Cryptocurrency might still be thought of as a risky investment only for the adventurous. But today, over 100,000 merchants accept Bitcoin (the most dominant of many cryptocurrencies available) for the purchase of everyday items. Among the larger companies who have made the leap are Microsoft, Expedia, Overstock, Home Depot, Starbucks, Subway, and Shopify. As more merchants hop onboard, many consumers may wonder: Can crypto be used to buy real estate?

The short answer is yes, if all the right participants are involved. First and foremost, both buyer and seller must be in agreement that crypto is an acceptable form of payment for the real estate transaction. Next, any third party needed in the transaction, such as an escrow and insurance company, will need to agree to do business involving crypto. This can be challenging due to cryptocurrency’s inherent anonymity. Crypto transactions are recorded in blockchain technology that are only tied to numerical IDs, not names. (For a basic explanation of cryptocurrency, go here.) Third parties may be more willing to participate in the transaction if the cryptocurrency is cashed out for dollars first. Any capital gains will have tax implications.

Pros of Buying with Crypto

Trading for a More Secure Asset. Just like the value of stocks fluctuate daily, so does the value of crypto. When you find a seller willing to accept crypto for real estate, you trade a volatile asset for a more stable one. The seller then takes on the risk of the crypto increasing or losing value.

A Possible Discount Price. As a buyer, you might also be able to negotiate a slightly lower price for real estate if the seller is willing to bet that the amount of crypto paid will increase in value over time.

Faster Purchase. Similar to paying for a home with cash, having enough crypto to pay upfront will speed up the purchase time because there are no mortgage hoops to jump through.

Cons of Buying with Crypto

Volatile Value. Because the value of crypto fluctuates, the seller could back out if the specific crypto offered drops in value before the end of the real estate transaction timeline.

Finding Sellers Is Tough. Despite crypto being over a decade old, there is still a lot of confusion about how it works and hesitancy to use it. Some sellers will market their home as “crypto-friendly,” but usually a crypto buyer will have to ask each individual seller if they’ll accept the digital currency. On another note, currently Bitcoin and Ethereum are the most dominant cryptocurrencies, so if you’re planning to use a different type of crypto for a home purchase, your chances of finding a seller are even slimmer.

Bottom Line

It’s possible, though not necessarily easy, to buy a home with cryptocurrency. If you have a large amount of crypto that is enough to buy a home outright, you might have an easier process cashing it out for dollars first. The option to buy a home in crypto largely depends on how easy or difficult it is to find a seller willing to accept crypto as payment.

Real Estate Term of the Week

Cryptocurrency: A type of currency which uses digital files as money. Usually, the files are created using the same methods as cryptography (the science of hiding information). Digital signatures can be used to keep the transactions safe and let other people check that the transactions are real. The first cryptocurrencies were made to be free of government-given currencies and free of government control. The control of each cryptocurrency works through a distributed ledger (a list of transactions shared by everyone), usually a blockchain that serves as a public financial transaction database.

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