With increasing reports of both Bitcoin and Ethereum being used to purchase property, it appears that digital currency is finding its place in the Real estate sector.
Although a recent Bitcoin News report illustrates that some banks are not prepared to allow customers to use mortgage equity to purchase cryptocurrencies, it is clear that real estate agents are not adverse to taking investors’ digital funds in exchange for bricks and mortar.
A recent article by the Washington Post revealed that in the US, a Miami penthouse listed at the time for 33 Bitcoin carried the stipulation that the client would not take any other form of currency. In the UK buying property using Bitcoin is far rarer. In fact, Bitcoin News recently reported that a Harris survey revealed that 27% of male millennials considered Bitcoin to be a better long-term investment than buying a property, assuming that they were even able to get on to the housing ladder.
It appears that buying property using cryptocurrency is more limited to groups that have made substantial profits trading the digital currency; the crypto “nouveau riche.” In the US the buying of real estate using currencies such as Bitcoin is far more widely accepted and new concepts are beginning to facilitate sales in innovative ways.
Longstanding real estate and private equity firm, Muirfield Investment Partners, have joined with the company in an attempt to use blockchain to introduce more liquidity to the real estate market by developing a token which can be freely traded, whilst remaining compliant with US security laws. Thomas J Zaccagnino, Muirfield’s founder, commented, “By tokenizing a real estate investment vehicle, investors are for the first time, able to freely trade their ownership on regulated secondary exchanges.”
Blockchain itself has become a boon to the industry with numerous applications. According to the Washington Post, in 2016 Goldman-Sachs projected a $2-$4 billion savings in the title insurance industry as a result of using blockchain to verify and store land titling. This said blockchain is not the only solution to finding cheap, speedy, solutions to recording land and property ownership.
The Post suggests that DLT can’t detect a forgery nor will it detect a foreclosure issue, which effectively means that such titles can’t be marketed, indicating that despite DLT’s effectiveness in real estate transactions, it does have its limitations, in that it can’t necessarily offer buyers title insurance.
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