared to make a full offer will have an edge in competitive markets.
● Limited inventory: It’s still not exactly mainstream to purchase a house with cryptocurrency, so the number of sellers willing to accept crypto is relatively low.
● Opportunity cost: By cashing in their crypto coins for real estate, buyers could miss out on future appreciation of the coin.
● Tax implications: Since cryptocurrency is unregulated, exchanging coins can present some uncertainties regarding comming tax season. In general, trading or selling coins is subject to a capital gains tax.
Pros and cons for sellers
● Future appreciation: It’s not a guarantee, but if the past has taught us anything, it’s that cryptocurrency markets can experience unprecedented growth — appreciating much faster than real property. Sellers with a high risk tolerance may enjoy the profits from future crypto appreciation.
● A wider audience: Sellers who include “accepting Bitcoin” or another cryptocurrency in their listing will potentially open their sale to more buyers — marketing to a tech-savvy, young, and international audience. The more buyers interested in a piece of real estate, the better.
● Potential losses — The crypto market is extremely volatile, and selling at the wrong time could limit profits, or worse, lead to a loss.
● Learning curve — Cryptocurrencies must be stored in a “wallet” or virtual exchange. If you don’t already have an account, you’ll have to make one, which may present a challenge for less tech-savvy users. There are many online exchange services that let users create an account and manage their crypto for free, but be warned that accounts are susceptible to hackers. Always take precautions to ensure security.
● Tax implications. Again, trading cryptos presents an uncertain tax situation for both the seller and buyer. Make sure to consult an experienced CPA who is familiar with cryptocurrency to avoid a visit from the IRS.
Cryptocurrency is positioned to change the face of the real estate industry as younger buyers, tech enthusiasts, and international investors use it to buy and sell property. While Bitcoin is most frequently involved in the majority of transactions, we’re likely to see other altcoins like Quantocoin <https://www.banqueduval.com/new-blog/2017/10/24/quantocoin-new-club-sponsor> start to gain traction. The market may fluctuate, but the inherent security and transparency of the blockchain is here to stay. Blockchain has the ability to streamline the mortgage and title process, and revolutionize buying and selling homes <https://www.redfin.com/city/11458/FL/Miami>. Of course, trading crypto for real estate comes with pros and cons, so make sure to do your research before investing.
Would you ever buy or sell real estate with Quantocoin? Let us know in the comments!