Imagine being able to perch on the shoulder of the first Chinese trader who used an object to represent currency during their primitive barter transactions, then moving forward in time 500 years to the first time a coin was used for trading items of value in what is present day Turkey. Further imagine yourself watching the first paper note transaction in Europe centuries later and watching the first stock exchange develop. This God’s-eye view of monetary history unfolding is a lot like watching the development and growth of bitcoin.
What is Bitcoin?
Bitcoin is a digital currency, also called cryptocurrency, that relies on something called the blockchain. The blockchain is the ultimate peer-to-peer technology because it offers a secure way to record transactions while protecting the anonymity of the transactors and offering transparency in the transaction. In order to conduct these transactions, an individual needs something called a digital wallet, which stores these units much like a physical wallet holds fiat money.
Bitcoin was introduced in 2009 by an anonymous developer known as Satoshi Nakamoto. It was created as an open source, decentralized currency to allow transactions to be conducted between individuals without the need for intermediaries. Over time, the currency has been widely excepted and, despite controversies surrounding it, has increased in value so that today one bitcoin is valued at more than $6,000 U.S. dollars. Because it is not controlled by any government, anyone in any country can enter into a financial transaction without having to exchange their native currency into a foreign currency making it one of the most flexible currencies in the modern world.
Using Bitcoin For Real Estate
Since the first bitcoin transaction, the digital currency has been used for conducting all sorts of transactions from the buying and selling of goods and services, to lending money, and, now, even the buying and selling of real estate. In fact, the entire bitcoin ecosystem has grown to such an extent that specialty exchanges have developed allowing bitcoin investors to use it to make specific types of transactions more easily. Here are a few examples:
- Overstock.com allows users to make retail consumer goods purchases with bitcoin.
- Bitcoin.travel accepts it for travel and hotel accommodations.
- Pizza lovers can use PizzaForCoins.com to have dinner delivered from national chains like Dominoe’s and Pizza Hut.
- Bitbond provides small business loans in bitcoin and gives investors a chance to earn dividends by providing those loans.
- This is just a small sampling. There are also platforms that specialize in real estate services and transactions. For instance, Ubitquity provides real estate investors with blockchain-based tools for keeping records of their real estate transactions. Bitcoin Real Estate is a platform dedicated to facilitating the buying and selling of real estate with cryptocurrencies including bitcoin, ethereum, and litecoin. As far as I know, there are no real estate investing platforms that specialize in flipping properties with bitcoin, but any type of real estate transaction that can be conducted using fiat currencies can also be conducted with bitcoin if the investor has the right tools, mindset, and motivation to make it happen.
Flipping Real Estate With Cryptocurrency
Real estate investing, by its nature, is local. Whether the investor is involved flipping, rehabilitation, or new development, the process is very much the same. The investor must conduct the proper due diligence, have the money to conduct the transaction, and facilitate the transaction through relationships with the right parties.
Holders of bitcoin interested in flipping real estate should find a motivated seller. That seller may or may not be interested. Even if they’re not, you can still purchase the real estate with by converting it into fiat currency during the transaction. A platform that provides that service for many types of businesses is Bitpay. In fact, Bitpay has been used to convert bitcoin into dollars for a real estate purchase.
Another way to use cryptocurrency in real estate is through a self-directed IRA. House flippers can use their IRAs to conduct real estate transactions on the buy and sell side, but what many investors may not know is they can also invest in bitcoin through their IRA.
Finally, if you find a real estate owner who is motivated to sell, you can conduct the transaction directly with that seller through your mutual wallets, or work through a real estate agent that deals with bitcoin. Soon, we’ll likely see existing real estate crowdfunding (RECF) platforms accepting bitcoin for buying and selling transactions, and it’s quite likely we’ll also see the first platform dedicated to flipping real estate using it exclusively. As the bitcoin and RECF both grow, they are more likely intersect.