The rise of cryptocurrency has affected the way we usually spend our money. The money we are using to buy our necessities is tangible. Over the past few years, there’s been a cryptocurrency craze sweeping the world.
Despite a lot of sceptical thoughts from people, cryptocurrency’s popularity is rising. You can use it for coffee shops, major retailers, buy cars, and you can even buy real estate with bitcoin.
Cryptocurrencies’ booming market brings us to one question. Is buying real estate with cryptocurrency a good idea? Here are all the things you need to know.
What is a cryptocurrency?
Cryptocurrency is a digital payment system based on blockchain technology. It is a digital asset with a decentralized structure. This means that it exists without the government’s control. It has very secure cryptography and algorithms which is impossible to counterfeit.
Cryptocurrency is an alternative method of payment. Cryptocurrency has a virtual accounting system, and this will enable you to either buy, sell or trade.
What are some examples of a cryptocurrency?
To discuss, here is a list of some cryptocurrencies in the market:
Bitcoin is one of the original cryptocurrencies. The most famous cryptocurrency in the market. Bitcoin is a decentralized digital currency that started as open-source software. It works as a peer-to-peer electronic payment.
Due to the demand for Bitcoin, there are ATMs called Bitcoin Kiosks. These kiosks will allow you to withdraw cash in exchange for a Bitcoin. Many industries allow Bitcoin as a form of payment, this includes:
- electronic and software industry
- restaurant and food industry
- the automotive and manufacturing industry
- fashion industry
- mobile carriers and television
- internet service providers
- banking and finance industry
- travel and tours industry
- online media and marketing industry
- gaming and gambling industry
Litecoin, like bitcoin, is a peer-to-peer electronic payment with open-source software. It is similar to Bitcoin in its technical details. It is a global payment network that enables instant and near-zero cost payments.
Litecoin is now used for a lot of services, including:
- web services
- food and beverages
- apparel stores
- movie and theatre
- jewellery industry
Ethereum is one of the biggest cryptos in market capitalization next to Bitcoin. It is a blockchain-based software with smart contract functionality. Ethereum is for sending and receiving value without third-party interference.
Ethereum supports self-executing contracts. It uses a technology that creates and secures digital ledgers.
Ethereum works for many day-to-day transactions, this includes:
- paying for trips
- flight aggregator
- buying jewellery and mattresses
- buying phone
- settling your telephone and broadband bills
- for online betting
Bitcoin cash is a fork of Bitcoin. The reason is to allow more transactions on one block, and Bitcoin cash can accommodate a larger block size. Yet, it still shares and works on the exact mechanisms as Bitcoin. Bitcoin cash went to another fork. The result is a split of Bitcoin Cash into Bitcoin Cash ABC and Bitcoin Cash SV.
There are things you do with Bitcoin cash, this includes:
- online shopping
- buying gift cards
Chainlink is a decentralized oracle network from Ethereum. Its network provides tamper-proof computation to support advances in the blockchain industry.
You can use Chainlink in:
- decentralized finances
- cryptocurrency investments
Cardano is a public blockchain having an open-source system. The transparent system that Cardano uses is flexible.
The purpose is to transfer and receive funds instantly. It has a sustainable blockchain platform that has a scalable design.
You can use Cardano in a lot of things, like:
- purchasing pharmaceutical or health-related products
- finance-related transactions
- for agricultural purposes
How can you buy real estate with crypto?
There are many ways to use cryptocurrency in our everyday lives. In the United States, you can legally buy some real estate through Bitcoin and Ethereum. Here are some ways you can purchase real estate using cryptocurrency:
Using cryptocurrency as payment
You can buy real estate using crypto through a direct wallet-to-wallet transfer. You can establish an agreement with the seller of the house. Cryptocurrency has a decentralized system.
It is best to have the agreement in writing. You should only sign documents with the guidance of a lawyer who knows about crypto and real estate to avoid complications.
