Can We Merge Bitcoin and Real Estate and Is it the Future?
Cryptocurrency; the digital currency that underpins the Blockchain and the “new kid on the block” when it comes to investment assets. Like any child pushing at its limitations and restraints, the recent volatility has caused concern amongst some people.
But where some see trouble others see an opportunity. A firm of property developers, GoHomes, recently agreed on the sale of two brand new homes paid for in Cryptocurrency. And this raises a very interesting prospect particularly for some of the original Cryptocurrency miners who have seen huge increases in their ‘wealth’ thanks to all the Cryptocurrency they mined years ago when everyone said they were mad to take payment in something that was worthless.
Buying property using Cryptocurrency or indeed selling to buyers using Cryptocurrency is right at the cutting edge of the process of transferring the ownership of real estate in the UK. But the concept has been proven and the question is is there a future for this type of transaction. Personally, I think so yes. The process is exactly the same up to the point of exchange of contracts; same due diligence, same enquiries, searches, everything the same. The main difference is that contracts are exchanged and completed simultaneously. Equally the solicitors acting for the buyer will have to do a high level of due diligence to confirm the source of funds in keeping with Current AML regulations. This is slightly easier if the client is a Cryptocurrency miner and more complicated if they are a trader but in both cases, all the information is held in The Blockchain.
The sellers for their part need a solicitor who is aware of the pitfalls and drafts a sales contract able to pre-empt these and they must have created a digital wallet within which to receive the sale proceeds.
My feeling is that vendors will be attracted to this market because it is a new marketplace to sell to. Buyers will be tempted by the prospect of exchanging a relatively volatile asset for one that is more traditional, flexible and less volatile.
The danger of Cryptocurrency volatility can be (to an extent) removed by vendors pricing in UK Pound Sterling or Cryptocurrency equivalent. In this way, the buyer is required to cash-in sufficient Cryptocurrency to meet the purchase price and costs. And sellers do have to hold Cryptocurrency. The current weak link in the chain is the cryptocurrency exchange delay between the payment of Cryptocurrency into the digital wallet and the output of sterling to the vendor but this will get resolved in time. Interestingly contracts complete on the payment of Cryptocurrency by the buyer. but the seller does not get their sterling immediately this can be dealt with in the contract.
Make no mistake, cryptocurrency is starting to make inroads as a valid means of payment for real estate. In a relatively short period of time, all the kinks in the process will be resolved. Quantum Property Investments intends to be among the first few to offer its London based property for sale with a sterling marketing price and Cryptocurrency equivalent.
Written by: Doug Morris (CEO) Quantum Property Investments