L.A.'s real estate industry enters the age of bitcoin
A little over a year ago, in a first for Southern California, a buyer used roughly 3,300 bitcoins to buy a Cape Cod-style mansion in Manhattan Beach for $3.225 million.
Had he waited a year, that same number of bitcoin could've bought multiple beach houses, a few penthouse condos and a private island in the Caribbean. So it goes in the volatile get-it-while-you-can nature of cryptocurrency deals in the real estate industry.
Bitcoin is an open-source digital currency that, through its peer-to-peer exchange system, avoids the need for banks. Its value has increased tenfold in the past year, leaving investors scrambling to make a profit off the tumultuous chaos.
A bitcoin real estate transaction is the confluence of two extremely bubble-prone fields. Although the technology is still in the early stages and few people are actually buying goods with the currency, real estate presents a compelling use case for bitcoin in the real world— even though spending it to buy a home can lead to a legion of unforeseen frustrations.
Already, a handful of bitcoin-seeking luxury real estate listings have popped up around the country, and experts predict the digital currency could grow to be a viable means of home buying.
"Within the context of real estate, it makes sense to use cryptocurrency in those types of transactions," said Neeraj Agrawal, director of communications at cryptocurrency-focused think tank Coin Center. "Cryptocurrency is a way to send large amounts of money pretty easily with relatively low fees and little interference from middlemen."
Given the advantages of cryptocurrency compared with cash, Agrawal said that if it does catch on, it'll likely be used to buy things like homes or cars rather than inexpensive goods like Metro swipes or cups of coffee. Brands including Subway, Microsoft and Overstock.com accept bitcoin.
In San Diego, a company brokering the sale of two multimillion-dollar homes in the affluent community said this month that it would accept bitcoin as payment. The custom-built homes are listed for sale for $19.8 million, the equivalent of roughly 1,750 bitcoins. Sellers will also accept cash.