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Bitcoin is getting a lot of press lately, mainly because of the significant increase
in value of bitcoins over the last 12 months. Many people are looking at bitcoin as potential
alternative investment strategies and today I want to talk about whether or not you can
use bitcoin to sell your home or to buy a home.
Hi I'm Ryan McLean from OnProperty.com.au, your daily dose of property education an inspiration.
Well there was recently a story of a person who was selling their home in Perth Hills,
so in Western Australia, and they were only accepting bitcoins as the form of payment
for this home. So this is potentially the first time in Australia that will be sold
using bitcoin only and not actually being able to purchase this home in cash. So it
got me thinking can you purchase a home using bitcoin and should you go about doing it?
Well obviously the answer to can you do it is yes. Truthfully I don't understand all
the government regulations around bitcoin at the moment because I don't necessarily
understand the currency fully itself anyway. So what is bitcoin roughly? Now I don't mind
bitcoins myself, I don't own bitcoins myself but I've done some research online. Bitcoin
is a decentralized digital currency also known as a crypto currency and basically it's created
on the Internet and it was created using software. And bitcoin is designed in such a way that
you don't need banks to hold money, you don't need to go through a central system like you
do in Australia where you have to go through banks in order to pay people or through PayPal.
It’s decentralized so you can send money directly from one person to the other which
means fees are a lot less. Now, as a crypto currency the software is created that as more
and more bitcoins are mind, they call it. When you create bitcoins it actually gets
harder and harder to create more bitcoins. So it helps I guess, stabilize that currency
and make sure there's no one person who can say "well I'm going to increase, I'm going
to put in an influx of bitcoins into the market" There's over one billion dollars of bitcoin
currency in the market at the moment. So there are a lot of different exchanges out there.
We can exchange money for bitcoins or bitcoins for your local currency.. But that's a rough
idea of what bitcoin is, if you want more information on that then I suggest you go
to Google or you have a search in YouTube on what bitcoin is and what are the risks
associated with it. I wanted to talk about some of the risk of
bitcoin and firstly, probably what I would consider one of the major risks is the fluctuating
exchange rates of bitcoin at the moment. Bitcoin stayed pretty stable in its exchange rate
and the growth of that product in its early days but in the last twelve months it has
gone from something like $10 per bitcoin to over $200 per bitcoin. But it's not all happy
days, is not just up up up up up because there have been instances where bitcoin has dropped
dramatically in value. One of those instances was when China, the Chinese government, actually
closed down a lot of the exchanges of a bitcoin and automatically overnight that product,
the bitcoin, the exchange rate almost halved. So fluctuations in exchange rate are extreme
and that is a risk if you're going to be buying or selling a home using bitcoin. There was
recently a story of Mount Gox where there was a robbery of bitcoins worth $470, 000,
000. So someone came and obviously robbed all these bitcoins in huge value and all that
information on that is blowing up on the web at the moment. There was also a story of a
guy who had thrown out a hard drive probably a year ago or couple of years ago but now
with the value of bitcoin he realizes that there was actually over $14, 000, 000 in value
in bitcoin on that hard drive but he had thrown it away. So if you're storing bitcoin on your
computer or your hard drive and it crashes, well it’s going to be pretty hard to access
that. So that's a risk as well. And then lastly, you've got risk of hackers. A lot of the bitcoin
exchanges that have come up to help people I guess use bitcoin have been severely attacked
by hackers. And obviously people want to come in, they want to get access to the bitcoins
and they want to steal them and have that money for themselves. So there's always the
risk of hacking as well. So now that I've scared you with all the risks
of bitcoin I want to ask you when it comes to selling your home using bitcoin or buying
a home using bitcoin at this point in time in 2014 why bother? What is the point? While
selling a house using bitcoins likely going to get you some press it’s unlikely to attract
many buyers. Think about it in your life, if you're flicking through realestate.com.au
or you're flicking through domain.com.au and you see a house and you like it and you’re
"Ok yeah, I might end inspect that property, that could be something that I like" but you
are seeing the listing will only except bitcoin as payment. Everyday investors, everyday home
buyers are going to look at that and are going to immediately be turned off and go "bitcoin?
What the hell is bitcoin? That sounds too risky for me, I'm not going to go ahead and
do that." So I think bitcoin is not mainstream enough, there is not enough of people who
are confident in the currency and happy to use the currency that it would be worthwhile
for your standard home seller in Australia to try and sell their home using bitcoin.
Now you could offer it as an option, maybe you can purchase it using cash or you can
purchase it using bitcoin and maybe that opens you up to some press and maybe some extra
buyers but realistically if you're just saying you can only buy using bitcoin, my thoughts
are that you are going to close off a lot of your potential buyers and that is actually
going to make it harder for you to sell your property.
If you want to check out the full transcription of this article and more, head over to OnProperty.com.au/101
and you can get all of that over there. So until tomorrow, stay positive! And P.S. tomorrow,
which I've got an interview with Ben turn up from iPropertyInvestor.com.au and we talk
about his investment career and then the following day we talk about him investing in US property.
But tomorrow will be the first episode where I've got sponsorships on the podcast so I
have secured sponsorships for the month of March so you guys will notice that at the
start of the podcast it's going to be about 15 seconds within the first minute where I've
got talking about a sponsor product and then there's going to be a sixty seconds somewhere
around the middle where I'm also going to be talking about the sponsors. Well the sponsors
that I've lined up, I believe are a great match for you guys and for the people that
listen to this podcast so I do think that they're going to add value and they encouraged
me to keep making this. They make it financially viable which means I can continue to improve
the production quality and continue to ensure that every single morning when you wake up,
you've got a brand new episode on On Property to listen to. So until tomorrow, stay positive!