Recently, a property in Miami, USA, was sold for 33 Bitcoins, and the homeowner refused to accept any payment method other than Bitcoin.
In China, there is also an example of a property sold in Shenzhen with 92.5 Bitcoins. The property agent revealed that the reason why buyers are willing to accept Bitcoin payments is that they believe that the future price of Bitcoin can rise to $30,000.
Unlike financial markets, real estate transactions are illiquid, inefficient, and copious amounts of money could be trapped even though the value of the estate of the house rises.
Buying a house in Bitcoin is only the first step. Blockchains and digital currencies are likely to be an outlet for future real estate transactions. The use of the blockchain with real estate seems to have begun.
1. Bitcoin to buy a house
In April 2018, Guo Hongcai took out 500 Bitcoins and bought a 10,000 square meters luxury home, which is 90 minutes drive from San Francisco, United States. He owns a Rolls Royce classic car in the that was also bought with 60 Bitcoins.
At the same time, in Oakland, California, senior real estate investor Alec received calls from buyers from around the world, such as Italy and China, all of whom wanted to buy Alec’s house in the digital currency.
The four-bedroom, two-bedroom house, which has just been renovated, is priced at $648,000 and is being accepted for Bitcoin, Ethereum or other digital currency.
The house is located near San Francisco and is of limited supply. Alec insists on choosing digital currency as the payment method. “I don’t think that a project can subvert any market. I can only say that everyone has an alternative mode of payment and wants to give it a try.” Alec said.
In an attempt to try this new payment method, he deliberately visited a blockchain start-up in Silicon Valley to learn about property rights records, cross-border transactions, crowdfunding investments, equity transfers, and even the technology behind digital currency.
Alec was also concerned about the constant fluctuations of cryptocurrencies affecting his profits when selling a house more than $700,000. However, he said that the outcome of the transaction was to be able to ride the new waves of digital currencies and understanding the new Bitcoin’s property market.
Ultimately, he accepted a mixed plan: more than half of the money was paid in US dollars, and the remaining half was spent in Ether. Ether was calculated based on the currency price on the last day of the transaction.
In December last year, Seattle, 23-year-old Cary Kuo purchased a $415,000 house and paid a 10% down payment in digital currency.
In the final transaction, Cary converted the digital currency into US dollars and paid it to the seller. After many twists and turns, he found a mortgage bank that was willing to use digital currency as collateral to successfully complete the transaction.
The United States is not the only country that supports buying homes in Bitcoin. The first place in the world to use Bitcoin to buy a house in Indonesia. In 2014, a Bitcoin Tycoon lavished more than 800 Bitcoins ($500,000 at market prices) and purchased a beautiful villa in Bali, Indonesia.
Bitcoin buying has become a new trend. Why are people willing to accept this payment method? Could investors be over-positive about Bitcoin transactions? What are the potential risks behind using Bitcoin as a payment method?
2. The greyed zone
In addition to personal experiments, more and more real estate projects began to accept digital currency to buy a house, and the number of people using digital currency to buy a home is gradually growing.
Propy is a platform that can use Bitcoin and Ethereum to complete real estate transaction payments. It has nearly 50,000 visits per month, and interestingly, about half of it comes from China.
Like Guo Hongcai, one of the earliest Bitcoin holders in China began to buy overseas properties in Bitcoin.
“The initial investment we received from them ranged from $50,000 to $100,000. The most recent investment project was to find a home valued at $3 million to $4 million in Silicon Valley,” said Napyalia Karayaneva, CEO of Propy, in an interview.
Why do they choose to use Bitcoin as a payment method to buy a house overseas?
This can be seen as a way of circumventing regulation and transferring assets overseas. The new payment method could also be an excellent chance for domestic customers who like to buy a home in other parts of the world.
With digital money to buy a home, they can bypass foreign exchange restrictions and smoothly transfer assets overseas.
The emergence of third-party organisations such as Propy catered to their needs, regulations, and accepted Bitcoin payments.
Besides, using Bitcoin to pay directly to the house can also avoid tax. Because at present, no country has officially introduced tax collection measures for virtual currency such as Bitcoin.
There are many websites similar to Propy, such as Bitcoin real estate, which specialises in digital money to buy a house. There is hype for blockchain project that buys houses in virtual currency.
Since digital currency is mostly not regulated, using digital currency to buy a house is stepping into the grey area.
For example, you don’t know how the buyer’s Bitcoin is obtained, and the parties to the transaction may not know the true identity of the other party. Some sellers joked, “You can never guess where the buyer comes from.”
Another area of concern would be the laws and regulations in the field of digital currency are missing; to ensure that each transaction is not falsified is a difficult task, and if there is a dispute, there would be a lack of legal support.
However, payment is only the first step. The blockchain technology has not only changed the real estate market, but it would stimulate a change in the transaction process.
3. The future has come
The global real estate market is worth $217 trillion, making up half of the value of all significant assets in the world. However, real estate investment is illiquid, investment efficiency is low, and copious amounts of funds are trapped in fewer places.
These are all problems that blockchain technology can improve.
At present, the platform such as Propy only solves the problem that digital currency can pay the real estate transaction, and the link of property rights transaction cannot be automatically run through the smart contract.
If the blockchain technology is used to “purchase the purchase contract and real estate license”, it will not only simplify the process of signing and notarization but also make it easier to trace and query the real estate license.
In the future, we can imagine that the property can be certified, the value of a house can be split into several tokens, the seller will not be locked in the property for decades, and even a part of the house token can be sold when necessary; Buyers can buy Token in succession and enjoy the benefits of rising house prices.
Moreover, the circulation of the entire housing market has become freer.
Buying a house in digital currency is only the beginning. It is foreseeable that blockchain technology will have a massive impact on the global real estate model in the future.
The pass-through economy will become more imaginative with the development of blockchain technology.
Photo Credits: DarkNetMarket