For some time now, cryptocurrencies have been steadily infiltrating the world of consumerism when it comes to purchasing electronic devices, software and other items. Recently, however, consumers have been able to use digital currencies to purchase real estate.

Not only that, but Bitcoin is becoming more and more mainstream, leaving investors open to the possibility of investing in real estate and Bitcoin as a means of decentralizing their portfolios.

Increasing the opportunity to use cryptocurrencies for real estate

The opportunity to use cryptocurrencies in real estate transactions has been growing. The applications of cryptocurrency and related blockchain technologies are huge for the real estate industry. These include.

Properties listed for sale using Bitcoin

Some sellers and agents use this strategy to attract more attention to their listings. For example, some sellers only want to sell their property in exchange for bitcoin, while others choose to sell their assets in exchange for split payments between bitcoin and traditional currencies.

High-end real estate listings that take this approach tend to be the most successful, as wealthier buyers are more likely to own bitcoin and be willing to use it for real estate. For anyone who finds themselves with an abundance of cryptocurrency, real estate is a great way to turn these digital finances into tangible assets.

Bitcoin Real Estate Leasing

Bitcoin is becoming an increasingly popular way to pay for rentals and leases. For example, Expedia.com, a giant in the online travel booking space, accepts bitcoin payments and recently began accepting an increasing number of Airbnb-style rental/vacation listings.

In early 2021, billionaire Rick Caruso announced that his Los Angeles-based company would be accepting bitcoin for the rent of its residential and retail properties. This includes luxury condominiums and shopping centers, demonstrating the continuing trend that cryptocurrencies are significantly penetrating the commercial real estate sector.

A variety of listing services you can trust

Blockchains are ledgers that record data, distributed among parties in a highly secure manner. Blockchain makes the underlying data more trustworthy because they are independently verifiable compared to each copy distributed, rather than being compared to data recorded separately by a third party. The system significantly reduces the risks and costs associated with fraud, double spending and real estate data manipulation.

Just as online multiple listing services (MLSs) such as Zillow and Redfin have been re-inventing their MLS services and making them more accessible, the potential for blockchain to streamline the real estate transaction process is huge.

Blockchain-protected MLS can provide more reliable and efficient property search information. The level of human intervention and risk of error involved in the traditional method of creating online listings can lead to highly problematic inaccuracies that blockchain-enabled MLS can avoid.

A blockchain-enabled MLS will allow a transparent database in which all agents and brokers can access a complete chain of reliable property information.

How many bitcoins is your property worth?

This is one of the risks associated with trading large assets in bitcoin – the value of bitcoin fluctuates daily, sometimes greatly over relatively short periods of time.

For example, the value of bitcoin peaked at about $63,000 per bitcoin in April 2021. However, at the time of writing, the current value is $47,916 per token, according to Markets Insider.

That said, the value of Bitcoin has generally trended upward throughout its history. For example, it is currently more than 500% higher than it was in 2018 when each token was trading at just $6,500.

Advantages and disadvantages of cryptocurrency trading

The advantages of using cryptocurrencies for real estate include.

  • The efficiency of cryptocurrency transactions usually occurs in a matter of minutes.
  • Greater privacy – Bitcoin wallets can provide a higher level of privacy when purchasing property.
  • Liquidity of real estate investments.
  • Avoid taxing the transfer of property rights.
  • Reduce real estate transaction costs.
  • Transferring cryptocurrency wealth to tangible assets.

The disadvantages of using cryptocurrencies for real estate include.

  • Market/value fluctuations.
  • Inexperienced real estate entrepreneurs enter the market.
  • No tangible pledges or downside protection (until converted to hard assets)
  • Risk of impact of new regulations.

Final Thoughts

Despite some recent problems with value fluctuations, cryptocurrencies remain very popular and are being touted by experts as the future of finance, including real estate.

Digital currency offers many valuable applications for the real estate industry, with agents, investors, buyers, sellers and renters all benefiting from the reliability and flexibility it provides.

However, businesses and individuals must be cautious. That being said, it will be interesting to see how the market continues to evolve as the cryptocurrency era continues to penetrate further into the real estate space. Many changes are about to take place and a lot of upside is expected.