With the introduction of Bitcoin in 2009 and following blockchain currencies, discussions about crypto real estate began almost immediately.
Today, stories of seven-figure crypto real estate transactions are roiling the industry. There are believers and deniers in any emerging technology, especially one that promises revolutionary change.
However, it is unquestionable whether or not those having a stake in the real estate market should be paying close attention to what is happening with crypto real estate. The best preparation for the future, according to Scottish author George MacDonald, is a well-cared-for present.
Other international and upscale markets are testing the waters as crypto real estate sales get up steam in Manhattan and Miami. According to Ryan Knowles, founder and CEO of MAISON Bahamas, what was once just a crypto curiosity is now subtly altering how real estate transactions are conducted in the Bahamas. As deals started to materialise in places like Florida and New York, interest in this place started to increase. Currently, there are a few different businesses in our market that facilitate cryptocurrency transactions, and some developers are accepting cryptocurrency for the purchase of homes.”
Knowles thinks that once digital money becomes a widely accepted form of payment, real estate transactions will be simpler than ever, despite the fact that there are still more obstacles to be addressed. People used to just accept cash, but as payment methods advanced, such as the introduction of credit cards and Apple Pay, the process of doing business became simpler. With cryptocurrency, it could [potentially] get to the point where you can buy a house with the click of a button, just like ordering a coffee.”
Meanwhile, according to Knowles, the market’s instant response to cryptocurrencies can be seen in the whole new buyer pool that has been brought into the Bahamian market as a result of modified banking regulations. According to the luxury property expert, “These purchasers who have amassed their fortune through bitcoin are not just entering the market but becoming huge participants, and there has been an enormous amount of development.”
Paul Salazar of Beverly Hills-based Hilton & Hyland in Los Angeles observes a similar influx of fresh capital into the market. “Crypto made many people wealthy, and this has added a whole additional layer of wealthy buyers who are looking to cash out their winnings and buy a home,” the author said.
Los Angeles, like the Bahamas, is beginning to structure for crypto real estate, but no property has yet been totally traded using digital money. Salazar thinks that merchants’ concerns about the volatility of the currency are a major factor in their reluctance to take cryptocurrency as payment. While the advantages—speed, convenience, and security—may lead to an increase in the number of future sales made using digital money, resistance will persist until crypto stabilises.
Salazar, a leading producer in the ultra-luxury market in Los Angeles, has firsthand experience with the effects that recent declines in cryptocurrency values have had on sales. “A number of transactions have been canceled as a result of the significant decline in cryptocurrency over the previous several months. The sellers in this market are aware that you would miss out on the house if you are looking to buy one and your cryptocurrency decreases in value by 20% the day before closing. In the end, people still desire money.
Mike Shapiro, an investor, entrepreneur, and author, thinks that digitising real estate is a brilliant idea, but he also sees a significant danger in doing so due to the volatility of cryptocurrency investments. For obvious reasons—effective—blockchain it’s technology may very well be the real estate industry’s future. However, until these cryptocurrencies, like Bitcoin, are backed by something, they will not have any value, according to Shapiro. It is worthless as real estate till that time. Nothing about it is stable.
Despite the rippling effect that cryptocurrency volatility has had on the financial landscape, it is not anticipated that real estate, where a lack of home inventory continues to favour sellers, will be affected. Shapiro thinks that investing in real estate for the long term, especially in locations with significant demand, will continue to be a reliable choice.
Real estate behaves very much like stocks and equities. If you’ve made an investment in a strong team, strong branding, or in real estate, a strong product, that’s cash in the bank. Aspen, East Manhattan, and Beverly Hills are like Apple stock in that they won’t suffer as much during a downturn.
