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.