The rise of cryptocurrency and real estate transactions
Cryptocurrency has become an attractive investment option during the last decade and has generated many new millionaires. After having made some wealth in crypto, many people look for more solid investment possibilities to secure and diversify their wealth. A very good option is real estate, as a building offers a huge guarantee for keeping the value of your money. Furthermore, it offers you the possibility of earning passive income with renting. So why not buy some property with your crypto?
How transactions on the blockchain work
As soon as a new transaction is recorded on the blockchain, the details of the transaction such as asset, ownership or price are recorded, verified and settled across all nodes. This complex process only takes a few seconds to be completed. If a change on any ledger is verified, it is simultaneously registered on all other copies of the ledger. That makes the blockchain the fastest and safest way for recording ownership of any kind.
Keeping records of the transactions is a core function of all businesses. Traditionally, records take a lot of time and effort to create. Often it comes to errors during the creation and storage process of the transactions. Nowadays it is possible to execute a transaction immediately, while the settlement can take up to several days. When buying real estate, the registration process takes several days involving lawyers and government employees. On the blockchain, the verification of a transaction and the recording are immediate and permanent. As soon as a transaction is recorded in the blockchain, all the details are settled within seconds.
Investing in real estate using cryptocurrencies
In the same way as you can buy real estate using fiat money, nowadays you can also use crypto for purchasing real estate. Using the blockchain in real estate makes your purchase faster and allows more nimble transactions and property transfers. Using crypto real estate purchases cuts traditional wait times and reduces the need for intermediaries. If you have accumulated some crypto and would now like to diversify your wealth, you can easily buy property with your cryptocurrency in the same way as all crypto transactions work.
Whether you can buy a property 100% in crypto or in a crypto-fiat mix, depends on the preferences of the seller and the agreement that you have made. If you would like to use your crypto for a real estate purchase but the seller is not willing to accept crypto, you would have to first convert your crypto to fiat and then use the fiat money for conducing the purchase.
Is it legal to buy property using a digital currency?
Yes, it is legal to use your crypto for buying property. The most frequently used cryptocurrencies for buying real estate are Bitcoin and Ethereum. You can conduct a wallet-to-wallet transaction in order to purchase real estate with crypto. While sellers and intermediaries might accept cryptocurrency, governments and traditional major banks won't. So, for paying the fees of your real estate purchase or for paying off your mortgage, you will most likely have to use fiat. In this case, you will have to convert your crypto to fiat first in order to make the payment.
Advantages of using cryptocurrency to buy a property
As a real estate buyer, you can benefit from the high volatility in the crypto market when executing a crypto real estate purchase. Buy when prices are low and sell when prices are high. The real estate blockchain offers you the possibility of using smart contracts. That is a safer and faster way of transferring property. You also have the possibility to split the total amount and pay part of it in crypto and the other part in fiat. Another advantage are the extremely low transaction fees when conducing a bigger purchase – such as buying a property – with crypto instead of fiat.
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