Technology is fascinating! Every day, it seems that there’s a new breakthrough that can change the world as we know it. Artificial intelligence, blockchain, virtual reality, and more all seemed the domain of science fiction until recently. While some people look at these developments with anxiety and trepidation, we prefer to take an optimistic approach. 

And since we live, breathe, and dream about all things real estate, we can’t wait to see how the future of our industry unfolds! In this post, we’ll cover whether or not you can buy real estate using cryptocurrency. 

How Does Cryptocurrency Work?

First of all, what is cryptocurrency, anyway?

This is a fair question, especially if you’re wondering how it applies to real estate. If you skim the headlines, you’ve undoubtedly encountered terms like Bitcoin, Ethereum, Altcoin, and others. All of these are a form of digital currency with no physical representation or centralized government or bank to maintain it. Does that sound risky?

If so, you may be reassured that most cryptocurrencies are distributed through a blockchain to maintain a secure financial database. Now, you might be wondering:

What is a blockchain?

A blockchain is a record-keeping system widely believed to be impervious to forgery or hacking. It works by linking a continuously growing list of ordered records into blocks that are, in turn, merged with cryptography. 

Each information block contains a cryptographic hash of the previous block, a timestamp, along with details of the transaction data. Now, that opens up an entirely new discussion.

What is a cryptographic hash?

(Isn’t technology fun? We simply cannot get enough of it!) In short, a hash is a mathematical function to convey information into shorter bytes. A cryptographic hash has multiple applications, but is primarily used to secure sensitive data. Clear as mud? The good news is that you don’t have to be a tech wiz to take advantage of the technology any more than you have to be a licensed electrician to turn your lights on or off. 

Loving this foray into the future? Here’s another article you may enjoy: Will Artificial Intelligence Ever Replace a Human Realtor®?

Is Cryptocurrency Safe?

At the end of all the tech speak and jargon, what most people want to know is whether cryptocurrency is a secure investment or a disaster waiting to happen. Once again, it’s a fair question. You only need to look back at the arrest of FTX founder Sam Bankman-Fried to wonder if this new currency is legitimate or a scam. And since it’s unregulated by the government or the banks, it can be hard to tell. 

Nearly every new technology goes through a crash and boom cycle. In the aftermath of the FTX scandal, it seems that we are in the midst of a crash, but that can turn around quickly. And even as the fear and anxiety surrounding cryptocurrency has caused a drop in value, it seems this new way of life is here to stay.

Crypto Coins Vs Physical Coins

Traditionally, when someone mentions that they have “a few coins,” they aren’t talking about vast amounts of money. A quarter, a dime, or even a loonie, it often adds up to a few dollars or less. Cryptocurrency is different. 

How does one crypto coin compare with Canadian funds? Like any currency, the value fluctuates, just as the Canadian dollar gains and loses against the US dollar. That said, cryptocurrency can be very expensive to buy and can rise and fall in value quickly. 

A single Bitcoin can run as much as $35,000 or more. If you have 50 coins, that may not sound like much, but it essentially makes you a millionaire in today’s market. The question now becomes, “What will you do with it?”

Looking for more traditional home-buying advice? The posts below will have you covered:

• Buying A Home? Know These 4 Important Mortgage Options First
• How To Prepare For Your GTA Home Purchase
• Inside the Hunt for a House in the GTA

Cryptocurrency and the Future of Real Estate

Now that you’ve had a crash course into what cryptocurrency is and how it works, we can move on to more exciting topics. How does any of this relate to real estate? Let’s start with a quick disclaimer. As fascinated as we are by this new technology, we are neither crypto experts nor lawyers. We are happy to provide you with the background information that might open up exciting new avenues for your future. Still, please do not take this post as legal or investment advice!

Since cryptocurrency is a new and unregulated technology, there is some confusion about how it works when buying or selling a house in Canada. Abroad, real estate purchases with crypto are becoming more popular as governments and investment companies scramble to get on board with the new technology. Currently, nations such as Thailand, Turkey, Portugal, Switzerland and the United Arab Emirates are at the forefront when it comes to relaxing regulations on cryptocurrency, including for real estate purchases. 

In Canada, there is no law against it. If the seller holds crypto, they will likely be more than happy to accept it as a form of payment for their house. Currently, these sellers may be few and far between. Even if the homeowner is willing to deal in crypto, the use of third parties to hold your funds in trust until your transaction closes may make this path more complicated than it’s worth.

In addition, many banks do not accept or recognize these digital assets, which can make getting approved for a mortgage complicated. Fortunately, there is a simple solution to get around these issues.

Should you buy or sell first when moving? Discover the pros and cons of both options here.

Tradition Meets the Future

If you have money invested in cryptocurrency, you are likely in a strong financial position to purchase a home since a couple of coins can more than cover your down payment. One day, you may be able to buy real estate directly using digital assets without ever having to involve the banks.

However, for now, the best path may be to combine the future with tradition by simply liquidating your cryptocurrency into Canadian funds. This way, you bypass the legal and financing complications you may otherwise encounter. As time goes on, both cryptocurrency and the real estate market will adapt to each other, and we are excited to see how it all unfolds!

Do you have questions about buying or selling GTA real estate in this fast-changing new reality? We are here to help with everything you need! Reach out today at 647-875-8000 or info@teamrajpal.com to start the conversation.

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