Last year, David Jenkins and his wife Sandra made the news when they put their Gold Coast mansion on the market. That, of course, wasn't the unusual part though. The couple got so much attention because they listed their Sovereign Islands mansion for 500 bitcoins.
Unless you've been living under a rock, you've probably heard of bitcoin, the digital currency that's rocketed in value and taken the world by storm.
Typically used in online trading, bitcoin has slowly been making its way into traditional markets, such as property. But is this a passing fad? Or a trend worth paying attention to?
What is bitcoin?
In the simplest terms, bitcoin is a digital currency traded online between users. To use bitcoin, you must have a bitcoin wallet and address. With this address – and not your name – you are able to send and receive bitcoin.
The anonymity of bitcoin is one reason people use it. Other benefits of the cryptocurrency include:
- It is not affected by other markets,
- Transactions cannot be interrupted,
- It's a peer-to-peer system.
Lately, the largest advantage of bitcoin has been its massive rise in value.
Over 2017, bitcoin experienced 1,376 per cent growth, according to MarketWatch, with a single bitcoin reaching a value of $15,000 USD in December.
The perks of buying and selling real estate with bitcoin …
Bitcoin also ventured into the property market in 2017.
Why are sellers willing to accept bitcoin for such a massive asset? The main reason is that they don't see this growth trend slowing. They believe that they'll be able to gain significantly more value by accepting bitcoin, rather than money.
Since peaking in December, bitcoin has slowed down a bit. In recent weeks, a single bitcoin has been worth between $10,000 and $11,000, according to Coindesk. Fluctuations, however, are common in such novel markets.
… and the potential risk
Not everyone is so sure about bitcoin's ability to continue appreciating.
Many worry about the volatility of crypto markets. Illiquid assets are always more risky than tangible ones, particularly in such an emerging economy. In the past, bitcoin has dropped as much as 20 per cent in a single day.
There's also the risk of a bitcoin bubble that could eventually pop, flooding the market and rendering the coins useless.
At this point, it's not advisable to keep your savings with bitcoin. It follows naturally, therefore, that it's still too risky buy a large asset with the currency either.
Real estate is also still a very traditional market. While you might be able to find a seller willing to accept bitcoin, it could be difficult to find a conveyancer or soliciter who would know how to finalise the sale legally. You also wouldn't be able to pay stamp duty in bitcoin, as the government only accepts Australian dollars.
To find out more about selling or buying Gold Coast property, reach out to the team at Ray White Surfers Paradise today.