Cryptocurrencies have constantly made headlines due to wide fluctuation in their prices. The value of the digital currencies have increased – and decreased – by record margins this year. But this has not discouraged individuals from carrying out transactions using digital currency.
“On 27 May, an anonymous buyer paid nearly $22.5 million in Bitcoin for a 5,068 square foot penthouse in Miami Beach, Florida” according to Scott Cooper. The penthouse is the most expensive property up till now that has been purchased using cryptocurrency.
The property is a 5,067 square foot penthouse located on the 9th floor of a 12-story building. The building was sold just weeks after the developer had announced that it will be accepting cryptocurrencies. The deal took less than 10 days to complete.
The Arte Surfside Building designed by Antonio Citterio has four bedrooms with attached bathrooms. Moreover, it also features a 3,000 square foot terrace with beachfront views. Other standout features of the luxury building include a gym, yoga studio, steam and sauna room, meditation pond, and outdoor swimming pools. Moreover, the building features temperature-controlled parking areas, a children’s playroom, and a rooftop tennis court.
Luxury Builders Offering Properties in Cryptocurrency
Many luxury real estate builders and dealers are offering properties in exchange for cryptocurrencies. One Hyde Park – an upscale property dealer – has recently listed a £175 million penthouse in London. The sale could make it the most expensive property deal using cryptocurrency.
Property firms hire experts to handle crypto transactions. Firms like Propy are training realtors to become crypto-certified agents.
However, most developers haven’t started accepting cryptocurrencies as payment for properties. They require crypto-holders to convert their digital holdings into cash to purchase properties.
Alex Sapir, a co-developer of Arte Surfside building, told Forbes that there is a strong potential demand for real estate transactions using cryptocurrencies. He said that cryptocurrency transactions are both secure and seamless for both parties. The developers were overwhelmed by responses from qualified buyers when they had allowed cryptocurrency as payment for the property.
Crypto transactions are not common at the moment. So, crypto holders all over the world remain on the lookout for new opportunities.
Cryptocurrency Investment on the Rise
Cryptocurrencies use is increasing all over the world. The combined valuation of the top 10 cryptocurrencies is estimated to be $350 billion.
By offering properties for sale in cryptocurrencies, the market for real estate will expand. It will attract more buyers that will lead to the closing of deals much faster.
Property agents have reported increased pent-up demand for properties available for sale in Bitcoins. Experts see great long-term potential for property transactions using cryptocurrencies.
Individuals have more control over digital property transactions. There is no middle agency such as banks or other transaction firms in transactions involving cryptocurrencies. The transactions can be made quickly without much scrutiny.
The use of cryptocurrency in the real estate market offers various benefits. The parties don’t have to pay a fee to banks for carrying out large transactions. The fee for Bitcoin transactions is fixed at 1 percent.
Moreover, digital transactions are much quicker as compared to the transaction using traditional payment instruments like pay orders.
Property transactions using cryptocurrency involve fixing the price of the property in a particular currency and then converting it to Bitcoins. The seller of the property doesn’t incur any loss due to fluctuation in digital currency value as long as it is converted into cash right after the transaction is complete.
Challenges to Adoption of Digital Currency for Property Transactions
While cryptocurrency has made the process of property transactions seamless and less costly, there are still certain challenges with the adoption of digital currency. One of the challenges in adopting cryptocurrency like Bitcoin is that the transactions are irreversible.
Moreover, buyers face the risk that the value of the digital currency may decrease making the property unaffordable for them after the deal is made. Buyers of cryptocurrency also have the risk that the returns will be negative.
But there are turnarounds to the market risks of cryptocurrencies such as converting to cash soon after purchase. Moreover, investors should buy cryptocurrency only when it is trading at low prices avoid buying when the prices are trending high.
In addition, individuals should not buy a large amount of cryptocurrency without first getting exposed to small amounts. It is suggested to observe the market for some weeks to get to know the market. Moreover, individuals should expect losses, particularly in the short and medium-term.
Many realtors are skeptical about the volatility of cryptocurrency. They are not enthusiastic about offering the properties for digital currency due to the uncertain future of cryptocurrency. The scenario where properties would be valued in Bitcoins instead of greenbacks is far off due to the extreme volatility of digital currencies.
Properties that are offered in cryptocurrencies are an outlier currently, but it is expected that an increasing number of developers will allow buyers to pay in digital currency. A collection of residences in Hollywood valued at over $1.2 million are available for sale in Bitcoin. Moreover, two-bedroom apartments are listed for sale in Washington DC for 36 to 84 Bitcoins.
One seller in Austin Texas is also offering significant discounts to buyers who make payments in Bitcoins probably due to savings for not paying fees to banks.
A lot of realtors today are confident that their properties will find buyers when they allow them to pay using cryptocurrencies. Most of the property buyers would be tech-savvy individuals in their 30s who are early adopters of cryptocurrency. They might be interested in cashing their digital currency to a more stable type of assets.
Cryptocurrency makes property transactions quick, convenient, and less costly for both parties. Real estate transactions involving cryptocurrencies can attract buyers from all over the world. The biggest obstacle in the adoption of digital currency is stability. Once the seemingly elusive stability is achieved, it can greatly increase the potential of cryptocurrency transactions.
The opportunities presented by cryptocurrency are vast. We will have to wait and see if the digital currencies live up and serve as a viable alternative to the traditional paper currency.