Should You Sell Your House For Crypto?
This question may be on your mind and you may be wondering if this is something you should do. So, let’s dive in.
Before we begin, please note this is not a financial advice nor should it be used as such. You must make your own decision and if needed employ trusted, certified financial advisers to help you with your decision. This is just an opinion provided for educational, explorational, and entertainment purposes.
To understand the exchange of one asset for another, we have to understand the asset we have and what we are exchanging it for and whether it makes sense (financially speaking).
Oftentimes, we don’t think about this unless we are bartering, as we simply accept the sovereign currency within our market. For those in U.S. (and often around the globe) we will accept U.S. dollar, but around the world you may be dealing with your own local currency or if your locally currency is in trouble and you don’t trust it, you’ll deal with currencies you believe to be stronger, like USD, euro, pound, etc. And the good news is that market prices within your area are reflected in those currencies.
For example, in USA all of the house prices are quoted in USD. When I travel to Europe, all prices are quoted in euros. But, if both the buyer and the seller are willing, we can use any currency for our exchange, including a trade for another property or asset, such as another house, a boat, gold, a car and even crypto.
When we make an exchange for a particular currency (please note I’m using this term loosely here), we do it because we value what we are receiving in our exchange.
We accept dollars because we believe they have value and we can use them to buy other things.
And with the recent printing of the dollars, euros, pounds and other currencies around the world, those precious pieces of paper are starting to devalue. Sure, that dollar bill looks exactly the same, but it happens to purchase a bit (or a lot) less. This makes everyone demand more of those papers, as it’s reflected in the price of items, specifically assets (like your house).
Over the last year, we have witnessed a price of home go up in price 12–20%! That means that if your house was valued at $100,000 a year ago, it’s valued at $120,000 today. And with the craze of the market today, you possibly could get even more, should you decide to sell.
But many are not selling. Why?
Well partially because they like where they live, but also because if you sell today you might not be able to find anything you can afford (as prices are rising sharply and rather quickly).
But what if you could get a currency in exchange for your home that will keep up with the rising prices? In that case, more people, I believe, would be interested to sell and go shopping. This would in turn slow down the price rise we’ve been seeing lately and would make the markets much healthier.
A great solution, in my opinion, is to accept a crypto currency for your sale. They have been keeping up with the rising prices (of everything) and many of them are nearly as liquid as many sovereign currencies.
Sure, your local grocery store is still not accepting bitcoin,
but I believe that will change (and very soon). But you don’t even need them to accept it, either.
With some crypto in your digital wallet you can get a card (both Visa and MasterCard are supporting it now, Amex is not quite there yet) that functions very much like a debit card, taking out appropriate amount from your bank account (a.k.a. wallet) for the items you purchase. Another solution is to convert your crypto back into the accepted currency for your purchase and then buy what you’re wanting to.
But crypto is risky!
Everything has risks and crypto is no different. Dollar has a risk of being devalued. House has a risk of going down in price or burning to the ground. Gold has a risk of not appreciating in value, being stolen or lost or repossessed by the government. Stock has a risk of company going under and bond has a risk that the underlying company (or country) goes belly up.
Everything has risks!
Being still in it’s infancy, crypto is very volatile at the moment. Over the past 10-ish days we witnessed bitcoin go from roughly $64,000 down to roughly $47,000. That’s a big drop and it happened really fast.
For those that believe that cryptos will have a place in the future, they accumulate and HODL for the long haul.
Just as we’ve seen the giant drop over the last 10 days, we’ve also witnessed the same crypto, bitcoin, go from roughly $20,000 in December 2020 to $64,000 in April 2021. That means that if you sold your $100,000 house in December for bitcoin you could purchase 3 $100,000 homes and still have some money left over (not accounting for the transaction fees nor the increase in prices, for the ease of math). If you want to account for the price increase, you still could buy 2 $100,000 and have plenty of money left over for whatever (accounting for fees and price inflation).
Similar thing occurred with ethereum, where a year ago it was priced at $90 (not a typo) and today is hovering around $2,300.
But I get it, perhaps this up and down thing is too much for your personal mental health and a bit too risky. That’s why there are cryptos called stable coins. These cryptos are pegged to the USD and the exchange is 1 to 1. So, for 1 USDC or DAI you get 1 dollar (and vice versa). This makes it much simpler to account for, as it follows what we’re used to. As the prices go up in dollars, they go up in these stable coins.
But if stable coins are the same a sovereign currency, why use them?
The beauty of crypto is that not only allows for transactions and instant book keeping, it also offers a settlement right as the transaction happens. The legacy financial system (the current one not accounting for the crypto) does not offer that. It allows for transaction and that’s about it. Book keeping happens on your own and with your bank and the settlement is done days later. So technically it is possible that you could double spend.
If you’ve over over drafted on your bank account, that’s exactly what happened.
You checked your account and it showed you had money. You forgot that you already purchased something else and that number on the screen is not really real (it did not settle and update the ledger). You went to buy something else, thinking you had funds, until a week later when you’re in negative and owing a hefty penalty fee for over drafting.
I guess that’s what you get for trusting the bank and the little numbers on the screen!
With crypto, including the stable coins, that’s not possible. What’s in your account is really in your account. You can’t overspend (it simply won’t let you) and what’s even better, no ridiculous fees (over draft, balance below allowed, no direct deposit, pay for the privilege of banking with us, etc.). On top of that it’s fast. Depending on the crypto and the network it uses (and the congestion), we are talking a few seconds to perhaps a couple of hours at the most. That still beats days, if not weeks with what we have in legacy system.
More buyers
Another very neat aspect of allowing crypto as the payment for the sale of your property is that your market of potential buyers could open up.
There are many crypto-millionaires, around the world, who want to exchange their crypto for a house (or other assets/items). Many of them would prefer to buy directly with crypto without having to exchange to sovereign currency first (less steps).
Some may be looking for their personal residence, a second home or an investment property. Many are looking to buy in their own location or country, but there are even more looking for property in a different country.
This opens up sale across borders in a much simpler way and creates a potentially larger market of buyers for your property.
Conclusion
As you can see, there are many great reasons to use the crypto for the transactions and for the sale of your property.
- It’s fast and easy to use.
- It allows for easy accounting as to what happened, since it keeps record of all transactions.
- It offers you ability to manage the currency risk easily (you can do it with the legacy system, but it’s going to be a bit more complicated and take time). You can structure your currency portfolio in such a way to limit potential downfall and possibly increase chances of the up side.
- You can have a combination of appreciating currencies and stable coins and easily switch between currencies (both crypto and sovereign).
- Your potential market of buyers increases as you allow for different types of payments.
Overall, whenever we are open to more options our ability to accomplish the task becomes easier. Selling property is no different. Allowing for negotiation on the price is a common practice for sale of anything, where buyer and seller agree on a specific amount. The same can be said about negotiation on the form and type of payment, from financing the purchase and buying all cash to allowing that “cash” can be in different forms.
