Investors are always at the mercy of fluctuating markets. From the housing market to the stock exchange, no one can predict absolutely everything. Therefore, it’s still fascinating that cryptocurrency – such as bitcoin – continues to be so popular. It’s taken up more than a few headlines in recent years, mainly thanks to its volatile nature. However, digital money actually holds plenty of benefits, especially for those of us who are investing in property.
Isn’t cryptocurrency difficult to get into though? Isn’t it complex to trade with? Regardless of what you may have heard, crypto is actually much more user-friendly than some media outlets will have you believe. In fact, it’s getting easier to trade and collect digital cash. But what knock-on effect will this have for property sales?
The benefits of bitcoin
We have to establish, first of all, that crypto isn’t quite ‘mainstream’ yet. This means that you really won’t find estate agents and lettings groups trading in the money straight off the high street. It’s not impossible, but thanks to the uncertainty of bitcoin and other currencies, many firms are slow to adopt. That’s a whole other story.
We have to focus on how crypto could benefit private property investment. Cryptocurrency is so popular because it is largely free from any ties or red tape. As anyone dabbling in housing will know, administration and tape can be a big deal. Therefore, a free-moving, instantaneous digital currency is likely going to appeal to millions who want to start buying homes for development.
Bitcoin, for example, doesn’t have any of the slow-moving exchange rates that you get with fiat money. Even for overseas transactions, you can send money and it will be with the recipient within seconds. It is almost an instant transfer. Beyond this, there are next to no fees for handling the money. The benefits for the housing market and for investment, therefore, lie in speed and ease of use.
Physical money can hamper property investment. There can be a lot of waiting around on the chain, and paperwork can be never-ending. However, blockchain technology, through which crypto largely derives, helps to secure the whole process. Investors and sellers can set up ‘smart contracts’ through the tech, which means that, as well as trading in free digital money, there is a cast-iron imprint of what was agreed to at the point of investment. There’s no longer a need to depend on paperwork.
Easier for individuals – but what about firms?
Right now, especially in the UK, it’s more likely that you’ll find bitcoin trading hands with individuals than with businesses. This is for a few reasons, mainly due to the currency being decentralised. Individual investors and entrepreneurs really don’t have to do much to start. They simply download and install a digital wallet, or program, and pick a crypto exchange. They can also find bots and automated investors to do the hard work for them. All they need to do is pick a bot or two on websites like this one – it’s quick and easy to set up.
Businesses, such as estate agencies, are likely to be wary of crypto. Crypto is volatile. This means that it regularly dips and peaks in value, making it a less-than-secure option for bigger firms with more to lose. For the shrewd property investor, however, the markets are fair game. Not only can you tie up money in a reliable foothold, but you can also invest GBP in bitcoin or Ethereum to further secure your cash.
One thing that property investors all need, of course, is security. Some may warn of the dangers of digital wallet hacking, but beyond this, cryptocurrency is almost impossible to clone. There are no dangers of fraudulent activity. On top of this, blockchain will allow investors and sellers to clearly imprint where contracts begin and end. Digital money always has a source, and for this reason, many property gurus are getting into the game early.
Is it worth investing now?
Many people will say that investing too much now, especially if you don’t already own property, can be dangerous. The lack of centralisation also puts off some investors. However, for many property developers, cryptocurrency offers a lot of freedoms. Fiat money can only go so far, as can paper contracts.
We are some way from cryptocurrency going ‘fully mainstream’. However, trends show that British people are more and more intrigued by bitcoin in particular – which means that acting now may not be the worst thing you can do. Certainly, it is always worth doing your homework to find out more.