The Risks and Benefits of Cryptocurrency in Real Estate Transactions

As the cryptocurrency trend continues, buyers in real estate transactions have begun to express interest in financing their purchases using digital currencies like Bitcoin. Before agreeing to accept cryptocurrency as payment in these transactions, sellers should apprise themselves of the benefits of accepting digital currency as payment as well as the substantial risks involved.

Real estate transactions using cryptocurrency operate similarly to normal transactions

Cryptocurrency allows parties to transfer of large sums of money with relatively low fees and little interference from third parties. Bitcoin, the most popular form of cryptocurrency in real estate transactions, is an open-source digital currency that allows its users to avoid the need for banks by directly processing payments on its peer-to-peer exchange system.

Using cryptocurrency allows for quicker payment processing and blockchain recording

The main benefit of using cryptocurrency in real estate transactions is the quick processing time. Without needing to rely the banking system, payment can be processed by the seller in as quickly as 10 minutes after the appropriate contracts have been negotiated and signed. The short processing time reduces headaches for both buyers and sellers. Additionally, processing payments outside the banking system offers shortcuts for buyers drawing funds from multiple sources or international accounts.

Accepting cryptocurrency exposes sellers to risks involving fraud, de-valuation of digital currency, and title issues

Sellers should be wary when agreeing to accept cryptocurrencies in real estate transactions since digital currencies are not adequately regulated and are subject to hacking and theft. Further, encryption in cryptocurrencies makes it nearly impossible for sellers to discern the true source of payment. This is especially problematic given the popularity of cryptocurrency as a vehicle for money laundering. Without the regulation of the banking system, sellers accepting cryptocurrency are susceptible to fraudulent or illegal transfers from buyers. To avoid these risks, sellers accepting cryptocurrency should be overly cautious and extensively verify potential buyers. Though cryptocurrency has recently been the subject of extensive regulation designed to reduce fraud, sellers must continue to exercise caution until comprehensive and reliable regulations have been implemented.

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