Unless you’ve been living under a rock, chances are you’ve probably heard about cryptocurrencies.
Bitcoin in particular has been on the tip of everyone’s tongue. The gold standard for cryptocurrencies has been consistently hitting new highs since the 3rd quarter of 2020.
Ever since a crypto enthusiast used his Bitcoins to buy pizza, many have since begun wondering what else could be theoretically bought with cryptocurrencies.
How about a car? Or maybe even a house?
Is it even possible to buy a tangible asset with a currency that technically does not exist in the real world?
How would you transact such a deal? What about valuations?
The good news is it is quite possible to buy a house with cryptocurrency. Like any other transaction, what it needs is a willing buyer and a willing seller.
If both parties are willing to proceed with the exchange — then voila. You’ve got yourself a transaction going. With all of that in mind, let’s take a look at the mechanics of buying a house with cryptocurrency.
1. Getting a wallet
First things first. In order to store your cryptocurrencies, you’ll need a wallet. It can be either a cold or hot wallet.
Cold wallets are the most secure as they store your cryptocurrencies offline. Thus making you immune to cyber attacks. But they can make it difficult to perform transactions.
Hot wallets are the most convenient as they are 100% online. With them, you’ll be able to access your cryptos easily with minimal fuss. However, they are vulnerable to cyberattacks and hacks — so be careful.
2. Meeting with the seller
Here’s the thing about cryptocurrencies. While they are steadily growing in popularity, they are nowhere near mainstream.
So if you’ve found your dream property, you’ll have to either exchange your cryptocurrencies for cash or convince the seller to accept cryptocurrency payments.
Given that houses are a significant purchase, some sellers may feel apprehensive about accepting payments in cryptocurrency. After all, cryptos are not backed by any governments — making it risky.
If your seller is able to accept crypto, you’ll just need to transfer your coins into their wallet. From here, it’s only a matter of transferring the title just like any other transaction.
Alternatively, if the seller is unwilling to accept cryptocurrencies, you can always follow this guy’s example and directly exchange your coins for cash. Once you’ve agreed on the dollar value of the property, you’ll be able to proceed with the transaction.
Considerations
On paper, buying a house with cryptocurrencies seems relatively easy. However, there are several considerations that you’ll need to take into account.
1. Government regulations
As cryptocurrencies are entirely decentralized, they are often viewed with suspicion by governments around the world.
So, if you’re buying a house with crypto, pay a visit to your bank or local tax office to understand if there will be any repercussions.
2. Price fluctuations
It goes without saying that cryptocurrencies are extremely volatile. Random price fluctuations could result in an erosion of your buying power.
As a buyer, all of the risk falls on you as the seller has already agreed to a dollar price.
3. Sellers
Again, some sellers may not be entirely comfortable with crypto payments. This may result in it becoming extra difficult to find a seller who will accept cryptocurrencies.
If the seller does, he/she may be encouraged to drive up the price of their property or demand that you exchange your cryptocurrencies for cash.
Given the risky nature of cryptos, not many banks and credit companies would be willing to underwrite a purchase with such volatile assets.
Closing thoughts
If you’re looking to make a purchase with cryptocurrency, always do your homework first. If you don’t own enough cryptocurrencies, you can find the best crypto lending platforms by Tezro here.
Lastly, check with the regulatory authorities to ensure that your transaction is above board. The last thing you’ll want is to get in trouble for an illegal purchase.
