Cryptocurrency is still a relatively new kind of currency, but the effect it has had on the global market has been undeniable. From feeding families in Venezuela to buying homes in the states, crypto has changed the way that we do things. Below, we look into how cryptocurrency is effecting the real estate market.
What is cryptocurrency?
Cryptocurrency is a digital currency built to make financial transactions secure and difficult to fake. One of the most important features of crypto is that its not controlled by any central authority — including governments, banks, etc. The decentralized nature of blockchain makes cryptocurrency nearly immune to the old ways of government control and interference.
Cryptocurrency also makes it easier to conduct any transactions. Transfers are simplified through use of public and private keys for security and privacy purposes and these transfers can be done with minimal processing fees, allowing users to avoid the steep fees charged by traditional financial institutions.
Crypto and Real Estate
According to Investopedia, "Previously, transacting high value assets such as real estate exclusively through digital channels has never been the norm. Real estate transactions are often conducted offline involving face-to-face engagements with various entities. Blockchain, however, opened up ways to change this. The introduction of smart contracts in blockchain platforms now allows assets like real estate to be tokenized and be traded like cryptocurrencies like bitcoin and ether."
Translation: Cryptocurrency and blockchain technology eliminates the need for a trusted (and pricy) third party to facilitate the digital transactions. Blockchain can also make MLS property data more centralized and accessible, title records easier to track and transfer, and it can make transactions more efficient and secure.
Crypto and California Real Estate
As aforementioned, crypto is not dictated by any particular government, making it a useful tool in international transactions. The real estate market in California is extremely popular with foreign investors and so it’s predicted to be one of the first markets to fully adopt crypto in real estate transactions. Real estate listings in markets that are popular with foreign investors are increasingly advertising that they accept cryptocurrency. The appearance of these listings is likely driven by two things: a marketing tool to catch the attention of foreign investors and a hope to attract local enthusiasts who prefer to play with crypto.
Many believe that within the next decade most real estate transactions will be conducted on the blockchain. The constant flux in the cryptocurrency market demands caution, but cryptocurrencies are poised to disrupt the real estate industry and savvy real estate brokers who want to stay ahead of the curve should prepare now.