Despite having been around for over a decade, cryptocurrencies such as Bitcoin and Ethereum are still relative newcomers as far as exchangeable currency goes. That said, as their value continues to rise (and sometimes fall given that they can be rather volatile), cryptocurrency is increasingly being adopted in many sectors and industries; real estate, among them.
But should you use cryptocurrency to invest in real estate? There are two sides to the argument—some firmly believe in the staying power of Bitcoin et al. and can see its beneficial uses within the realm of real estate; while others remain skeptical of how smart it actually is to invest with cryptocurrency. In this two-part series we examine both sides of the “bitcoin” as we look at the plusses and minuses of utilizing cryptocurrency to make real estate and CRE investments.
The Benefits of Using Cryptocurrency to Invest in Real Estate
The explosion of Bitcoin and Ethereum, among others this past year has prompted an uptick in the number of people accepting cryptocurrency—from online travel sites to national and international retailers. The world of real estate also seems to be getting in on the digital currency action so to speak.
The key to being able to use cryptocurrency to purchase real estate or to invest in certain real estate funds is based upon mutual agreement. That is to say, all parties involved have to agree that cryptocurrency is an acceptable form of payment given the terms of the transaction. In certain European companies, utilizing Bitcoin to purchase property is more common than it is in the US. There are places in the UK for example, where developers advertise properties that are under construction with the stipulation that payment only be made in Bitcoin. The US however is steadily gaining ground, as more real estate based companies are accepting deposits and even full transaction payments in Bitcoin and other cryptocurrencies. Ethereum has launched a program specifically designed to transact mortgages.
The plus side to investing with cryptocurrency is that blockchain technology is relatively new and consequently, relatively “hot.” This means that more and more people are investing in cryptocurrencies which drives the value up. Right now, as it stands, those who buy cryptocurrency can make a lot of money fairly quickly which translates to more purchasing power. Some of the other key benefits:
– There is greater privacy involved with a cryptocurrency transaction of this nature.
– You can still avoid certain taxes by investing with cryptocurrency. (Though to what extent this will change, remains to be seen.)
– Overseas transactions are facilitated with cryptocurrency.
– New currencies are being created that are designed specifically for real estate transactions and investments.
Deciding whether or not to use cryptocurrency as far as your real estate and/or CRE investments go is a personal choice, one you should definitely weigh carefully. In the next article, we take a look at some of the potential risks of investing with cryptocurrencies.