Bitcoin Makes Inroads into Real Estate Sector: Two UK Luxury Homes Sold
London-based property development firm Go Homes completed the sale of two family homes earlier this week using bitcoin.
A $468,000 four-bedroom family house in Colchester and $796,000 four-bedroom townhouse in Hertfordshire were both sold to bitcoin investors. The buyer of the Colchester family house is known to be a bitcoin miner, who has invested in bitcoin in its early days and have maintained a strong portfolio of cryptocurrencies since then.
The buyer of the Hertfordshire townhouse intends to rent out the house to tenants who are willing to pay their deposits and monthly rental fees in bitcoin.
Ed Casson, the Go Homes group sales director, told The Telegraph in an interview that the sale of the two family homes are the first domestic properties within the UK to be sold for bitcoin. Casson stated:
“This re-writes the rule book and shows there is another way to sell property. This is the first time a domestic property has been sold for Bitcoin in the UK. It’s a bit of history in the making. Selling homes for Bitcoin will become common in the next five years.”
Over the past five decades, Casson emphasized that the global real estate industry has not demonstrated significant changes or improvements in financial operations and implementation of innovative technologies. As such, real estate firms have relied on centralized financial institutions and their inefficient, costly, and limited banking infrastructures to process payments.
Casson stated that Go Homes along with industry leaders within the British real estate market are trying to integrate emerging technologies like bitcoin to facilitate payments better and meet the demand of their clients.
“Our industry has largely remained unchanged in terms of innovation in the last 50 years. We are taking an opportunity to embrace this technology,” added Casson.
In August, University of Cambridge economic historian Garrick Hileman described bitcoin as a minor economic miracle, given its exponential growth rate regarding market valuation, user base, and user activity.
Hileman noted that the global luxury market and other industries dealing with expensive properties like the real estate market have started to adopt bitcoin as a payment method, as it eliminates the involvement of intermediaries and third party service providers that can be costly.
Considering the current state of the Bitcoin network and its underlying scalability issues, it is highly inefficient to process small payments using bitcoin. For instance, it is not possible to utilize bitcoin in purchasing cheap products or services like a cup of coffee, as recommended bitcoin transaction fee is in the $10 region, according to Earn.com’s bitcoin fee prediction platform.
“If you’re only paying a $2 transaction fee on a piece of art that’s worth tens of thousands, the fee is basically zero. But if you’re paying two or three percent on a piece of art of that value, then the numbers can go up quite a bit,” said Hileman.
Moreover, the settlement of large-scale transactions over a hundred thousand dollars can cost senders thousands of dollars in transaction fees, which can rise depending on the amount of money transacted. Bitcoin’s transaction fee is not dependent on the amount of the transaction but rather its size, and hence, it is a much more efficient method of payment processing for large transactions.