According to Webster, the most trusted American dictionary (according to Google, America’s most used search engine), the word “cryptic” can be defined as “having an ambiguous or ambiguous meaning.” Why, then, has cryptocurrency, a term rooted in obscurity, become a popular payment method all over the world?
Although it’s been a while since I actually got my hands on a stack of dilapidated, unclean, drug-ridden green coins, I still enjoy the idea of having enough of this lavish green microbial coin in the bank when I pull out my credit card. All alone.
Cryptocurrency was popularized, for all intents and purposes, in 2008 with the creation of Bitcoin. It was initially created with the intention of promoting a form of person-to-person payment that does not involve any bank or any third party. This is a kind of decentralized online payment system. It works using the blockchain, i.e. a database that stores data in “blocks” that are linked together in order to make transactions. Although I find this hard to imagine, I assumed that was exactly why it was “mysterious”. One can “buy” cryptocurrency, such as Ethereum, Dogecoin and Bitcoin mentioned above, on exchange apps and websites. There are online brokers that also provide services to help invest in cryptocurrencies.
While, I usually let the geeks do whatever they want and not be the wiser, cryptocurrency is becoming increasingly relevant in the real estate industry; Thus, I felt compelled to educate myself a little, even finding some humor in chemistry jokes just to effect.
In the past year or so, there have been three transactions registered with the Utah Real Estate MLS (Multiple Listing Service) that completed the purchase using cryptocurrency. I suspect we’ll see more in the coming months and years. However, while buying a cryptocurrency home is now possible, there are some considerations to consider.
First, both the buyer and seller must agree to this type of payment. Of the 2,512 active listings on our MLS, 17 mentioned that they are willing to accept cryptocurrency as payment. The incentive to choose this payment method includes securing complete privacy when purchasing real estate, ease of use for international transactions, liquidity in real estate investment, no loan fees, speed of transactions, diversification, and increased security.
On the flip side of the advantages, there are real risks, too. For example, hackers are rampant in the cryptocurrency world, cryptocurrencies do not offer any solid guarantees, there is a threat of excessive volatility, and high risks from the ever-changing regulations associated with this type of currency.
There is another option, a third alternative, if you will, for cryptocurrency owners to use their holdings to qualify for a mortgage. Recently, Freddie Mac, one of the largest buyers of loans in the secondary market, agreed to use Bitcoin, specifically, to secure a mortgage under certain conditions. Of course, as with any government-supported program, this is subject to change. If all else fails, cryptocurrency can be exchanged for cash at any time, and we are all familiar with how cash works…although this is also changing.
We can probably all agree that, in the past three years, our world has changed. He has almost become a Star Trekkish. We are moving fast towards the future. It can be expected to become somewhat “mysterious”.
Jane Fisher is an associate broker and real estate broker. She can be reached at 801-645-2134 or [email protected].