Broker Piper Moretti, CIPS, read an article about cryptocurrency back in 2009. At the time, she thought it seemed a little sketchy and she didn’t fully understand the concept, but nevertheless, she was intrigued. So, she did more research and called local lenders to get their take on the technology.
Now, 10 years later, she has helped complete the sale of five properties—three homes and two commercial office buildings—with bitcoin, a type of cryptocurrency. She even co-founded and became CEO of The Crypto Realty Group in Los Angeles to make it easier for clients wanting to buy or sell with digital money to find her. She still hangs her real estate license with Compass in Manhattan Beach, Calif.
Moretti understands that digital currency is still fairly new in the real estate world. To help other brokers and agents understand it, she teaches courses on cryptocurrency. “I’ve done luncheon education meetings, and we pack the house in my area. They want to learn,” she says.
Using cryptocurrency makes it easier for international buyers to invest in the American dream, Moretti says, because they don’t have to go through the conventional banking or mortgage systems. Plus, the process is much faster than the traditional way of buying a property. “It’s almost instant. And it’s good for us, too. We can buy a house in London or other places in the world much more easily,” Moretti says.
The ABCs of Cryptocurrency and Bitcoin
Bitcoin is considered the world’s first and most widely used cryptocurrency. It is stored and exchanged securely on the internet through a digital ledger known as a blockchain. Bitcoin has a total market capitalization of a little more than $100 billion, according to Coinbase.com, which means there is a limit to how much bitcoin is available. Collectors and users of the currency believe that because of its limited amount, it will continue to grow in value.
Coinbase.com is a website that shows current market value, historical value, and fluctuating prices of the top 50 cryptocurrencies, such as ethereum, litecoin, and zcash. The bitcoin network includes thousands of computers run by individuals all over the world.
Many cryptocurrencies come and go, which makes them risky when conducting large transactions—such as buying a home—because of their instability, Moretti says. For reference, the value of one cryptocurrency was $13.39 in 2013 but rose to $20,089 in April 2018. It fluctuated from $7,000 to $13,500 in June 2019 alone, according to Coinbase. Bitcoin, however, has become much more stable the past few months.
With bitcoin, you simply create what is called a wallet online. Then, you can buy small portions of the digital money, which can be spent at restaurants, car shops, coffee shops, and more. This step will help novice users get to know what it’s all about. Coinmap.org has a list of businesses that accept bitcoin around the world.
“It’s relatively fast and visible down to the decimal,” says Mark Warden, broker-owner of Porcupine Real Estate in Manchester, N.H. He has completed two residential home transactions with bitcoin. The New Hampshire legislatures passed a bill in 2017 exempting those using virtual currency from money transmission requirements, such as being licensed with the state. That set in motion a growth in businesses accepting payment in cryptocurrency, including real estate sales.
Warden even sold his own car with bitcoin. He likes that it eliminates use of banks, which can slow down the process. In fact, the whole transaction is so quick that his first closing on a house with bitcoin took less than 15 minutes. Also, the fees are low, international payments are fast, and it has an added level of identity protection. Each bitcoin transaction is protected by digital signatures corresponding to the sending addresses. It is impossible for merchants or individuals to force unwanted or fraudulent charges, which other payment methods have been susceptible to. Plus, bitcoin payments can be made without personal information being introduced at all.
“It just makes things a lot less complicated with a lot fewer people involved,” he adds.
Who Else is Adopting Cryptocurrency in Real Estate?
Henry Elder, president of International Blockchain Real Estate Association and director of Wave Financial, says more and more title companies are getting involved with this new phenomenon. These companies see this new technology as a way to create a more efficient structure in the buying and selling process.
“Title companies have been doing business the same way for so long, but it’s the 21st century and now many of the larger title companies are getting involved in cryptocurrencies,” he says.
Elder says the association is focused on education. Founded in 2013, IBREA has grown to include 7,000 members worldwide over the past six years. Anyone interested in learning the workings of cryptocurrency and how it can affect business is invited to join—including real estate professionals. There’s an active LinkedIn group along with meetups all over the world. Elder took over the leadership of the organization in February 2019, and he’s planning kickoff meetings to relaunch the association in several areas of the U.S., Europe, and Asia.
“At this point, this technology is like the internet. In 10 years, no one will talk about it anymore because it will be the underpinning of everything in real estate from the title to escrow,” he adds.
Elder encourages real estate companies and individual practitioners to get involved in cryptocurrency now and become a disrupter rather than be disrupted when it comes to the forefront. However, he acknowledges there is a long way to go to educate the public because most people don’t understand cryptocurrency.
“If you can guide [clients] through this space, there’s lots of money to be made. If you help them understand, you set yourself apart and become a standout,” Elder says.
Companies are starting to pop up around the world to facilitate the real estate industry’s transition to cryptocurrency, such as Propy, a real estate transaction platform built on blockchain, which is headquartered in Palo Alto, Calif., and has another office in Bulgaria. “The blockchain technology allows our platform to accommodate online transactions from any part of the world seamlessly,” says Chris Garrett, head of sales.
The company uses smart contracts to avoid fraud, and the property data is securely included in the blockchain transaction. A smart contract becomes an agreement in the form of computer code between two parties. That contract runs on the decentralized blockchain network and is stored on a public database. It cannot be changed, and third parties such as lawyers are not needed to complete the contract.
“If agents don’t start educating themselves now, they will get left behind as the world moves past them,” he says.
Tips on How to Dive In
Start slowly and educate yourself. Find classes on cryptocurrency through your local, state, or national real estate association; attend IBREA meetups in your area; or simply start with an internet search, Moretti says. Elder suggests speaking with some of the title companies offering blockchain pilot programs, so you have someone to help you and your future cryptocurrency clients get the deal done correctly.
Buy a little bitcoin yourself. If you are interested, buy a little bitcoin, Moretti says. Follow the market, check it daily, and start reading news about what’s happening with bitcoin in other countries.
Market what you know. Advertise and market that you understand cryptocurrency and real estate, says Warden. Once he studied the technology and had a healthy grasp of it, he placed the bitcoin symbol on his real estate signs, website, and business cards. “Sometimes offering a cutting-edge choice to clients can give you a competitive edge,” he says.