Using crypto as collateral
Some cryptocurrencies like Bitcoin can function as collateral for a loan. There are crypto lenders available in the market. They accept cryptocurrencies as collateral in your real estate transaction. However, using crypto as collateral is not yet available to all states. So you have a limited place to pick where you can buy real estate.
Cash-out your crypto
You can also buy real estate by cashing out your cryptocurrency. Make sure to cash out when the value of your assets is high or enough for you to secure the payment of the real estate in cash.
You can cash out using crypto kiosk machines or crypto debit cards. You can also try peer-to-peer exchange or use a centralized exchange. Another option would be selling from your crypto wallet or through a money transfer application.
What are the advantages of buying real estate through cryptocurrency?
There are many benefits to using cryptocurrency when buying real estate, including:
Low transaction cost
Unlike conventional money transfers, cryptocurrency helps you eliminate unnecessary transaction costs. Cryptocurrency transactions do not use go-betweens. The result of this is you won’t deal with higher transaction costs.
Easier international transactions
International transactions are easier to do because all transactions are digital. Many countries accept cryptocurrency in real estate transactions. Countries including:
- Ivory Coast
Security is a huge factor when considering real estate as an investment. Cryptocurrency with blockchain technology provides the best security, and it is almost impossible and a rare chance to breach.
Privacy of the transaction
Some cryptocurrencies have great technology that is hard to breach. Every transaction you do gets encrypted on the system, and it means that your privacy is not compromised.
Quick buying process
Cryptocurrencies have smart contracts which cut the waiting time in every transaction. Smart contracts give quick, accurate, and automated marketing. This is an important factor to consider when buying real estate.
Cryptocurrencies have fewer intermediaries than an average transaction, which would mean that you will have more efficient processing. Cryptocurrencies allow you to send and receive payment at your convenience.
You will need a digital wallet to secure all cryptocurrencies in one place. All transactions will reflect on the wallet’s data, and Cryptocurrency’s blockchain technology replaces the paperwork that most real estate transaction involves.
What are the disadvantages of buying real estate through cryptocurrency?
Cryptocurrency has some downsides. Here’s a list of them you might need to consider before buying real estate:
Volatile nature of cryptocurrency
The constantly changing value of cryptocurrency makes your real estate transaction risky. Some people do not want to take the risk. This is because of the uncertainties lodged in the price fluctuations of cryptocurrencies.
Lack of sellers who accepts cryptocurrency
Cryptocurrencies are an emerging market. Not all dealers of real estate are into cryptocurrency at the moment. You have limited options due to lacking sellers available for a transaction.
The opportunity cost of losing the value of cryptocurrency is possible when you buy real estate. The value of cryptocurrency is volatile. It can go up anytime. Once you decide to buy, you might have to miss that surge.
Cryptocurrencies are currently unregulated. There is no intermediation with the government, which could result in complications with real estate taxes. In the US, cryptocurrency trading is taxable. It makes it more complicated when you buy real estate.
The legal and financial risks are high.
Regulations about cryptocurrencies are still not settled. Cryptocurrencies have a decentralized structure. The requirements are unclear. There is no central authority to govern cryptocurrency, and the legal and financial risks in the transactions are high.
Susceptible to fraud
Typical real estate transactions are not susceptible to fraud because they involve a lot of paperwork. As cryptocurrency enshrines a streamlined and faster process, it would be easier to create a scheme. Cryptocurrencies also have no reason to hold someone accountable when fraud happens.
Seller not willing to take cryptocurrency as payments
Cryptocurrency is not a global legal tender. Sellers of real estate do not want cryptocurrency as payment. The value of cryptocurrency is fluctuating. This makes it hard for the seller to trust and be willing to take it as payment for real estate.
Is buying real estate with crypto a good idea?
The future of real estate is changing. The use of cryptocurrency as a financial investment is becoming more open. Cryptocurrency is a risky market. You can either win or lose.
Normally, you will have things to consider before buying real estate. You would check the price of the property and the location. You will also need to allocate your budget.
Like buying real estate through cash, buying through cryptocurrency is also a big decision. You should study everything about it. Keep learning before deciding when to buy real estate with a cryptocurrency.