Homebuying. You skimp and save for years to afford your first house, counting down the dollars until you finally have enough for that first deposit. In this market, you aren’t alone in keeping a hawk’s eye on your property savings; after all, the average cost of a home in the United States stands at a $188,900. For many people, it’s the most expensive investment they have or will ever make. But what if the currency you watch isn’t a dollar or euro you could weigh in your hand, but bitcoin – which you could only track through a computer screen?
Over the past few years, cryptocurrencies have rocketed into the popular view as a internationally-accepted, secure, and anonymized form of payment that stands free of any central government oversight. Blockchain technology was first invented after the financial crash of 2008, and spawned coins such as Bitcoin, Ethereum, and even the surprising lucrative joke currency, DogeCoin. These cryptocurrencies offer buyers a new way to purchase daily goods, gift cards, and now – homes. According to a writer for Business Insider, popular real estate sites like Trulia are beginning to host listings that accept – if not demand – bitcoin as payment.
But how feasible is this new payment method? Is bitcoin, as some people claim, the “currency of the future?”
I’m not so sure.
Bitcoin and its peers are notoriously unstable, if not outright volatile. In January of 2017, one bitcoin was worth $1,000; by December, the asking price per unit had skyrocked to $19,000. Just two months later, the cost per coin had plummeted to a comparatively trite $6,000. To look at it from a real estate perspective: If you bought a $100,000 home in January for 10 bitcoin, you would have paid out the equivalent of $1.9 million dollars for the property by December’s market standards. The sheer profit lost – or gained, from the seller’s perspective – is mind-boggling.
If the fluctuations over the past year have shown us anything, it’s that investing bitcoin might make you rich – but it could also bring you to financial ruin. After the downturn, many significant players in the tech landscape opted to distance themselves from the coins and their risks; Google, for example, recently announced that they would no longer host advertisements for cryptocurrencies. The prospect of getting rich quickly through a miraculous upswing in the market is alluring, but not particularly practical – and especially not for those homebuyers putting hundreds of thousands of dollars on the line. As a writer for Realtor.com puts it in an article on the topic: “Bitcoin isn’t backed by something like gold, so it’s really worth only as much as folks are willing to pay for it.” So, I ask you – how comfortable would you feel putting your hard-earned cash into a currency manipulated by public opinion?
Bitcoin just might be the currency of the future. But for now, real estate investors and homebuyers alike would be safer staying far, far away.