Lately, there has been increased talk of the advances bitcoin has made as an increasingly mainstream, viable currency. Now, not only is it possible to pay for your cup of java or to order items online using bitcoin, but you could even purchase your next home and pay for it in bitcoin.
The advance of bitcoin in the real estate industry is certainly a newer area of development, but an increasing number of brokers and even countries are beginning to look at ways in which the blockchain can be incorporated into the industry.
Honduras looks to reduce fraud in real estate with bitcoin
Among those countries is Honduras, which has created a registry for land titles using the blockchain. The issue of land titles is one that has remained problematic for the Central American country, one of the poorest in the region. In the past, the land title database has been hacked numerous times, resulting in fraudulent transactions. Recognizing an opportunity to put an end to such issues, Honduras contacted Factcom and Epigraph, bitcoin technology firms based in Texas, to assist in building a secure land title registry. By incorporating the use of blockchain technology, Honduras hopes to reduce the number of incidences of land title fraud while being able to grant buyers more secure mortgages.
Honduras may be one of the latest countries to leverage the power of bitcoin technology, but it is certainly not the only country to do so. Other countries have also jumped on board with the idea of allowing bitcoin to be accepted for real estate transaction. In Bali, an anonymous buyer purchased a two-bedroom luxury villa, paying 800 bitcoins, which amounted to more than half a million U.S. dollars. Isle of Man has also tested a government-operated project using the blockchain.
U.S. explores bitcoin in real estate
Last year, Vista Abstract announced that it would become the first title company in the United States to begin accepting the digital currency for real estate purchases. Since then, buyers, sellers, and brokers have sat up and taken notice of the potential offered by incorporating bitcoin technology into the real estate industry. A property in Lake Tahoe sold last summer to the tune of $1.6 million in bitcoins. While not the first of residential real estate transactions to be conducted using bitcoin, it is believed that the sale did set a record in terms of price, which totaled 2,739 in bitcoins. Online merchant processor BitPay handled the transaction.
In order to for such a transaction to take place using the merchant processor, the seller would first need to create an invoice for the property price, in either U.S. dollars or bitcoin. BitPay then guarantees the bitcoin exchange rate for 15 minutes following the creation of the invoice. The buyer is responsible for completing payment during that 15-minute window. If payment is not completed during that time, BitPay recalculates the exchange rate. A suburban home in Kansas City has also sold through BitPay, at a price of about $500,000.
Bond New York, a real estate broker based in New York also announced last year that it would begin accepting bitcoin for real estate transactions, thus becoming the first real estate brokerage firm in the United States to accept the digital currency. 1
BitPremier, an online luxury marketplace specializing in bitcoin transactions, has also begun to list properties for sell, including a home in Naples, Florida for just shy of $1 million, as well as a property in Palm Desert, California, list for $7.45 million.
With more and more stories of property transactions using bitcoin hitting the news, it would certainly seem that the future of real estate could be changed forever.
1) NY Post. Real estate broker: 'We accept bitcoin'. https://nypost.com/2014/01/04/real-estate-broker-we-accept-bitcoin/