According to one of the largest online exchanges of the cryptocurrency, CoinDesk, Bitcoin is “a form of digital currency, created and held electronically. No one controls it. Bitcoins aren’t printed, like dollars or euros – they’re produced by people, and increasingly businesses, running computers all around the world, using software that solves mathematical problems.”
According to them, “bitcoin’s most important characteristic, and the thing that makes it different to conventional money, is that it is decentralized. No single institution controls the bitcoin network. This puts some people at ease, because it means that a large bank can’t control their money.”
Due to the fairly opaque nature of the digital currency there has been quite a bit of suspicion as to its use or viability as an investment. Certainly it seems an investment fad for now, and those with long-term investments in property are unlikely to have invested heavily in bitcoin.
That could potentially change, however, with news outlets reporting this week that some of the UK’s first ‘bitcoin only’ property sales are underway.
One of the main criticisms of Bitcoin is its fairly rare usage as actual currency. That is to say that, as of yet, nobody has the ability to simply walk down to their local coffee shop and order a latte in Bitcoin. Similarly the ability to use Bitcoin for everyday purchases seems unlikely as such tiny denominations of the currency could be problematic for widespread transactions.
Another problem is that in order for the currency to work properly it needs to be ‘mined’, or the transactions need to be processed as digital mathematical equations by computers. With the Bitcoin network already reportedly using more energy than Ireland there could come a point where the electricity required to run the equipment to calculate the currency’s transaction could become more expensive than Bitcoin itself.
These potential problems don’t seem to have deterred homeowners in the UK though, as reported by The Telegraph this week. According to them, property developer Go Homes announced the successful sale of two homes this week, both having been bought by men in their 20s in the technology industry.
The first is a four bedroom detached family house in Colchester which is still under construction, which was sold for £350,000. The unnamed buyer, a software developer, is understood to be a so-called “Bitcoin miner” who made an early killing on the cryptocurrency and is now converting it into bricks and mortar by buying a new home as an investment property.
So are we likely to see homes bought in Bitcoins becoming the norm in the near future? It’s quite hard to say. As with pretty much any point in Bitcoin’s short history, predicting its future with any particular accuracy is very difficult.
The potential for this to become the norm or simply be remembered as a flash in the pan seem equally likely at this point. Bitcoin itself doesn’t seem to be dipping in popularity and the news coverage it’s received recently has meant that interest in cryptocurrency is at an all-time high.
Having read into the finer details of using cryptocurrency, people don’t appear to have been put off. It may be advisable, however, to give the currency another 6 months or so to really test how it fares under the spotlight.
Should it hold its value relatively well within that time period it may be time to prepare for a property market traded solely in cryptocurrency.