By now, odds are you’ve heard of the boom in cryptocurrencies—decentralized currencies such as Bitcoin that are popular with the web-savvy crowd. Since Bitcoin’s debut over a decade ago, cryptos have been gaining in popularity as an alternative means of commerce and investment.
Are cryptocurrencies the future of finance? Could you purchase your next home using Bitcoin? Only time will tell. For now, let’s take a moment to better understand the crypto trend and its implications for the future of real estate.
What is a cryptocurrency, and how do they work?
Cryptocurrencies function through blockchain technology. The blockchain is sort of like a digital ledger that can store transaction information. This ledger is decentralized and distributed across a network, making transactions highly secure.
Still confused? Don’t worry, there’s no need to understand the inner workings of the blockchain to get into crypto. The important takeaways are that this technology is extremely resistant to fraud and can’t controlled by a central bank or regulator unlike traditional currencies.
Are cryptocurrencies used in major transactions such as real estate investment?
Since Tesla Founder and billionaire mogul Elon Musk’s recent announcement that he would allow Bitcoin to be traded for his company’s vehicles, the legitimacy of bitcoin for real world transactions is at an all-time high. From ritzy real estate in Beverly Hills to commercial rental spaces in Canada, the number of real estate ventures accepting the alternative currency continues to grow.
Are cryptocurrencies the future of the real estate market?
The security inherent in blockchain technology has the potential to revolutionize real estate transactions. The built-in validation of cryptocurrency could even make the home-buying process faster while increasing speed for entries on multiple listing services and title searches.
Still, investing in this new form of currency is not without its downsides. The price of Bitcoin has fluctuated wildly, and the threat of government regulation of the fledgling alternative currency looms large. Bitcoin earnings are also subject to the same capital gains taxes as other traditional assets.
Cryptocurrencies have the potential for big change in the real estate market and beyond. If adoption of these alternative forms of capital continues at its current pace, it’s not unlikely that we will begin to see homes being traded for Bitcoin as the norm.