How the digital currency may affect the property market.
Cryptocurrency, or crypto, – Bitcoin, Litecoin, or Ethereum, to name a few – is growing rapidly in today’s society. And, with El Salvador having made Bitcoin legal tender, it looks like cryptocurrencies might just rival traditional currency in the not-so-distant future. The rise in crypto could mean big things for the future of a number of industries, not least of which is real-estate.
REMOVES THE MIDDLEMAN
Traditional real-estate transactions involve not just a buyer and a seller, but also a realtor, a lawyer, a bank, and more. With crypto-led transactions, all of these middlemen are removed, leaving only the buyer and seller.
Cutting out the intermediaries like this means that both buyers and sellers get more out of their money in all real-estate transactions, thanks to the lack of fees and commissions. These fees can be surprisingly steep, so their removal would allow greater financial freedom to everyone involved in the sale.
INCREASED MARKET TRANSPARENCY
Cryptocurrency is a decentralized system, which means that information regarding all crypto holders is stored securely and is available to others within the network. As a result, all transactions are public, and market transparency is increased. It’s not just crypto holders’ information that’s readily available, either. Properties effectively have their own identities within the network, and their full chain of ownership and financial history is accessible.
This intrinsic transparency in the cryptocurrency system has ensured that there is also trust within the system. With the instant verification available to crypto holders, and the ready access to transaction histories, holders can feel confident when conducting their own transactions. It’s this trust and transparency that paves the way for crypto to become a big player in the real-estate market.
FASTER PROCESS
Due to the fact that all middlemen will have been removed from the process, transactions could be completed much faster than via traditional methods. Currently, buyers and sellers must go through a number of different channels before money changes hands, whereas with cryptocurrency, they would only need to communicate with one another. And, with individuals’ information being so readily verifiable in the decentralized system, the process can be sped up even more.
ENABLES INVESTMENT
The reduced fees and increased online security that come with the use of cryptocurrencies are set to result in more interest in real-estate investment opportunities. And, this isn’t the only reason investments are due to increase. Crypto allows something called fractional ownership, which is when shares of an asset are sold to more than one buyer. This is popular due to the lower upfront cost required, and the speed at which an individual can buy into property.
As well, crypto’s transparency opens the door to crowdfunding opportunities, wherein multiple individuals can pool their funds to invest in a property. Thanks to the decentralized system, the risk in this enterprise is managed, and opportunities are afforded to those who may be locked out of more traditional channels.
Ultimately, cryptocurrency is still very much in its infancy – the original crypto, Bitcoin, was first created in 2009 – so it’s difficult to predict exactly what’s going to happen in the future. Having said that, if the current trend of an upwards trajectory is to be extrapolated, the future looks very bright indeed. This, coupled with the numerous benefits that can be seen by the real-estate sector through the use of cryptocurrencies, is an incredibly exciting thing.
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