Recent years have seen the popularity of cryptocurrency, blockchain technology, and NFTs skyrocket. News media cover stories about crypto companies, and many stores have begun their own forays into transactions involving cryptocurrencies.
So, what is the relationship between real estate and cryptocurrency like today?
As recently as five years ago, many landlords and investors felt that securing property transactions with a volatile asset like cryptocurrencies would be too risky. Now, however, crypto services adjacent to the real estate industry serve some industry leaders. Will you miss out on the future of the real estate industry if you don’t learn about crypto now?
Today, get a complete update on the current status of crypto real estate and what it means for the future of your business.
A Table Of Contents On Real Estate And Cryptocurrency
Cryptocurrency and related technology are new to many people, including landlords who have already been in the industry for decades. What’s important to know about crypto and real estate as we move into an ever-evolving digital era? Follow along to learn more:
- What Is Cryptocurrency In Real Estate?
- Real Estate And Cryptocurrency: What’s Happening?
- Preparing For The Future Of Real Estate And Crypto
- Crypto And Real Estate FAQs
- Moving Forward: Real Estate Crypto
Cryptocurrency is used in real estate transactions to buy properties in the real world and in digital spaces. Today, we’ll mainly discuss how cryptocurrency funds actual property transactions.
Cryptocurrency is a type of digital money. The money never exists in a tangible form; instead, it exists only in coding that’s worked into the blockchain.
Most people have heard of popular cryptocurrencies such as Bitcoin. Some real estate transactions use Bitcoin, while others utilize cryptocurrencies explicitly developed for real estate investments.
If you aren’t yet familiar with the terminology of the crypto space, the above explanation might not have given you all the details you need. So, let’s break things down a bit further to help everyone understand what crypto is (and what it isn’t).
Cryptocurrencies are digital forms of money. All transactions are recorded on decentralized, encrypted databases. No centralized authority, such as the government, can verify and monitor the transactions. All transactions are verified in the records when trades and sales are made using this form of currency.
Blockchain is the technology that supports cryptocurrency. In its essence, blockchain is a ledger of digital trades and assets. Blockchain makes it possible to record and track all cryptocurrencies. Every transaction adds a “block” to the chain, and those blocks can be followed for a particular currency.
Finally, let’s touch on NFTs. NFT stands for nonfungible tokens. NFTs are blockchain assets. These assets can be anything from music to real estate, representing the item on the blockchain. Various uses for NFTs exist. In the real estate sector, however, an NFT is often used as the listing for a potential real estate transaction.
Over the last two years, real estate news has gradually included more words like cryptocurrencies and digital wallets. Both positives and negatives have occurred, and real estate investors everywhere keep their eyes peeled to see if and how crypto will alter the industry landscape.
What’s going on with crypto and real estate today? Find out now:
The most significant way real estate crypto has been covered in the news revolves around NFT home listings. Sellers and agents are listing properties for sale in Bitcoin or in combination with dollars and Bitcoin, and it’s got people talking.
Early adopters of Bitcoin and other cryptocurrencies who hit big in the crypto market are looking for ways to tie this fluid and volatile asset to a tangible asset. Some use their gains to purchase property with cryptocurrency to balance their portfolio.
Some booking agencies and landlords allow tenants to pay rent with cryptocurrencies. More and more people are beginning to have a bit in their digital wallets and are looking for ways to use it in the real world. Accepting rent through crypto is one way landlords can attract these individuals as tenants.
Finally, real estate entrepreneurs focus on creating new cryptocurrencies for working in the real estate industry. These ICO opportunities allow them to get into crypto real estate without partaking in traditional transactions.
Digital real estate cryptocurrency has become a focus for several different services in the past few years. In addition to developing real estate cryptocurrencies, companies like Roofstock have focused on developing processes for crypto real estate transactions to occur successfully.
Roofstock recently announced that the first property sale via NFT happened on its Rooftstock onChain platform. This sale marks the first of its kind and showcases how blockchain and crypto platforms have developed to support real estate transactions.
The sale was processed on the Roofstock onChain (ROC) NFT marketplace, which runs on Original Protocol’s peer-to-peer system. Each home sold on ROC is first titled through an LLC, and then the unique Home onChain is set up as an NFT on the marketplace.
When sold, the Home onChain is transferred, and the transaction is recorded on the Ethereum blockchain.
What should you do to prepare for cryptocurrency’s future influence in the real estate industry?
While it’s not time to sell everything for cryptocurrency, as this digital currency is still stabilizing, it’s time to consider how you might be able to get involved and financially benefit from crypto.
