Real estate businesses are taking note and responding as customers rally behind blockchain-based payments for everyday purchases. The real-estate industry’s status quo is being challenged by blockchain technology. Early cryptocurrency adopters and traders are amassing vast sums of money, which they are investing in real estate, boosting an already burgeoning market. Smart contracts can also make transactions and property transfers faster and more nimble.
A few real estate brokerage firms have begun to sell their clients’ real estate holdings in exchange for cryptocurrencies such as Bitcoin and others. Clients must also understand how to purchase real estate using cryptocurrencies in order to do so.
NFTs and other cryptocurrency investment platforms have made it easier and more accessible for everyone to own a property with Bitcoin or Ethereum these days. However, as the number of people using bitcoin grows, a few questions arise. What are the locations where you can use your cryptocurrency? Can you use cryptocurrencies to buy a house if you have a significant quantity of cryptocurrency in your virtual vault?
What is Cryptocurrency?
The term “cryptocurrency” refers to a digital type of currency. It differs from other types of cash in two major respects. To begin, cryptocurrencies are entirely virtual, meaning they do not exist in the form of a physical paper or coin. Second, the vast majority of cryptocurrencies are decentralized, meaning they are not issued by a central bank. This allows consumers to swap cryptocurrencies without having to go via a bank.
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Can you buy real estate with Bitcoin?
The slow-moving wheels of the traditional real estate market can be solved using cryptocurrency and the blockchain. Early adopters are already taking advantage of the infrastructure for buying real estate with virtual currencies. A customer in Texas used Bitcoin and BitPay to purchase a single-family home in 2017. Another person utilized BitPay to purchase a $1.6 million property on Lake Tahoe. Chinese investors are likewise keen to diversify their holdings away from Beijing’s prying eyes by employing virtual currencies.
To put it another way, you can utilize cryptocurrencies to invest in real estate, and many people have already done so.
Benefits of Investing in Real Estate with Bitcoin
1. Take advantage of a more secure asset
The value of cryptocurrency is volatile, which means it fluctuates regularly. As a result, the value of Bitcoin may fall below what you paid for it. It could possibly appreciate in value. Its value fluctuates on a daily basis.
You are swapping a volatile asset for a more secure one when you acquire an asset or a 1 bedroom apartment for rent. Although real estate appreciates at a slower rate than bitcoin, it is also less likely to depreciate, putting the deal in your benefit.
2. Discounts are possible
If you locate a seller who accepts cryptocurrencies, there’s a good chance they’ll give you a discount. If sellers believe they will profit from the cryptocurrency you have offered them, they may be willing to accept a lower asking price for their home.
3. Purchase time is reduced
When purchasing a home with cash, you can pay using cryptocurrency to expedite the process by bypassing all mortgage requirements. If you have enough cryptocurrencies to buy the house, it strengthens your argument and offer.
How do you use cryptocurrencies to buy a house?
Using cryptocurrencies to purchase a home has a few alternatives.
1. Convert cryptocurrency to fiat currency
One of the simplest methods to use your cryptocurrency savings to buy a property is to use a service to exchange your cryptocurrency for fiat money (dollars), then use that money to buy a home. Retain in mind, though, that you’ll need to keep the fiat money in your name for at least two months before it’s considered an asset that may be used to buy a house, and a deposit that large may be detected by the IRS. Check with your accountant to see if any money you earn from bitcoin sales is liable to capital gains tax.
2. Borrow money using cryptocurrency as collateral
There are businesses that will let you use your cryptocurrency as collateral to obtain a loan in fiat currency, which you can then use to purchase real estate. However, you’ll pay higher interest rates (8 percent or more) than you would with a traditional mortgage, and you can run into complications with the IRS flagging your account when a large sum of money emerges. On the plus side, if you wish to keep your bitcoin as a long-term investment, it will stay in your account and its value will fluctuate according to market conditions.
3. Directly send cryptocurrency to the vendor
While finding a seller ready to accept cryptocurrencies as payment for a home can be difficult, many are warming to the notion. Some vendors, in fact, are interested in buying Bitcoin, Ethereum, and other cryptocurrencies. In certain circumstances, including cryptocurrency in your offer may help you stand out from the crowd.
If home sellers want to contact investors with Bitcoin holdings, they can use Bitcoin to their advantage. It can help them stand out from the crowd and attract new customers by allowing them to buy Bitcoin worth millions of dollars.
If you’re interested in cryptocurrencies, you’ll almost certainly come across Bitcoin or Ethereum. Because cryptocurrency is still a relatively new method, finding an insurance provider or seller who accepts Bitcoin or Ethereum will be difficult. Cryptocurrencies that are less well-known will be much more difficult to deal with.
Even so, you should expect to see more “Bitcoin Accepted” on the For Sale signs in your neighbors’ front yards as investors, developers, and the IRS adjust to the possibility afforded by cryptocurrencies.
Will the blockchain’s attraction be enough to entice important parties to help make real estate a more crypto-friendly environment? Although the odds are favorable, the future of bitcoin is yet unknown.