Bitcoin is already in retail and restaurants — so it was only a matter of time before the cryptocurrency took on real estate. That time is now. Bitcoin is slowly making its way into closings on everything from Lake Tahoe land in California to Manhattan condos to single-family homes in the heart of Texas.
Using bitcoins to buy a house is legal, but it isn’t easy, says Josias N. Dewey, a Miami real estate lawyer who has authored several publications on blockchain currencies. You just need one thing: For the buyer and seller to agree on exchanging bitcoin for the property.
Real estate ICO’s (RE ICO’s) are Initial Coin Offerings that allow people to invest in companies with PropTech or FinTech platforms or in real estate directly. Currently, most RE ICO’s have been launched by startups with little to no track record to date.
How Does It Work?
Bitcoin is an internet-based, decentralized payment system. Each user has an anonymous address, and you can trace every bitcoin's transaction history. It uses blockchain technology, a database that co-exists in several locations and is shared by the community. "This structure makes it incredibly resilient because there is no central point of failure that can be attacked," says Chris Merrett, bitcoin consultant at Meritorious Consulting. "If certain nodes of the network are attacked successfully, the other nodes in the network can adapt similarly to the human immune system adapting to a new virus."
How Do You Purchase?
You only need one thing — for two parties to agree on the transaction. "I recently paid for my doctor's visit in bitcoin because my physician is also a bitcoin investor," says Jake. Enthusiasts are purchasing a wide variety of items with their bitcoins, from pizzas to real estate.
The first real estate transaction was a single-family home in Austin, Texas. The seller wanted the bitcoins converted to dollars, so they used BitPay, a global bitcoin payment service provider, to complete the transaction. Bitcoin's value fluctuates every day, so the risk is on the buyer's side since the seller agreed to a fixed dollar amount.The pros of buying real estate with bitcoin is that once everything is signed, the transaction completion time takes 10 minutes to a day depending on network congestion. Think about that for a second — no need for the banking system. You can pay for the house, the realtor and anyone else at the same time.Some experts warn that buying real estate with bitcoin won't be simple in every case. As Open Listing notes, "Even if you are able to find a seller that's willing to accept your offer in bitcoin, it can be tricky to find title insurance and escrow companies who feel comfortable handling virtual currency transactions. To take on your home purchase, they may require you to cash out your bitcoin so that your transaction can be treated more like a traditional house purchase."
However, make sure you trust the second party if you're thinking of buying into real estate. If you want to reverse the transaction due to any litigation, then you need both parties to be compliant because Bitcoin transactions are not reversible.
But at the end of the day, if you want to buy a house with bitcoin, there are ways to make it work.
