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Summary:

You can buy all sorts of things with bitcoins these days — but, most of the time, there’s no real point in doing so. One start-up, however, shows that bitcoins could have a practical role in reducing costs in the real estate industry.

As the marketing hype behind Bitcoin has started to wear off, people have begun to wonder if there’s any point to Bitcoin beyond speculation and its beauty as a protocol.

And the skeptics have a point: despite all the hoopla, involving everything from space flight to a pro sports team, Bitcoin is just not that practical for buying and selling things. It takes too long to complete a transaction compared to credit cards or good old cash and, in any case, most merchants don’t know what the heck Bitcoin is in the first place.

As someone who’s followed the currency closely for about a year, I’ve been waiting for someone to offer a practical use case for Bitcoin and, finally, a good candidate has emerged: RealtyShares, a startup that lets people invest in real estate through a version of crowdfunding.

The company, based in San Francisco, began accepting Bitcoin this week. Unusually for Bitcoin-friendly merchants, the decision seems to be driven by a business need rather than a marketing gimmick. That’s because unlike everyday commercial activity, most real estate transactions involve delays and transaction fees — the sort of deals where paying in bitcoins is a natural advantage.

I spoke with RealtyShares CEO Nav Athwal, and he said that 15 percent to 20 percent of its customer base is global, and that these customers can rack up considerable fees through multiple wire transfers, escrow accounts and so on. Instead, they can now use Bitcoin to avoid many of these fees.

Bitcoin, of course, isn’t entirely free — miners take a tiny cut to clear transactions while middlemen like Coinbase and Bitpay, which make Bitcoin a practical option for many consumers, charge around one percent to merchants. This, however, is still better than the three percent charged by credit card companies and certainly much less than the eight percent or so charged by the likes of Western Union.

Also, according to Athwal, RealtyShares will take advantage of Coinbase’s current policy, which waives the one percent fee for the first million dollars of transactions.

All of this, of course, doesn’t mean that RealtyShares will do big business in Bitcoin or even that the company’s business model will succeed in the first place (that model, by the way, involves offering shares for as low as $1,000 in different residential and business properties, which investors then own through an LLC). But given the slow, expensive process associated with moving money into and out of real estate, this seems like a case where Bitcoin could prove truly useful.

Time will tell if real estate, along with overseas remittances, might provide the first practical real-world use cases for Bitcoin.

  1. Ah bitcoin. Will it save us? Or will it be cast aside for something as ridiculous as Dogecoin? I and am unabashedly speculating in it, waiting to see what happens.

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    1. I don’t think Dogecoin is as ridiculous as people make it out to be. Perhaps the concept around the name, yes. But they have got incredible traction and publicity for it in a very short period of time. If cryptocurrency ever becomes “mainstream,” though, I think it has to be consolidated into one, MAYBE two currencies, and Bitcoin certainly looks like it will be the one to lead the way.

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      1. Fair point. I’m backing bitcoin and litecoin only at the moment, haven’t been brave enough to go beyond those two yet, hopefully those two will end up going ‘mainstream’, but like you say other coins are in someway superior, I just hope Dogecoin doesn’t stick around too long, at least not with that name.

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  2. GoodNPlenty333 Tuesday, February 4, 2014

    >It takes too long to complete a transaction compared to credit cards

    This is completely false. Credit card transactions take weeks to complete and finalize. Bitcoin transactions are confirmed almost instantly, and permanently finalized within an hour or so. What matters is how long until you can spend the money you receive, and Bitcoin destroys credit cards in this regard.

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    1. Exactly. And all the nightmares with charge back from credit cards. What people see as “safety net” because they can chargeback their credit card is an absolute ridiculous system where merchants who sent out products or services that were given in good faith before getting paid with a credit card in the end is a highly risky endeavour. Hurray to systems that allow to withdraw money from your Bitcoin wallets like http://debitcard.bitcoindarling.com

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  3. BitcoinREO Investing Thursday, February 13, 2014

    We (@BitcoinREO) also buy, rehab, flip, and rent our REO and Real Estate w/ Bitcoins at http://Www.BitREO.com as well thru a pooled/crowd funding concept..
    Bitcoins ARE becoming a secure and easy.
    Team @ BitcoinREO & PajamaREO
    http://Www.BitREO.com

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