The real estate sector in California is embracing cryptocurrency payments in property sales and purchases.
Two extremely volatile asset classes – real estate and cryptocurrency – are converging to create the perfect synergy for bold investors chasing high-risk, high-profit opportunities. Cryptocurrency payments are carving a niche within the California real estate market, according to the LA Times, which cited several documented transactions where payment was made in Bitcoin.
Industry insiders are already projecting that the trend will catch on and expect crypto-based transactions in the property sector to increase.
“Within the context of real estate, it makes sense to use cryptocurrency in those types of transactions… Cryptocurrency is a way to send large amounts of money pretty easily with relatively low fees and little interference from middlemen,” said Neeraj Agrawal, communications director at Coin Center.
According to Agrawal, Bitcoin and other cryptocurrency payments will gain wider acceptance in big-ticket purchases, such as homes and vehicles.
Enterprising brokers are exploring ways to simplify the process of digital currency transactions. One such broker, Canter Companies CEO Andrew Canter, explained the reason for his decision to adopt digital currencies in this way:
“We realized there is so much new wealth in the crypto space… There are a lot of new buyers and a lot of people that have seen their wealth fluctuate over the last year.”
But this new payment scheme is facing some serious challenges, especially from title companies that do not yet understand Bitcoin. Josh Cincinnati of the Zcash Foundation recounted his experience with banks refusing to accept the cash generated from his cryptocurrency investment when he tried to buy a house in Virginia. It did not help that he showed proof of his transactions over the previous two years.
But Mike Michalski of RE/MAX Estate Properties noted that buying and selling properties using virtual currencies is a straightforward process. He explained:
“Proof of funds for a bitcoin sale literally requires the buyer to sit down with a smartphone, open a blockchain app that displays the total value of their bitcoin and show that to the seller… Both the buyer and seller wanted to make the deal happen, but this is all new. There’s just not a lot of understanding or documentation.”
Second mortgage on your home to invest in Bitcoin is very risky
Meanwhile, real estate specialists have cautioned against taking out a second mortgage to invest in the volatile cryptocurrency space.
Simon Campbell of Bankforeclosuressale.com said that investing in Bitcoin carries several risks since the asset class is based on a nascent technology and there are no historical data to analyze its performance. He added that cryptocurrencies are much riskier compared to traditional investment instruments like stocks.
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