Sometimes it’s good to look to the future to see how property transactions may evolve and one exciting area is paying for deposits – and perhaps entire houses – using cryptocurrency. Here’s our introduction for the uninitiated but rest assured, there will be no overnight switch to cryptocurrency in the UK property market.
What is cryptocurrency?
Cryptocurrency is a type of currency that exists as digital coins or tokens instead of physical money that we hand over at the cash till. Although you may have heard of Bitcoin, there were reportedly over 4,000 other cryptocurrencies available as of January 2021. Cryptocurrency’s big advantage? It is almost impossible to counterfeit or double spend.
How do I buy and spend cryptocurrency?
In theory, any product or service bought online can be paid for in cryptocurrency – the retailer would simply display a price in pounds (£), use current rates to convert the figure into cryptocurrency and add how many crypto tokens were needed to make the purchase.
The buyer holds their cryptocurrency in a digital wallet, and tops this up by purchasing tokens from a cryptocurrency exchange service. Think of it as paying using PayPal but instead of the money leaving your bank account, it leaves your cryptocurrency account.
Already brands such as Tesla, Microsoft and PlayStation accept cryptocurrency payments and more brands are announcing their intention to accept Bitcoins and other digital currencies every day.
So will I be able to buy a property using cryptocurrency?
For many of us, cryptocurrency is still a new concept to get our heads around but buying a property using cryptocurrency is something that is already being discussed by mortgage lenders and the legal profession. If you’re really keen to know the current thinking, Bitcoin uptake: ‘a long way off’ is a news analysis article by mortgagestrategy.co.uk, explaining the current relationship between house buying and cryptocurrency.
Is cryptocurrency actually hindering house buying?
The article in Mortgage Strategy makes an interesting link between an inability among some first-time buyers to raise a big enough cash deposit to buy a home, and those who hold all the cryptocurrency wealth. Is it a coincidence that the average age of the UK’s first-timer buyer has reached 34 years old, and that the biggest holders of Bitcoin – having 27% of all in circulation – are in the 35-44 year old bracket? Could potential purchasers have too much cash tied up in cryptocurrency and it’s this that’s hindering their attempt to own their first home?
Are cryptocurrency deposits the solution?
Already some mortgage lenders are accepting cryptocurrency as a form of property deposit. For example, the Nationwide will accept a deposit payment in Bitcoin, but stresses that this is a request currently dealt with on a case-by-case basis. Experts believe that mortgages will evolve and new hybrids will emerge where some, if not all, of a property purchase will be funded by cryptocurrency.
Will I be able to pay an estate agent using cryptocurrency?
That idea is already a reality. Although far from a mainstream method of paying for property services, a small minority of agents are allowing sellers, tenants and landlords to pay with cryptocurrency. We do, however, see a long and happy future for traditional cash transactions.
If you’d like to know more about buying, selling and renting property, contact us today.
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