Is Using Bitcoin To Buy A House A Good Idea?

The popularity of cryptocurrency has rapidly gone up in just a few years. At one point, the digital currency concept seemed to be just a fad, with only tech whizzes attempting to mine some coin. Now, however, Bitcoin BTC/USD is at the top of the list for many cryptocurrency investors all over the world. 

Cryptocurrency investment is now much more accessible as well, though several questions may rise up regarding the concept. The first concern for beginners, of course, is what exactly they can purchase using their Bitcoin?

The largest investment and most valuable asset that most people have in the course of their lives is their own house. So, can investing in Bitcoin eventually get us enough to purchase one? Such a large purchase can take several years to save up for, but the value of your digital assets just might be enough for a house in the near future. 

Then again, a major purchase like that is also quite risky. Let’s have a closer look at whether using Bitcoin to buy a house is feasible or not: 

A Brief Overview Of Cryptocurrency

First off, we should have a glance at what cryptocurrency is and how it works in the modern world. Bitcoin was the first form of cryptocurrency and remains one of the most lucrative forms to this date. 

Basically, cryptocurrency is a decentralized currency that one can use for online payments and transactions. It operates through a blockchain, and is not overlooked by any one country or central bank. As such, it embodies the futuristic dream that no country’s currency can be stranger than the other. You simply exchange crypt for the goods and services you need. 

However, there are understandable issues with using Bitcoin to buy major items such as artwork, expensive gems, or real estate. Since we’re talking about buying a house here, it makes sense to look at the main problems related to purchasing real estate with Bitcoin. 

The Issue with Buying Real Estate Using Bitcoin

There are several qualities that define Bitcoin; most of them are advantageous to the traders but can also cause some problems. One of these is the fact that every BTC transaction is made public. When you make a transaction using this crypto, it will be displayed to the public and linked to your unique BTC address. While the address is much like using a pen name or pseudonym online, it won’t be a tool for tracking your exact identification. 

This factor is great for maintaining privacy, but it will complicate things when you buy real estate using BTC. Many investors buy real estate using a loan, and lenders want verification about where the money is coming from and who it’s benefiting. 

Moreover, cryptocurrency usually has a very volatile value. This is why investors in this asset seek to profit through buying or selling. The main goal of BTC was not to utilize it as you would traditional currency. It’s considered to be a capital by most authorities. So, utilizing BTC will also subject you to capital gains tax when you buy a house with it. 

Using Bitcoin To Buy A House: Yay Or Nay?

Without further ado, let’s now delve into the matter of buying an actual house with your Bitcoin. As long as both buying and selling parties are in agreement, the transaction is technically possible. One needs to get escrow companies that will be fine with handling crypto transactions. Once you do so, here are the benefits to expect: 

The Pros of Using Bitcoin to Buy a House

1. You convert your assets to something more secure

Whether you’re using your BTC to buy an old colonial home or purchase one of those mobile homes for sale by owners, the end result is a valuable, tangible asset in hand. 

No matter how beneficial BTC is, it’s a volatile asset. You might wake up yesterday to find that the value of Bitcoin is far below what you paid for it. On the other hand, you might find that you’re a millionaire many times over. 

The value of any cryptocurrency will face a lot of fluctuations every single day. However, real estate is known to be one of the most stable investments available. Its value is prone to increase slowly with time. While it may take a hit at times, it’s unlikely to fall as rapidly as BTC can. 

2. The seller might offer a discount

Homebuyers who are looking to utilize their Bitcoin just might be lucky enough to find someone of similar mind. If the seller of your dream house (or just one that fulfills your requirements) is on board for a crypto translation, they might even give a discount. Many sellers out there could be investors who are looking to obtain BTC, Ethereum, or other major virtual currencies. 

If the seller is also confident about the crypto being a valuable investment, you might get a lower price for the house or some other perks. The perks might increase if you have more than one seller vying for your Bitcoin. 

3. Quick transactions

Another great feature of BTC and cryptocurrency in general is that the transactions are usually very speedy. Buying a house the traditional way can involve a very long process. So, it’s nice to know that a crypto payment can speed things up. This way, you might be able to do away with the obstacle of a mortgage process. Of course, this is all down to whether you have enough BTC to make an upfront purchase. 

However, one would perhaps have the same speed of transaction if they were to pay with cash. A direct purchase instead of a mortgage or other type of loan will also make for a stronger offer, so you could be more likely to win the house from other contenders. If the seller would prefer cash, you can convert your BTC into “real” money and make cash offer.

The Downsides of Using Bitcoin to Buy a House

Where there are advantages, we also have to consider the other side of the picture as well. Here are the main disadvantages you have to deal with when trying to buy a house using Bitcoin:

1. Bitcoin has a very volatile nature

We’ve touched upon the volatility of BTC before; this is the main disadvantage investing in or using cryptocurrency. Any offer you put in right now will also change in value. For instance, 23 Bitcoins today will be almost a million dollars. We can’t say that the same value will hold tomorrow or the day after. No matter how quick the process is, the seller will probably take a few days to think about it. 

If the value of BTC rises rapidly, your offer of 23 Bitcoins might be incredibly high. You also stand to lose your investment this way. 

With this uncertainty, many sellers and buyers might want to avoid using any cryptocurrency for a transaction. Sellers want to get more than they paid for, and buyers want to pay the lowest possible price. When the odds of benefiting from the transaction are not 100 percent, some hesitation is likely. 

2. Most people aren’t familiar with digital currency yet

Bitcoin was introduced around 12 years ago, but it has only started its popularity streak fairly recently. Most people, especially those in the traditional field of real estate investment, are not too comfortable or familiar with BTC. The result is that they’re nervous about making a deal with this kind of currency. 

With this in mind, expect a lot of difficulty finding dealers, escrow companies, or insurance companies that will be ready to support your BTC. Even if a party understands BTC and its potential value, they might not be willing to get into such a deal due to the anonymity of the transaction. 

Sellers won’t be able to trace the money that they're being offered, especially when there isn’t a paper trail of checks, bank statements, etc. This is why even finding a listing that says the seller is open to cryptocurrency may be a huge challenge. Right now, most of the traditional listing sites don’t even have a cryptocurrency filter to narrow down the search. 

The Takeaway

Investing in real estate is traditionally one of the best moves you can make, provided you have the finances and know-how to back it up. At the end of the day, buying your dream house with your Bitcoin investment is certainly possible. It has happened before. However, you’ll have to be open to some hard work, searching, and show a lot of patience. House sellers that will accept digital currency are hard to find, but your Bitcoin stash will make it a bit easier than with other cryptocurrencies. 

The bottom line is that if you do get enough BTC for purchasing a house, do the math first. Convert your BTC into cash and make the offer with the dollars (or other traditional currency) you get. This compromise will get you the desired home and also help in making the most of your BTC investment.