In 2013, Dogecoin began as a joke based on a meme. It was created by two software engineers who were poking fun at the hype and wild speculation around cryptocurrencies at the time. Since its lighthearted creation, the currency has become one of the most popular forms of cryptocurrency.
Now, Dogecoin is being used for all kinds of purchases, including the purchase of a piece of land in Rhode Island. In early May, the property sold for 150,000 Dogecoin, which at the time of the offer was valued at $50,000.
This sale is believed to be the first real estate transaction completed using only Dogecoin. While cryptocurrency has been on the rise in the real estate industry, it’s still a risky investment.
The value of Dogecoin, and other cryptocurrencies, change quickly and often. The fluctuations make it difficult to predict whether the buyer or seller will come out on top after a transaction. The value changes so frequently and so drastically that the worth of the currency can rise and fall several times between when an offer is made and when the deal is closed.
How Common Is Cryptocurrency in Real Estate?
It looks like people are becoming more willing to deal with the risks around cryptocurrency. Despite the volatility of the value, in April 2021, there were 71 listings that mentioned cryptocurrency in their descriptions or on the listing site. That’s about 14.7 mentions out of every 100,000 listings, which is the highest rate of mentions ever recorded.
The last time the number of cryptocurrency mentions was anywhere near as high was during the March 2018 surge in cryptocurrency popularity when there were roughly 12.7 mentions per 100,000 listings.
Dogecoin isn’t the only cryptocurrency in use. There are at least 1300 types of cryptocurrency. While Dogecoin is popular, the most common cryptocurrency is Bitcoin, and other cryptocurrencies are being developed every day.
Kyle Seyboth was the agent who represented the seller in the recent Rhode Island Dogecoin purchase. He says the seller knew he wanted to complete the transaction in Dogecoin when he listed the property. Since the sale, Mr. Seybooth says he’s received tons of phone calls from people wanting to do the same thing.
What Impact Will Crypto Technology Have in the Real Estate Industry?
Some people believe Dogecoin and other cryptocurrencies are the future. If they’re right, the real estate industry could look very different in 10 years. The biggest change to the industry would likely be the speed of transactions.
Cryptocurrency is more transparent than traditional currency. Jason Shepherd, co-founder of Atlas Real Estate Group, believes the transparency will reduce the need for intermediaries such as title insurance and brokers. Eliminating the middleman could shorten the process by days or even weeks.
Smart contracts also have the potential to speed up real estate transactions. Smart contracts are programs used by cryptocurrencies to automate the execution of agreements. The programs run automatically when predetermined conditions are met, informing all participants of the success of each piece of the transaction as soon as it occurs.
More Accessible Investment Opportunities
Besides the speed of transactions, another impact crypto technology could have on real estate is in making investing more accessible. This technology simplifies investment crowdfunding. Currently, real estate investing requires a good chunk of cash, which means people without the resources to build up that cash have a difficult time getting started with investing.
Crowdfunding through cryptocurrency not only lowers the barrier of entry for real estate investment but also makes real estate investments more liquid. This decreases the risk for investors, allowing people with less financial stability to invest without putting themselves in as much financial danger.
Real estate is commonly used as a way for people to build wealth for their families or for retirement. It is one of the most reliable investments to get involved in. If cryptocurrency increases the ability of low-income people to begin investing, it could have a huge impact on families trying to improve their financial standing in the long term.
Cryptocurrency is still in its early stages, but it’s anyone’s guess whether it will be a passing fad or if it’s soon to be the norm in real estate transactions. Either way, real estate professionals should be aware of the implications this technology has for the industry.