New bit on the block

Posted by on December 29th, 2017

In 2013, a Long Island, NY, homeowner made headlines by announcing he would take Bitcoin offers on his Southampton home.

But today, the idea of using virtual money is gaining traction across the financial realm.

Several major retailers, including Overstock.com, Expedia.com and Microsoft now accept Bitcoin for some or all transactions, and the world’s largest futures exchange – CME – launched a Bitcoin futures contract Dec. 18.

Created about a decade ago, Bitcoin is based on an accounting software known as the blockchain. Unlike other currencies, Bitcoin and other so-called “crypto-currencies” are not regulated by a central banking authority. They exist only in cyberspace, and were conceived as a way to easily conduct international transactions.

No matter what you think of the cryptocurrency craze – and things are getting crazy – the blockchain technology appears here to stay – and is probably a more exciting development for real estate than the method of payment.

Transactions conducted on the blockchain are virtually self-regulating. Recorded publicly, the blockchain cannot be altered without the collusion of everyone else in the chain.

Using  blockchain information, one can easily access secure, verifiable information on who owns a piece of property or a building.

The International Blockchain Real Estate Association promotes an “open source, universal protocol for property buying, conveyancing, recording, escrow, crowdfunding, and more…to reduce costs, stamp out fraud, speed up transactions, increase financial privacy, internationalize markets, and make real estate a liquid asset.”

Several U.S. states are already well into the process of changing laws to allow the technology to be used in property deals.

Once a novelty reserved to the super-computing set, celebrity endorsements for cryptocurrency, and the resulting media attention, began to drive Bitcoin demand a couple of years ago.

By Dec. 12, the value of one Bitcoin – once worth less than a dollar – reached an all-time high of $17,500. Wild speculation and profit-taking are obviously driving such a parabolic swing, but serious investors likely believe the Bitcoin will become mainstream.

While most home sellers aren’t accepting Bitcoin just yet, it’s not hard to imagine a world in which homebuyers can use cryptocurrency just like cash.