Rafaela Hsu Rafaela Hsu

Digital currencies are becoming an increasingly common payment method as millennials rush the housing market.

On March 15, 2024, the Bitcoin coin peaked at $73,844 following a taxing crypto winter. That new record was primarily brought about by the SEC’s approval of spot Bitcoin ETFs in January 2024. Following that, in late February and early March, the Bitcoin price surpassed the $60,000 mark, which was thrilling enough for investors, but it went on to go over $73,000!

Benefits of Bitcoin

One of the main benefits is that it provides a much faster and more efficient way to make payments. Traditional methods of payment can often take days, weeks, or, in worse cases, even months to process. And with cryptocurrency, the processing of payments is almost instantaneous, which is a huge advantage if you are trying to close a deal as quickly as possible.

Another benefit of using cryptocurrency is that it is a very secure way to make payments. When dealing with large sums of money, you always want to make sure that the transaction is as secure as possible. According to Coinbase, cryptocurrencies are decentralized digital currencies designed for use over the Internet, free from the control of any governments, banks, or corporations. Thus, anyone who wants to take part in it can do so.

Another advantage of using cryptocurrency is that it can help you avoid fees. Compared to traditional payment methods, which often come with several fees, such as transaction fees, transfer fees, and even conversion fees. With crypto, you can avoid all those fees, saving you a lot of money in the long run.

Using crypto as collateral

Some cryptocurrency holders will purchase a house without selling assets to cover everything or making a sufficient down payment enough to qualify for a mortgage. Instead, they use their digital currencies to borrow the capital necessary to finance a home purchase and defer in paying their capital gains taxes.

From the perspective of wealth generation, this approach is enticing. Cryptocurrency holders can choose to diversify their holdings and prevent their portfolio values from fluctuating significantly during stock market downturns, which they can easily do just by purchasing an uncorrelated real estate asset. At the same time, they keep ownership of their cryptocurrency holdings, which could increase in value over time, as long as they repay what they owe accordingly.

Homebuyers can choose between two paths when taking this route — decentralized finance (DeFi) or crypto-backed mortgages:

Crypto-backed mortgages function similarly to traditional home loans, except that the borrower pledges cryptocurrency holdings to secure the loan. The lender then releases funds in U.S. dollars or another fiat currency equivalent to the value of the collateral. The two parties can then decide the monthly installments’ currency.

DeFi lending, on the other hand, occurs through apps where any cryptocurrency holder can act as a lender or a borrower without the need for middlemen. Depositors can park their assets and earn high interest by contributing money to the lending pool. If they qualify, borrowers can acquire funds from the pool to purchase a house and receive them quickly through smart contracts.

Are you ready to close crypto real estate deals?

While cryptocurrency transactions in real estate still remain as a small fraction of the total transactions in the U.S., their increasing frequency suggests a growing acceptance. That trend could continue if crypto gains in popularity. This is a reflection of a broader trend where cryptocurrencies are slowly being integrated into mainstream financial systems, particularly as more and more younger and tech-savvy generations enter the housing market.

With the growing acceptance of digital currencies in real estate, are you ready to close your next crypto real estate deal?