Cryptocurrencies are a thing. A real thing. What IS a cryptocurrency? Investopedia describes cryptocurrency as "A digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of this security feature. A defining feature of a cryptocurrency, and arguably its most endearing allure, is its organic nature; it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation."
At the moment, Bitcoin, Ethereum and Litecoin are the leading cryptocurrencies, with Bitcoin in front as the most popular among the three. Think of Bitcoin as just another currency such as Yen, Euros or Pesos. Bitcoin is bought and sold just like a stock - the price fluctuates and the value increases or decreases depending on units traded or outside forces such as software upgrades.
What makes Bitcoin unique is that there are only approximately 16,000,000 "coins" in circulation with another 5M or so in reserves. Unlike stocks or other currencies, coins will never be added, which could then flood the market and devalue the currency in the future.
Who Can Use Bitcoin?
Anyone with a computer or a smartphone and an Internet connection.
Okay...so how does this work with real estate?
So glad you asked! I'm very proud to have been a part of the first Bitcoin real estate transaction here in SoCal. (read more about it HERE). At the time, there were no escrow companies on the west coast set up to accept Bitcoin, but now we have Guaranty Escrow backing us up with BitPay, a Bitcoin exchange that works with fortune 500 companies such as Microsoft and Virgin Atlantic. The exchange works as a wire transfer as the Bitcoin hits the escrow account in USD - BitPay charges a small transfer fee to the transferor just as a bank would. The escrow company/seller side never sees the Bitcoin, only USD, making for a smooth title transfer. It behaves as an all-cash transaction.
Does the Bitcoin price fluctuation affect the purchase price?Absolutely not. Although the price of Bitcoin fluctuates, whatever the price of Bitcoin at the time of the exchange is the amount of Bitcoin the buyer exchanges to meet the purchase price. The seller is never affected by the loss or gains.
Hope this was a good start for all those interested in the inner-workings of real estate Bitcoin exchange. Feel free to contact me for more information!