What Cryptocurrencies Mean for Your Real Estate Transaction

Emerging technologies make our lives simple. But what wouldn’t make it simpler than to have virtual currency that could be safely sent and received anywhere in the world? Cryptocurrencies, and its blockchain technology, are becoming popular around the (real estate) world.

With this new technology comes quicker transactions without the need for third parties. What does this new form of money mean for title companies, such as Monarch Title, and the real estate industry? First, let’s start with the basics.

What are cryptocurrencies?

Like the paper bills in your wallet, cryptocurrency is used in exchange with purchased goods and services. Unlike typical currency, cryptocurrency is an online-only form of virtual money.

Cryptocurrencies are made up of long streams of encrypted numbers. They are created through coding, or cryptography, and are developed by mathematical formulas, which are called hashings.

As they are virtual currencies, cryptocurrencies are neither “owned” nor distributed by any one country. This means cryptocurrencies are a universal virtual currency that can be purchased and exchanged by all. Missouri doesn’t have any laws regulating cryptocurrencies at this time.

One common form of cryptocurrency is blockchain technology, which we previously discussed in this blog. Blockchain acts like a bank in that its ledger keeps and stores information on a distributed ledger. Everyone involved has access to this ledger, but all transactions are encrypted for safety.

A cryptocurrency that uses blockchain technology you might be familiar with is Bitcoin. This cryptocurrency is created and tracked on a self-sustaining computer program, and mining tracks each transaction. Bitcoin is the first unregulated cryptocurrency to go mainstream.

How will they affect your real estate transaction?

What makes cryptocurrencies different from other forms of currency is that they can exist outside an established banking community. Cryptocurrency transactions can be transferred in minutes anywhere in the world as long as both parties have internet connection.

The real estate industry has room to grow with emerging technologies and innovations. Until recently, the industry was typically conducted person-to-person and away from the computer. With cryptocurrencies, the internet now incentivizes the use of smart contracts and immediate transactions.

While it’s true cryptocurrencies, and especially blockchain technology, might no longer need other parties to facilitate such digital transactions, there are still plenty of positives in using the technology.

First and foremost, keeping title information centralized and secure over a ledger means that records will be easier to obtain and transfer and are robust against theft. Because transactions made with cryptocurrency can be done in minutes and over Wi-Fi, transactions made near and far, even international, can be made simpler and quicker.

Cryptocurrencies are popular among investors. More and more, investors turn to virtual currency for title transactions because of the simplicity and for the currency’s lack of regulation. Studies show millennials and younger people are most excited about the easiness of cryptocurrency and most likely to invest and use in transactions.

According to Matthew Murphy, a Forbes real estate analyst, blockchain is slated to be used in most real estate transactions in the next five to 10 years. He suggests brokers begin to experiment with cryptocurrency and blockchain technologies now.

There are pros and cons to using cryptocurrencies. Because Missouri is old-school, cryptocurrencies’ role in local title transactions likely won’t come into fruition for years to come.

Monarch Title is always here to help with a variety of title and closing services. Do you have questions on cryptocurrencies and how they affect your title transaction? Please, give us a call. We have five locations across mid-Missouri for your convenience.