Eight days ago, News Limited published an article about the asking price of 500 Bitcoins for a Gold Coast Sovereign Islands Mansion, valuing the property at a little over $6 million. Then, at the time of print, one Bitcoin was trading for $12,678
Today, according to Google, one Bitcoin is trading for $15,500, which would mean the asking price of the property today – if still at 500 Bitcoins – is $7.7 million. A staggering $1.7 million increase in 8 days.
So What Is Bitcoin And Will More People Be Using It To Transact Property?
Bitcoin is a decentralised digital currency whereby users can send money directly from one person to another with no need to use a bank to hold money. Bitcoin is similar to shares in that its value can fluctuate daily. As you can see from the graph from Google, Bitcoin is up thousands of dollars recently, an increase of more than 500% this year.
How Would You Settle When Buying With Bitcoins?
The ‘simplest’ way to transact with Bitcoins would be to agree on a number of Bitcoins for a property. Allow for possibly a 20% deposit of those Bitcoins to be held in trust, assuming you can find a lawyer with some kind of trust account or equivalent. Then the conveyancers or lawyers facilitate the transfer of title deeds from one party to another, while the 80% balance of Bitcoins are paid securely somehow.
However, if the price of the property was agreed in Australian dollars, as you can see from the above example where 500 Bitcoin has fluctuated $1.7 million in just a week, this creates all manner of headache for conveyancers and lawyers, as the currency has been known to fall up to 20% also at times.
What Are The Risks Trading In Bitcoins?
Bitcoin is the best-known of the new cryptocurrencies and is currently enjoying a surge in popularity which is pushing the price up. But as you can see from the graph there are dips in price as well, which are caused by a whole range of factors from sell off and loss in consumer confidence.
One of the risks is that there are Bitcoin billionaires sitting on hundreds of millions of dollars worth of this currency. If they were to offload these enormous holdings, there is the potential to send shockwaves through the market, as it has in the past. This can cause a panic mass sell-off, so the price would drop. Just like the share market has its ups and downs.
The other risks associated to trading in Bitcoin include the regulatory risk of countries potentially banning the trade in Bitcoin. The risks of large-scale hack. Transactions are untraceable. It’s easy to lose your Bitcoins and once lost, they are gone forever. If you accidently make a bigger payment with Bitcoin – gone! Forever! In 2016 a Bitcoiner accidently sent $137,000 instead of $5 with no way to get it back.
Imagine Losing Your Hard Drive with $100 million in Bitcoins!
James Howel lost 75,000 Bitcoins in 2013, after throwing away his hard drive which had at the time, around $4 million worth of Bitcoins. Today that hard drive, buried beneath trash in a landfill site near his home in Newport, Wales is now worth over $100 million!