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Cryptocurrency and the Future of Real Estate Investing

Madison Investor Using a Tablet to Buy Property with CryptocurrencyAs technology evolves, the real estate market is under pressure to develop. The newer technologies and practices of buying and selling rental properties have already revolutionized many facets of purchasing investment properties. For some, these new processes are just the beginning. Cryptocurrency is one of the emerging technologies that many real estate investors are closely supervising.

Even though still in the very early stages, an ever-increasing number of real estate transactions are done via cryptocurrency monthly. As using cryptocurrency to buy or sell property becomes more frequent, it is essential to understand what it is and how it may affect rental real estate investors like you.

Cryptocurrency Defined

Cryptocurrencies, like Bitcoin and Ethereum, are digital currencies. These currencies differ from other types of currency because they do not rely on a central bank or administrator – they can be transferred directly from one user to another. These transfers occur on a cryptocurrency network that verifies each transaction through incorruptible network nodes and are then recorded in a digital public ledger called a blockchain.

The idea behind cryptocurrency is to improve a transaction’s efficiency and safety and reduce the risk of fraud. Since all cryptocurrency transactions are public, there is enhanced transparency. And, since the data in the blockchain isn’t susceptible to corruption, information can be verified faster and more thoroughly than through earlier methods.

Automating Real Estate Transactions

Undoubtedly, cryptocurrency’s potential has already captured the imagination of many real estate investors. And many can see how that cryptocurrency could change nearly every stage of a real estate transaction. Someone could quickly check on the status of deeds, access the comprehensive history of a property, and more when using blockchain. Banks, real estate agents, buyers, and sellers can access the same verified information.

Transmitting data between all parties in a transaction would be faster and safer, and transfers of funds would happen directly. All of this could radically reduce the time between a preliminary sales agreement and finalizing the transfer of title.

The Power of Three

The natural advantages of using cryptocurrency to invest in real estate come into focus when combined with the affordances of smart contracts and blockchain. Smart contracts are digital agreements programmed to conduct transfers once certain conditions are met automatically. So, using a smart contract and cryptocurrency, all the parties involved could receive the fund when a property is sold. Attorneys, appraisers, real estate brokers, and so on would all be paid through instant funds transfer. Every transaction would have been automatically recorded in the blockchain, generating a transaction history that is both publicly accessible and stored indefinitely.

Title deeds, surveys, ownership information, and other information would be accessible in real time to all parties, allowing instant validation. It is not hard to see how performing real estate transactions this way will eventually shift almost everything about real estate investing.

The Future is Now

While buying and selling investment properties using cryptocurrency is still not that common in the Madison rental market, there are instances where properties have already changed hands via digital currency. One noteworthy example is the recent sale of a penthouse in Miami Beach, which sold for $28 million in cryptocurrency. The deal took less than ten days to close, essentially unheard of via traditional methods, even for a cash buyer.


Would you like more expert advice about purchasing investment rental properties? Contact us online or by phone at 615-953-8700.

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