In the past few years there have been increasing numbers of property deals worldwide which have used Bitcoins as currency, a trend that is likely to continue as currency control is further removed from elite financial institutions and put into the hands of the layman.
As the real estate sector enters a new era of Proptech – the digital transformation of the property industry – the market is moving at a faster pace. This, in turn, is beginning to have an impact on how people choose to carry out their real estate transactions.
What is Bitcoin?
Bitcoin is the world’s first virtual currency or cryptocurrency with which you can buy anything from a holiday to a pair of socks, pay a bill or exchange services without fees or bank interference. Bitcoin can only be acquired via the internet and can be used anywhere as long as the buyer and seller support it.
Each Bitcoin is essentially a file that is stored in a ‘digital wallet’ app on a computer or smartphone. Bitcoins can be sent to your wallet, and you can send Bitcoins to other people’s wallets. Each transaction is recorded in a ‘blockchain’, which is a digital ledger supporting the network.
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Bitcoin is not yet a common currency in Spain unlike in the States or South East Asia, but it is slowly beginning to enter the mainstream. The real estate sector is expected to see the use of Bitcoin grow significantly in the years to come. There are increasing numbers of properties for sale which advertise that payment is possible in Bitcoins – a totally legal transaction, although there are certain steps to follow.
Bitcoin and the Spanish property market
To carry out a property purchase using Bitcoins, they need to be converted into the government-issued currency such as Euros. The buyer and seller establish a day to set out the exchange rate and the exchange is then carried out at a notary’s office. The buyer transfers his or her Bitcoins to the seller via a mobile phone and the sale is completed with the equivalent price in Euros.
It is very similar to a regular property purchase, the only difference being that the buyer exchanges his or her Bitcoins into Euros. The buyer will also have to pay for any capital gains that the selling off of Bitcoins during the transaction process has brought (something that a payment in Euros does not require, since it will not have appreciated or depreciated against anything).
Bitcoin is used as if it were cash, since it is also completely anonymous. Between individuals, for example, there is no limit on the amount that can be contributed in cash, which applies in the case of Bitcoins. Whether the transaction is paid in Euros or with Bitcoins, it does not affect the taxation of the sale.
7 advantages of buying property using Bitcoins
1.The power to negotiate
As Bitcoin buyers are similar to cash buyers, they should have a competitive advantage as more sellers agree to accept the cryptocurrenc
Investors who have profited from Bitcoin in the past may look to diversify their holdings into real estate, generally considered one of the safest investments. They may want to lock in their profits, and opt out of the volatility of the cryptocurrency market
3.Speed of purchase
If handled correctly, Bitcoin transactions can be carried out more quickly than regular property transactions, an attractive prospect for both buyers and seller
4.No bank fees
Bitcoin transactions are relatively streamlined in comparison to regular transactions in that there is no need for many of the additional bank or intermediaries fees
5.Prevention of fraud
The blockchain acts to prevent fraud via its certifiable digital identification, which is one of the big benefits of the Bitcoin currency as it offers a reliable proof of funds, more so than a bank letter. The digital ID can be used for deed transfers, mortgage payments and other financial scenarios
The cryptocurrency market has been subject to unprecedented growth and risk-averse sellers may profit from future appreciation
Listings that accept Bitcoins tend to draw attention, opening up a new market of tech-savvy buyers.
“There is no reason that real estate Bitcoin payment cannot offer a convenient, fast and smooth option in property transactions. As technological innovation takes hold in the sector, Bitcoin is likely to earn its place and offer more choice to both buyers and sellers in a fast-changing world”, according to Francisco Nathurmal, CEO and founder of Bcn Advisors.