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Ask a Millennial: Do I Need to Start Accepting Cryptocurrency?

by Leslie Fowle | Mar 15, 2018

Cryptocurrency, or encrypted digital currency, has been around for years, but seems to be dominating the national conversation lately. (I myself have been hearing a lot about "blockchain technology." If you're wondering, the blockchain is basically an incorruptible, public and digital ledger of economic transactions.) Ever since a homeowner in Long Island listed his home in Bitcoin in 2013—a first for the United States—people have wondered how cryptocurrency would change the real estate industry. The house later sold in regular U.S. dollars, but the homeowner was later quoted in the press as saying his offer may have helped market his home to a younger, crypto-savvy generation.

Since then, only a handful of home transactions have occurred using cryptocurrency. The first single-family home sale using Bitcoin was announced only in October 2017. Still, the seller in that situation opted to use a service called BitPay to convert the cryptocurrency into U.S. dollars upon transaction. Despite success in other industries, it seems the real estate world has been hesitant to fully embrace the intangible coin.

“Today, blockchain and cryptocurrency does not affect the day-to-day business of your average Realtor®,” said David Conroy, R&D Lab Engineer at the Center for Realtor® Technology (CRT) in Chicago. “At NAR and CRT Labs, we feel that over the next three to five years this may change as digital currency and blockchain technology advances.”

The hesitancy may be with good reason. The value of cryptocurrency is not backed by any official authority. At best, the value of any one form of digital money (Bitcoin, Litecoin, Ripple, Ethereum, etc.) can be volatile. At the time of writing, one Bitcoin is equal to $11,272.52. This is almost three times the value this time two years ago. 

To make matters more confusing, there are no real rules or regulations guiding potential digital home transactions. For now, real estate buyers in the U.S. using cryptocurrency have done so without a mortgage—there is no precedent for how such a large loan would be handled digitally.

However, there are several organizations at work to advance these processes, like The International Blockchain Real Estate Association (IBREA). According to their website, the IBREA aims to produce cryptocurrency platforms that are “open source, nonprofit, secure, and scalable” for property and title, as well as for digital deeds. The IBREA hopes to promote and set standards for real estate transactions using cryptocurrency and set up industry best practices for the escrow process.

“Many of those advancements will be made by technology infrastructure improvements that may be apparent to an end user, or in this case, agent and their clients,” said Conroy. “If done correctly, the only things a Realtor® should experience from these advancements are improved property records, faster closing windows, and less risk for fraud. There is potential for it to be used for establishing identity, enforcing contracts, and even remittance.”

There may be a long way to go for cryptocurrency and blockchain technology to hit the mainstream and impact your business. In the meantime, the experts recommend just remaining aware of digital currencies and how they may impact the future of real estate moving forward.

Stay up-to-date on cryptocurrency and blockchain technology at CRT Labs.