Even though it is still approached with caution by the public, cryptocurrency is slowly but surely gaining a foothold in various markets. The doubts, of course, are understandable, as Bitcoin’s value in particular fluctuates quite unpredictably. Coindesk reports that the world's most popular cryptocurrency ended September with its lowest volatility for over a year, but also suggests that this is merely the calm before yet another storm. Despite issues like these, many experts believe that cryptocurrency will shape the future of finance, and as that future unfolds, we could soon see a significant role for cryptocurrency in real estate.
Cryptocurrency is becoming more accessible
Although Bitcoin is primarily used today as a trading commodity, FXCM notes that Bitcoin is also gaining ground in various traditional businesses. These include entertainment outlets, restaurants, and even casinos. Several global retailers, such as Walmart, Amazon, and McDonald’s, are also projected to have cryptocurrency payment systems installed in 2019.
With many businesses jumping on the bandwagon, it’s only right to ponder how cryptocurrency will affect real estate. Forbes Real Estate Council’s Matthew Murphy believes that cryptocurrency will innovate the real estate sector via blockchain. This is the decentralized technology used by Bitcoin and other cryptocurrencies to record transactions. Because of its decentralized nature, blockchain is perceivably indestructible and impervious to hacks. Transactions in real estate are often done offline, through personal engagements between specific entities. The introduction of blockchain smart contracts can change this norm, as real estate assets can now be tokenized and traded. There would also be no need for a middle person to facilitate the transactions.
Real estate is beginning to welcome cryptocurrency
Meanwhile, some real estate entities are already accepting cryptocurrencies as payment. Just last March, the New York Post reported on the first two units in New York City to be sold under a Bitcoin contract. The real estate developer, Ben Shaoul, shared that he had used the third party service BitPay to receive Bitcoin payments. The service, in turn, paid Shaoul’s company in cash. Several other listings accepting Bitcoin have also turned up in Miami, the Bay Area, and even across Australia and Canada.
It is interesting to note that listings with cryptocurrency options tend to get more exposure, and are also often luxury condos. Though such listings are becoming more common, Redfin agent Aaron Drucker advises first-time home buyers not to go for Bitcoin transactions because it’s currently too risky. Leave these to buyers who are out to buy their second or third homes.
Millennials could be key to cryptocurrency in real estate
All in all, cryptocurrency’s entry into the real estate market comes at an opportune time, as previously pointed out on Anchor Loans, the increasing number of Millennial home buyers. This demographic already accounts for 34% of buyers in the market, hence the need for house flipping strategies that appeal to them. When it comes to cryptocurrency, research showed that about 30% of Millennials prefer investing in Bitcoin than in stocks or government bonds. In general, Millennials are more open to this new technology in order to create opportunities for themselves. That’s why it’s safe to say that the generation has helped fuel the cryptocurrency trend, making it a household word in numerous industries.
Perhaps Millennial buyers’ demand will increase the role of cryptocurrency in real estate. Global acceptance of the digital currency may still be in its infancy, but with cryptocurrencies already seeing uses in real estate and other businesses, it’s only a matter of time.
Elaine Nelson is a former real estate agent who worked in the industry for six years. She operated mainly in Kansas. Elaine shares her real estate insights in the digital space whenever she's not busy being a stay-at-home mom and wife. She also likes to read about real estate trends and contemplate how these will affect the future of the industry.
