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Whoever said cash is king is in for a rude awakening.
Bitcoin, the volatile open-source cryptocurrency that has seen staggering growth in recent years, is now becoming an accepted form of payment in real estate transactions.
Homeowners are increasingly seeing the benefits in accepting Bitcoins for luxury listings, the Los Angeles Times reported. There is potential for massive gains and losses, as many are finding out.
In Manhattan Beach, a buyer last year used 3,300 Bitcoins to purchase a $3.23 million home in what was believed to be the first Bitcoin-related home buy in Southern California, the Times reported. A year later, those 3,300 Bitcoins are now valued at around $34 million.
And a brokerage involved in two luxury home sales in San Diego said it would accept Bitcoin payments, according to the Times. It will also still accept cash.
The cryptocurrency’s peer-to-peer exchange bypasses the bank entirely, allowing for fast and efficient transactions, its proponents said.
But the digital currency has been highly susceptible to hacking, where millions of dollars have disappeared in an instant and without a trace. The volatile virtual coin has also fluctuated dramatically, with sharp spikes in both directions.
It can also be difficult to make a deal with escrow and title companies still hesitate to use with Bitcoin. Banks may also not consider money acquired through Bitcoin as legitimate, presenting a problem for buyers looking for a loan.
An ongoing Securities and Exchange Commission investigation could make Bitcoin exchanges even more troublesome in the coming months. Dozens of subpoenas have already been issued to technology companies and advisers as the government investigates token sales, and its potential violation of securities laws, the Wall Street Journal reported. [LAT] — Natalie Hoberman
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