

The newest buzzword in the market is cryptocurrency, and anyone who hasn’t been living under a rock, has been bombarded with it. Although, the formal introduction of cryptocurrency to the world took place in 2008, it wasn’t a financial concept or a mainstream term until 2020. Every sector has been disrupted by this blockchain-based digital currency, and the real estate industry is no exception. As digital real estate promises to be the next big thing, it is pertinent that you familiarise yourself with everything related to real estate cryptocurrency. In this article, we will talk about what is cryptocurrency, how the trend started and how the cryptocurrency has affected the real estate market.
What is cryptocurrency in real estate?
In the simplest of terms, cryptocurrency in real estate can be described as users utilising cryptocurrency for real estate transactions. These transactions take place both in the digital space, or what is popularly known as the Metaverse, and in the physical world.
Let us take a few steps back and begin with the basics. Cryptocurrency is a digital money that has been made by using blockchain technology. Blockchain is simply a mechanism that collects related information, going on to group them together to create “blocks” which hold sets of data. Each block has a specific storage limit, and once that block reaches its limit, it gets chained onto other previously filled blocks, thereby creating chains of blocks with data, hence the name.
You may have heard of popular cryptocurrencies such as Ethereum or Bitcoin. These cryptocurrencies or digital money have made a significant impact on limitations, payments, and even foreign exchange, expanding across different industry, including real estate.
Can you buy real estate with cryptocurrency?
Yes, there are certain platforms that give you the option to buy real estate with cryptocurrency. Cryptocurrency-based real estate transactions are said to be fast, efficient and secure because they are backed with smart contracts. Smart contracts and be described as programs that are stored on the blockchain network and only run when predetermined conditions are achieved/met.
There are several ways through which you can purchase properties with real estate-backed cryptocurrency, including:
Ushering the transaction directly with the seller: Some property owners have completely and wholeheartedly embraced the concept of cryptocurrency and are comfortable when transactions are made with this digital asset. However, majority of the property owners would prefer to split up the transaction into cash and cryptocurrencies.
Taking the help of a third party vendor: In certain cases, the seller might need to use a third party to convert the buyer’s cryptocurrency into dollars. This process is facilitated by a third party vendor that exchanges the buyer’s cryptocurrency for real currency that would later be deposited in the seller’s bank account.
Here, it is important to remember that as you are completing a real estate transaction using cryptocurrency, you may need to make some additional payments to intermediate parties and government agencies.
How do cryptocurrency transactions work in real estate?
There are more than 6700 different types of cryptocurrencies, and each transaction works in a slightly different manner. However, they all share the same basis, where each type of cryptocurrency has its own unique set of codes. Similar to how you utilise casino chips, you will need to exchange actual money for cryptocurrency, so that you can purchase goods, services or buy real estate.
Such transactions are facilitated through Blockchain-based ledgers that confirm the value of the cryptocurrency, manages records and transactions, and facilitates the value convergence, for example, USD to bitcoin rate.
How did the crypto for real estate trend start?
Although, Non-Fungible Tokens (NFTs) have always been popular, it entered a new financial system with Decentralised Finance (DeFi) programming. The developers of cryptocurrency and other enthusiasts realised that this open financial system was always accessible and had a separate identity from traditional banking institutions. Therefore, they developed smart contracts and blockchains as a method to monitor and facilitate transactions.
Soon, metaverse was born and it shook the public discourse. Adding fuel to the fire was the global pandemic where people were forced to be socially isolated from each other. In an attempt to interact with other people, herds and herds of people turned to the metaverse to socialise and engage with current events. Real estate enthusiasts and tech junkies found peace by investing and engaging in virtual worlds with digital real estate cryptocurrency.
Is investing in real estate using cryptocurrency a good idea?
As cryptocurrency is still in its infancy, there are no evidence-based or observational studies that can guarantee what is going to happen in the future. Cryptocurrency is highly susceptible to market trends and fluctuations, and therefore, even though investing is a good idea, it should be done with a pinch of salt.
Conclusion
Blockchain technology, cryptocurrency, and digital real estate are all in their nascent stage, and therefore, we all need to wait and watch what the future holds for us.