Crypto + Real Estate: Making It Make Cents

Cryptocurrencies, or cryptos, have been a hot topic for quite some time, but the use cases have evolved to make cryptocurrencies more than just a means of exchange between peers. One use case that has garnered steam is using cryptocurrencies in real estate transactions. Real estate, in itself, is an age-old industry that was ripe for innovation anyway. With cryptos revolutionizing how everyday people can participate in the financial system, real estate seemingly fits into how they can do just that.

Blockchain Technology and Cryptocurrencies

Cryptocurrencies are digital representations of units of currency where encryption techniques are used to regulate the generation of units of the currency. These techniques also verify the transfer of funds while operating independently of a central bank. In a nutshell, cryptos are built on blockchains; allow for the capture of value of an application on a blockchain; utilize cryptography to protect data; and are designed to be used as a medium of exchange. Blockchains are what cryptocurrencies are built upon. A blockchain is a digital ledger where transactions made in cryptocurrency, digital assets, or other data are recorded chronologically and publicly (generally) using cryptography.

Blockchain technology enables the movement of cryptocurrencies, but also all sorts of data. Essentially, any data that can be put into a digital format can be added to a blockchain. This feature allows for cryptocurrencies to extend beyond simply being an investment tool, but also into a means for creating and maintaining generational wealth in industries like real estate from which the average person tends to be left out.

Real Estate + Cryptos = Access

In real estate, cryptos can provide a way for buyers and sellers to transact with each other without having to go through an intermediary. Generally, in a real estate sales transaction, there are several parties involved—the real estate appraiser, title company, lender(s), and buyer and seller agent(s). In a crypto-powered real estate transaction, some of these parties are not required.

By having cryptos be part of a real estate transaction, the market is now open to a wider group of people, a group of people who, for a number of reasons we won’t get into here, have not traditionally had the access, nor the opportunity, to participate in the real estate market. With the benefits of crypto, mainly encryption and being able to capture the value on a blockchain,  purchasing and selling real estate with cryptos is a viable and innovative option for a market that is becoming increasingly outdated and inefficient. Indeed, adding this new way to transact does cause concern, especially to those who are wedded to how things have “always” been. However, given the power, promise and speed of crypto, a buyer from anywhere in the world could facilitate a transaction from their mobile device. Now, that is access.

Crypto + Real Estate = Makes Cents

In the article  “The Future Of Real Estate Transactions And Cryptocurrency,” Luke Fitzpatrick shares that not only has Bitcoin (the genesis cryptocurrency) become more mainstream and opened investors’ minds to the possibility of investing in both real estate and Bitcoin, but also serves as a means of diversifying an investor’s portfolio. Additionally, as opportunities for using cryptos in transactions increase, Fitzpatrick notes that some sellers and agents have added accepting solely crypto or a mix of crypto and cash to attract more attention to their listings. Since crypto transfers can occur in very short amount of time, they also raise the level of efficiency on real estate transactions by leaps and bounds.

To facilitate a real estate transaction with cryptos, the following is needed:

• Both buyer and seller will need to agree that the transaction will be funded with all or some cryptos; and
• Both buyer and sell need to have a digital wallet in order to transfer the crypto of choice from the buyer to the seller.

Buyer and seller have to keep in mind that, governments and traditional banks generally do not accept crypto as a form of payment. Therefore, fees or other expenses will have to be paid in cash. Not to worry, however, because exchanging cryptos into cash is also not time-consuming and can be done relatively quickly.

Cryptos and real estate makes cents and sense. Participating in the real estate market is more than being about the money that can be made but also the generational wealth that can be created. With ever-increasing ways to improve the real estate industry, one of the byproducts is the innovation that is making room for new and old investors, developers, and homeowners to play on the same field.