2008, Somewhere Online: Satoshi Nakamoto invents Bitcoin, a digital cryptocurrency set to change the rules of how people exchange money forever.
First emerged online, as a blockchain application, Bitcoin is based on a decentralised ledger kept running by “miners” whose powerful computers crunch transactions and are rewarded in bitcoins. To put it more simple, Bitcoin is a digital currency that provides private anonymous transactions through a unique peer-to-peer payment protocol with private anonymous transactions.
Running on the blockchain, Bitcoin users are able to make payments of any value without fees while bypassing bank systems and government restrictions. “This seems to be driven by international investors who are circumventing inefficient banking and currency controls at home, and by US cryptocurrency enthusiasts,” said economist and bitcoin expert Charles Evans of Barry University.
Real estate is one of those sectors, that might face a potential change in the future due to blockchain technology such as the Bitcoin. A £350,000 house in Essex became the first in the world to be sold for bitcoin, ringing the alarms to industry experts.
The property was sold through groundbreaking conveyancing where the parties involved made a lot of due diligence to verify the digital trail and ensure the transaction was lawful. Solicitor Adrian Toulson further explained ‘We have designed a contract to protect both the buyer and seller from fluctuations in the exchange rate. The Land Registry agreed in principle that the price could be recorded in Bitcoin, but the buyer may well choose to use pounds, simply because calculating any capital gains tax may prove very complicated.’
Telford Homes’ chief has expressed concerns regarding the volatility of the Bitcoin. The Building Societies Association stated that the lack of regulation regarding the visual currency has put it into the highest risk category in relation to criminal activity.
The situation can get even worse for Bitcoin miners who are trying to engage in property investment since many of them are unable to pass the background checks and provide extensive audit trails the banks require. Lack of user identification has slowed the plans of many investors who were hoping to make a profit out of the UK property market as the value of Bitcoin rises.
Mortgage lenders and brokers in the UK have turned away Bitcoin investors. Still, the question, remains: ‘For how long?’
Bitcoin hit a high of almost $19,000 on December 18, 2017, earning extremely high profits for the miners but also raising volatility concerns among economy experts. The latest real estate market to get Bitcoin fever is Florida, where the digital currency was listed as a way to pay for some 75 properties for sale, according to the real estate firm Redfin.
Bitcoin and other cryptocurrencies, might not replace the sterling or the dollar but will surely change the business landscape, especially for foreign investors supported by strong technology and gaining popularity among individuals who are chasing quick profits, Bitcoin is here to stay.
The property in Essex was sold through groundbreaking conveyancing proving that there is a way to sell in Bitcoin despite suspicions. Both parties involved made a lot of due diligence to verify the digital trail and ensure the transaction was lawful. Solicitor Adrian Toulson further explained ‘ We have designed a contract to protect both the buyer and seller from fluctuations in the exchange rate. The Land Registry agreed in principle that the price could be recorded in Bitcoin, but the buyer may well choose to use pounds, simply because calculating any capital gains tax may prove very complicated.’
Our expert advisors here at Copperstones have been closely observing Bitcoin’s rise to stardom and are excited to see blockchain technology bringing change to the industry.