Bitcoin compared to Airbnb and Uber as property transactions in the spotlight

Bitcoin compared to Airbnb and Uber as property transactions in the spotlight
Bitcoin compared to Airbnb and Uber as property transactions in the spotlight

To sell and buy property is nerve wracking. To do the deal with Bitcoin is just ratcheting up the stakes.

But it has been an emerging prospect as Bitcoin's currency gains wider knowledge and some acceptance.

In the past month we have seen a series of vendors across Australia advertise their willingness to accept the cryptocurrency as payment.

It's seems mostly a marketing stunt to get publicity for their listing, so it has yet to become a marked trend.

Indeed there's no known Australian property sale where the buyer has actually accepted Bitcoin since the currency was launched in 2008.

The vendors have mostly indicated their preparedness since they already have one of the 13 million crypto wallets now existing on Coinbase.

Back in 2013 there was a buyers advocate who accepted Bitcoin payment for services of $1,300 which meant 10 Bitcoins were paid.

The exchange rate at the time was one Bitcoin = AU$130.

The current rush in Bitcoin-accepting vendors comes amid the see-sawing surge in the value of bitcoin to over US$11,500, marking a 1,200 percent rise this year.

Bitcoin could, of course, become the Uber of the financial world with insights manager Graham Cooke believing Bitcoin could revolutionise property and finance.

But for it to become normal, it will actually have to get the official involvement of government along with the banking and conveyancing industries.

For starters there is an issue with the traditional deposit payment which is regulated by state governments.

Yes the deposit could be paid in bitcoin, however it will need to be immediately cashed in and then paid in dollars into the selling agent's trust account for safe keeping until settlement.

The financial expert Peter Switzer notes several cautions, but "suspects cryptocurrencies are like most things modern and seemingly illegal, think Uber, Airbnb, etc, they will be here to stay."

Switzer noted in days gone by, the most asked questions he would get were, firstly, when will interest rates rise and should I fix now? And secondly, do I think there will be a house price collapse?

"But now all I get is bitcoin questions."

Anyone doing a deal involving Bitcoin and property has requirements of an increasingly vigilant Australian Tax Office.

They demand you record four things: date of transaction, value in AUD, purpose of the deal, and “who the other party was even if it’s just their bitcoin address”.

There are state government stamp duties to be paid in regular currency based on the property market value.

Ofcourse there's not just issues around the legalities.

Bitcoin’s value has fluctuated dramatically, mostly upwards to date, so the initial and final value of any transaction could trigger real tension between the buyer and seller.

The capacity of next day exchange and settlement might alleviate the issue, but what would happen over a typical settlement period?

After all an $800,000 property exchange on mid-November would have cost around 100 Bitcoins so would the buyer still be there when the value of their Bitcoin outlay has gone up to $1.1 million or higher?

Logan Lincoln of property research firm CoreLogic noted the surge in value of bitcoin in the last month had certainly created a major stir.

This article was first published in the Daily Telegraph.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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