Bitcoin for real estate?What Bitcoin Is

First of all- what is bitcoin?  I mean, you may have heard about it, but what’s all the fuss?

Bitcoin was invented by someone or a group of people that wish to remain anonymous.  They wrote the code for bitcoin, implemented it, and then walked away.  It has been running almost untouched for just over a decade (since 2009, created by the alias Satoshi Nakamoto).

The beautiful thing about bitcoin is that it is a digital way to transact with someone (send or receive money) without there being an intermediary (bank) that takes a slice of your pie. So someone gets all of the intended money without a 3% (or higher) credit card, PayPal, Zelle, or bank fee.  It costs fractions less to send money, and you can send it across the world, almost instantly(1).  At one point, 194 million was sent for roughly $.10 (yes, 10 cents)(2). ONE million through a bank typically costs $10,000 in fees.

Blockchain Technology

The Bitcoin Blockchain

Bitcoin uses decentralized, blockchain technology.  What’s that?  Honestly, it’s the greatest technology I’ve seen since the invention of email.  Instead of data (bitcoin) being stored on servers in a warehouse or at a company (where THEY control your data)- it is stored on thousands and thousands of computers all around the world that are dialed in to the same, exact information.  So if someone sends money from point A to point B, then all of these computers (nodes) record every transaction at thousands of different locations around the world simultaneously.  They record these transactions and record them to a block of about 1 megabite in size.  Each completed ‘block’ gets recorded on, and connected to, the previous ‘block’.  Hence the ‘blockCHAIN’.  Once a block is completed, it cannot be tampered with nor changed.  It is an open ledger, available to the public, for anyone around the world to see.  It shows ALL bitcoin transactions that have occurred since inception (so the notion that bitcoin is completely anonymous and sent around the world by only hackers and deviant criminals is absolute nonsense)(3).

Anyone can run a node to have their computer confirm/record transactions to the blockchain(4).  It’s open-sourced, and available to anyone.  So the computers (nodes) all agree that each transaction happens, and that no ‘Tom Foolery’ or cheating goes on.  Since bitcoin’s inception in 2009, it’s the longest-running monetary system in place that has not been hacked(5).  It’s truly remarkable.

Buying or Selling a House with Bitcoin

Great- thanks for that long-winded, in-depth explanation that most don’t care about (I know, I know).  So how does this apply to real estate and buying or selling a house?

This is where it gets good.  Bitcoin is not limited by borders, color of skin, wealth, or status.  If a buyer has the money to pay for a good or service (a house), then you can see if the seller is willing to sell their house in bitcoin.  No more of the fanatical ‘waiting for wires to clear’ on and near closing day.  No more ‘financing fall-throughs’ the week prior to closing.  No more of the banks ‘not allowing’ something in YOUR contract between buyer and seller.  This is your transaction/contract between 2 parties, YOU decide.

Now bitcoin, since it is still a very new technology- is highly volatile.  I can’t stress this enough.  There are massive, monetary swings- daily and hourly.  So what might be worth $500,000 today, could be $450K tomorrow- or $550K.  But I must say, over the last 10 years, it has been the highest-earning asset class of any other (stock market, gold (metals), real estate, etc.).  So it might be an option for investing to you.

If you decide to allow someone to purchase your house with bitcoin, remember these following VERY important steps:

  1. All sales/transfers are final. Once someone sends bitcoin from their wallet/address to your wallet/address- it happens almost instantly and there are NO refunds, chargebacks, or oops I sent it to the wrong address.  Once it’s sent, the only way you’ll get it back is if the other party agrees to send it back to you.
  2. Make sure you talk to a professional about setting up your own safe, cold-storage wallet, so that no one can trick/steal your money.  I have about 5-6 years’ experience in bitcoin and it takes time to learn.  I would suggest talking to an expert.
  3. Make sure both cooperating brokerages allow for this transaction with realtors involved, and make sure the attorneys are involved to know when the earnest money bitcoin has been transferred, as well as escrow money to be sent between bitcoin addresses.  You need to be in compliance, and have it in writing.  Check your local regulations to ensure you taking the proper, legal, avenues.
  4. Typically, when these types of bitcoin transactions occur, both parties are well-versed in cryptocurrencies (bitcoin).  If you are new to crypto & bitcoin, I would strongly advise anyone thinking about doing this to talk to a professional and do NOT attempt to do this on your own.
  5. Talk to a tax accountant/professional regarding your tax obligations when doing this.  There are tax implications not only when you sell your bitcoin (capital gains must be reported if you’ve made a profit from when you purchased your bitcoin, to when you sell your bitcoin), but also tax implications for purchasing and selling a property.  Your financial obligations do not end when the sale is over.  You MUST report everything to the State level and to the Federal level.  And know that there will be taxes associated with this transaction.
  6. Watch for scammers.  They’re everywhere, offering to ‘help’.  Those that know cryptocurrencies & bitcoin and have been doing it for years understand these situations and how to avoid them.  Those that are new to crypto & bitcoin are the most vulnerable to these scammers.  Read, absorb, and learn.  Always question someone approaching YOU to offer help.

Now that I’ve probably scared you half to death with the last few paragraphs, I still say that blockchain technology is one of the newest, most innovative technologies out there right now- and bitcoin is at the forefront.  There are newer, faster, more shiny cryptocurrencies out there that talk about having a leg up on bitcoin- but there’s only one that is the most secure, and that’s bitcoin(6).  For those that don’t want to see inflation devalue their dollar any further, bitcoin (or receiving bitcoin through a real estate sale) may be a fantastic option for you.  Digital money is the future, and I believe we’ll be transacting with it between the Earth and Mars!

(1) The Lightning Network allows bitcoin users to send small amounts at a fraction of the typical bitcoin costs, and basically instantly.
(3) It is proven that more deviant behavior is carried out by the physical dollar than all other means of transacting.
(5) When you hear of bitcoin ‘hacks’, it can sometimes be misleading because these ‘hacks’ were social hacks (someone hacking you through social media or emails to get your bitcoin), or through ‘Exchange hacks’ where offenders hack into these bitcoin exchanges (open markets that buy/sell and hold your bitcoin “for you” on their servers).  They hold your ‘private keys’ to your bitcoin.  As they say in crypto: “Not your keys, not your bitcoin”.  I would compel you to hold your own private keys by purchasing a ‘cold storage’ wallet to hold your own bitcoin.
(6) Bitcoin uses open-sourced cryptography with Proof of Work (POW) and a double Sha-256 hashing function, meaning it applies this hash function twice. It’s one of the most secure hashing functions in the world.  Bitcoin is stripped-down, no fills code.  Which equals less attack vectors and more security.  No blockchain has been operating as long as the bitcoin blockchain.

Mike Ciucci, Realtor

Mike Ciucci specializes in the Charleston SC real estate market.  He has been a Charleston realtor for over 17 years, focusing on quality and attention to detail his clients have come to expect.

Mike Ciucci
Carolina One Real Estate

Phone: 843.608.8378

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