One of the easiest ways to test the waters of digital currency is to start accepting cryptocurrency for rent payments. Many online rent payment services accept credit cards and direct debiting options, but only some permit cryptocurrency transactions.
If you are determined to accept Bitcoin and other currencies, choose the payment app that takes your desired currency.
Accessibility is another topic often addressed regarding the value of cryptocurrency in the real estate market. Those who have difficulty qualifying for traditional loans due to current investments or their credit score may have an easier time with a crypto-based lender. Often, these lenders focus less on credit scores or other traditional markers of financial stability.
If your rental business still isn’t utilizing much technology, it may be time to change that. Property technology, also known as proptech, is the future of the business. Varying software options enable rental management and payment collection. Additionally, they will be able to integrate with other technology, including blockchain databases.
Is the idea of crypto in the real estate sector utterly new to you? Do you often feel that you’re learning about hot topics in the industry long after they’ve already become entrenched in how things work?
We know how hard it can be to stay up-to-date with the latest industry news when you’re busy working hard and running your business.
That’s why we’ve created a newsletter and this blog where you can regularly get updates about the most significant changes happening in the rental sector. Sign up to stay updated today!
Still have questions about how cryptocurrency and real estate interact? You’re not alone. Check out the answers to the most frequently asked questions on this topic.
It is possible to buy real estate with cryptocurrency. The exact terms of any crypto-based real estate deal will vary due to the current lack of standardization in this area.
There are two primary ways to buy a property with cryptocurrency. In one scenario, you could purchase a property from another individual who’s comfortable with using crypto. You would pay them entirely in cryptocurrency to complete the sale.
Otherwise, you may need to involve a third-party vendor. The vendor works as a middleman to exchange the crypto into dollars before completing the transaction. The seller can then receive dollars while the buyer pays in crypto.
Every crypto real estate transaction will work slightly differently. There are over 6,000 cryptocurrencies today and not all are set up for real estate transactions. The top real estate cryptocurrency also changes frequently, and this can change preferences among both buyers and sellers.
Every real estate cryptocurrency transaction will have some similarities. The buyer and seller will both agree that some or all of the sale value will be sent in cryptocurrency. During the transaction, the crypto will be transferred between the two parties, and the data of this transaction will be transparently visible on the blockchain.
Depending on which particular services are being used, the real estate transaction process may completely negate the need for a broker, title company, and other industry professionals. By removing these parts of the process, however, there may be some additional risk if you are not working with a real estate-specific service.
For most investors, the key benefit of these transactions is the liquidity of the investment style. Cryptocurrency is very fluid; tying that to a brick-and-mortar investment is a way of balancing out an investment portfolio for some investors.
The cost of processing a real estate transaction (and related taxes) is often reduced when using cryptocurrency. Investors can get more for less, which is always an attractive feature.
The transactions are also more private due to the limited involvement of third-party individuals and vendors.
Finally, some investors are looking for more ways to test the power of cryptocurrency. Most transactions done in crypto at this time are completed by influential investors constantly seeking ways to diversify their investments.
The risk factor is the most significant disadvantage of getting involved in crypto and real estate right now. That risk comes in many forms.
Since this type of financial transaction is still new to the industry, only some specialized services or experienced individuals can guide the process. This can lead to mistakes in the process that are incredibly costly.
Another considerable part of the risk of purchasing or selling real estate with cryptocurrency is the volatility of cryptocurrencies. Crypto remains largely unregulated, and this could ultimately change. The dangers posed by the constantly fluctuating crypto prices and potential regulation make it difficult for some real estate investors to trust crypto as their primary financial backing.
Cryptocurrency and blockchain have seen applications in dozens of essential industries over the last decade. From health care to banking, there’s no doubt that the move to decentralized currency is a popular idea.
Does that mean real estate’s future relies on getting involved in cryptocurrency?
Blockchain technology and cryptocurrencies are still new and volatile. Utilizing only crypto to fund and manage rental properties wouldn’t be wise.
However, there are ways that you can prepare for the future of crypto in real estate:
- Learn more about crypto, how it works, and what real estate-specific cryptocurrencies are being developed.
- Offer to accept rent in crypto in markets like Miami, where the industry is flourishing.
- Consider financing a property through the crypto space if you’re comfortable with the risk of this type of asset management.
Cryptocurrency is only for some investors, which is the primary reason it will not take over real estate entirely or in the immediate future. While there’s no doubt that interesting developments are happening, landlords at this time are not being forced to get involved in the crypto space.