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Real estate history is about to change as a house for sale in Melbourne’s outer east is poised to become the first to be paid for in bitcoin. But, according to one expert, the use of the cryptocurrency would be a big mistake.
According to 7News, the vendor, Rob Gadd, has said that he’ll accept the online currency for a part of the sale but still wants the bulk in “cold hard cash”.
“It’s always nice to be at the front of the trailblazing end of doing something that hasn’t been pioneered before,” Mr Gadd told 7News.
“Someone out there with a lot of cryptocurrency, bitcoin or the others, can put down a small portion of their funds into real-world assets.
“There are a lot of people that are unconventional investors in it [cryptocurrency] that could potentially have some sitting in their wallet.”
But the CEO and director of Biggin & Scott – Knox, Adam Flynn, feels that the move is a big mistake.
“Paying for property with bitcoin is a highly irresponsible strategy, given that the currency fluctuates so quickly that the value of the bitcoin between purchase and settlement could disadvantage both buyer and seller significantly,” Mr Flynn said.
“Unless the property is settling on the same day the contract is signed, which is impossible, buyers shouldn’t use a fluctuating currency to purchase a house, which is a significant financial commitment.”
Mr Flynn said that there are “massive” flow-on effects in recognising cryptocurrency as legal tender.
“If somebody buys a $2 million property for $1 million cash and $1 million bitcoin, in 60 days when the house settles that $1 million bitcoin could have halved in value, meaning that the buyer will then have to source an additional $500,000 in cash for the property to be officially bought.
“Conversely, six months down the track when the vendor is ready to utilise that bitcoin to purchase something else, it may have lost significant value.”
Mr Flynn said that using bitcoin as a currency is a gamble with unacceptable odds.
“Other issues accepting bitcoin as legal tender are not insignificant, with a major one being that transactions made via bitcoin are anonymous.
“You cannot be sure who you are entering into a transaction with and transactions are difficult to trace. There is no definite way to know who is behind the online identity registered for the transaction, which could be problematic for the real estate industry as a whole.”
7News said that bitcoin is a secure online currency that is booming. It said that when the cryptocurrency started “almost a decade ago”, a single bitcoin was worth as little as 10c and that now “you’ll pay more than $12,000”.
7News also reported that Mr Gadd is hoping the home will sell for $900,000, which equates to about 75 bitcoin, but he is only offering “a fraction” of the purchase price to be taken in the digital currency.
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