You Can Now Buy Homes with Cryptocurrency

In the US, cash is still king. But with the spotlight now on bitcoin—buying homes with cryptocurrency—at the very least when it comes to luxury units—is on the rise. If you don’t believe me, then check out these properties that were put on the market back in February. Several of these homes were bought in our own backyard in areas like Sunny Isles and Aventura. And just this past June, the Lower Penthouse in Surfside’s Arte building was sold for $22.5 million (at the time of this article, that’s about 510 bitcoins).

What is Cryptocurrency?

Digital money, such as Bitcoin, is a decentralized cryptocurrency that makes it easy to perform direct transactions without having to go through a bank. Transactions are protected through hashed codes that create blockchains. And whenever a new blockchain is started, a new coin is minted. A new bitcoin is created approximately every 10 minutes. However, there’s a fixed supply of 21 million bitcoins, and to avoid going over 21 million coins, the bitcoin supply is halved approximately every four years. This is supposed to maintain bitcoin’s value steady.

Some of the benefits of bitcoin are that it can be traded internationally without having to undergo another country’s exchange rate; transactions are pseudonymous (so your identity is protected); transactions are irreversible (to prevent bitcoin fraud); and, best of all, you don’t need to rely on traditional banks to spend bitcoin.

Lastly, because hacking a blockchain to steal a bitcoin is so much work and can rarely be done fast enough, there isn’t an incentive for people to try to break the rules and steal coins. Instead, bitcoin is a cryptocurrency that encourages participants to play by the rules, because by breaking the rules you only waste time. When users or nodes play by the rules and create blockchains, they’re rewarded with bitcoins. In this sense, bitcoin is a currency backed by a participant’s hard work and good faith, rather than the good faith of a government or a physical asset like gold. Because of its unique properties and liquidity, bitcoin went from being worth $0 to skyrocketing to $64,000 in April 2021. While market fluctuations can cause the price to change, the return has been beyond many investor’s wildest dreams.

How Can People Buy Homes with Cryptocurrency?

However, not all cryptocurrencies have the same range of utility. When it comes to buying homes for example, Ethereum tends to be the most popular form of crypto.

In the case of selling Arte’s Lower Penthouse, the developers, Alex Sapir and Giovanni Fasciano, partnered with a company called Solid Block to help securitize their crypto transaction. Solid Block is a company dedicated to bringing liquidity to the real estate market. Solid Block creates securitized real estate tokens, like MBSs, but they’re much easier to trade. Once securitized into an STO (securitized trade offering), STO shares can be bought and sold like stock investments. Owners of the STO have the option to divy up shares by square footage or square inches.

For example, a home worth $30 million with 100,000 sq ft could sell its shares for $300 a sq ft or $2.08 a sq in. This flexibility allows investors who don’t have as much capital to have a shot at being able to invest in real estate. Owners of these tokens can also keep a certain percentage of shares to maintain majority ownership, while selling off other shares to raise funds for property renovations. In this sense, STOs let you have your cake and eat it too.

Ok But What If I Want to Sell My Solid Block Shares?

You can absolutely sell your shares of Solid Block. Once you turn your cryptocurrency into STOs, you’ll be able to trade them on an Alternative Trading System or ATS. ATSs are the equivalent of a secondary market—think Fannie Mae and Freddie Mac—but for cryptocurrencies. The ATS used by Solid Block is called Templum Markets. While this is a very new way of investing (and way too expensive for most of us to consider at the moment), I think it shows a lot of promise for how we can buy and trade real estate in the future.

The point of using blockchain technology is to create market liquidity. That’s the whole reason behind why MBSs (mortgage-backed-securities) were created, because buying and selling homes was such a pain, that people decided that it would be easier to trade and sell homes in bulk. By selling and buying mortgages in bulk that had similar characteristics, you could actively trade a group of mortgages in an MBS—but with more trading guidelines to follow.

By using cryptocurrency and STOs, this would make buying and selling homes much easier. A) Because people would be able to trade directly with the buyer without as much bank interference. And B) by selling even shares, owners of STOs could trade percentages like stocks, bringing much more liquidity to real estate markets. I truly believe that technology like this, if used correctly, could eventually be used to pay for ordinary homes.