Gone are the days when Bitcoin was used by only a niche audience for transactions on shady websites. The crypto coin has evolved to the point that businesses have started implementing it as a secure form of payment. On the other hand, several governments have also completely banned the digital coin. Bitcoin was released back in 2009 and over the course of the years gained both popularity and notoriety with the public.
Despite the controversy and being considered highly risky due to massive fluctuation values, cryptocurrency continues to entice both investors and industries—and we’re not talking about just Bitcoin. More than a thousand crypto coins are currently available, some faring better than others. Unregulated by banks, these encrypted digital currencies managed to penetrate almost every market in 2017, including real estate.
Although the market is risky, crypto transactions through the blockchain are considered safe. By design, a blockchain is resistant to data modification and can record transactions between two parties efficiently and in a verifiable, secure and permanent way. As for crypto coins, most of them can be mined (created) using special mining rigs: computers with high-end GPU’s, for example.
Real Estate: One of The Many “Links” of the Blockchain
Given the increasing popularity of Bitcoin and listings already popping up accepting the digital coin as payment, PropertyShark made a case study on a hypothetical Bitcoin real estate transaction. The research revolves around a $45 million NYC luxury condo sold in April 2017. The real estate data provider took a closer look at how sustainable would’ve it been for the owner to sell the property in Bitcoin.
PropertyShark calculated Bitcoin’s average monthly price from April 2017 to March 2018, to see how many Bitcoins you would’ve needed each month to buy the property.
The condo— formerly owned by Demi Moore—is located in the iconic San Remo building, and, if it had sold in Bitcoin last year, it could’ve banked around 37,000 BTC, as 1 digital coin in April 2017 amounted to $1,206. Fast forward just one month, Bitcoin’s value increased to $1,895, making the condo’s price in May already 13,000 BTC less.
Bitcoin kept surging in June 2017, and decreased a mere 4% in July, keeping the property’s price hovering at 17,000 BTC. You would’ve only needed about 11,000 Bitcoins to buy the 14-room residence in August and September, and by October, close to 8,000 BTC.
It wasn’t until the end of November that the digital currency started heavily increasing. By then, the property could’ve been purchased for only 6,000 BTC, and with the historical spike that occurred in December, it could have traded for under 3,000 BTC. In December 2017, at the currency’s peak point (1 BTC = $17,000), the condo’s price tag would’ve been around 2,700 Bitcoins.
Bitcoin’s value started contracting through January and February 2018, and by March, the apartment’s price would’ve been about 4,800 BTC. In hindsight, the amount of Bitcoin that was needed to buy a $45 million condo in April 2017 could have landed you 13 condos by the end of the year.
Back in 2017, no doubt some crypto investors knew where the market was headed, and that Bitcoin was poised to grow, but nobody would have guessed it would blow up the way that it did. Looking at the data, selling an apartment using Bitcoin would’ve made sense in early 2017, but at the time, the market was uncertain—as it is now.
A couple of assets did trade last year in Florida and California, so those sellers definitely made an impressive profit. Recently, two New York City condos were also bought with Bitcoin, which goes to show that no matter the circumstances, there’s some kind of confidence in the market. Nonetheless, trading and investing in cryptocurrency requires in-depth knowledge of the business, not just speculation or luck.
No matter its volatility, It’s safe to say that the technology is here to stay, although there’s a long road ahead for improvements.