Bitcoin has come a long way since its creation in 2009. Used in a wide variety of markets, is bitcoin now becoming the trend to purchase real estate?
How do Bitcoins work?
There is absolutely no need for advanced technical knowledge to use bitcoins. Get started with it by simply installing the bitcoin wallet on your smartphone or computer. You will be receiving a personal address similar to your email through which you can carry all your transactions. As a proof that you own the wallet, the Bitcoin wallet stores a small secret piece of data or private key.
Bitcoins are creating a new platform for the real estate market. Over the past one year, a number of people have been seen taking out second mortgages in the form of home equity to purchase Bitcoin. The value of Bitcoins skyrocketed in 2017. This is the primary reason why people are investing in Bitcoins. The transactions between the buyers and sellers also speed up considerably as there is no middleman (bank) involved. The transactions involving bitcoins are performed on new online trading platforms like ATLANT. The properties are tokenized in order to trade assets online. For instance, Sweden’s land registry authority has been testing ways that could save about €100 million by doing away with all the paperwork.
The impact of bitcoins on the real estate industry is far-reaching. It prevents fraud by creating a certifiable digital ID that is much more reliable than a bank’s letter. This digital ID can be used for mortgage payments, deed transfers and for other financial transactions.
Just like any other investment, there are safety and security concerns associated with Bitcoins as well. But a big upside of it is that it could, of course, be paid off over the course of time within months. A significant encouragement in investment has been seen because of reduction in real estate fees. Similar to how the stock market works, the real estate tokens can also be bought and sold in fractions. This is highly beneficial for investors.
Blockchain is decentralized. The information is fully transparent and available to all. The buyers and sellers have the option of securely storing their information online which is instantly verifiable. This cuts down on the money and long discussions one has to spend with lawyers and banks.
Every homeowner has their right to utilize their equity where they feel is best. However, there are some risks involved as bitcoin is very new. There is not much history related to it that shows how investing in cryptocurrency is always beneficial. More and more individuals are now showing their interest in bitcoins. As alluring as this might sound, there is also the risk of the entire system collapsing.
It is risky when people gain access to funds for investment by using the equity in their home. There is no concern when the returns are soaring. But the problem lies when an individual loses money and is unable to repay the money. The market would then be hit by a flood of foreclosures.
Blockchain is still in its infancy. With all the related problems, it is very important for investors to pay close attention to the trends of the crypto world.