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Cryptocurrency in Property

20th March 2018

Categories: Latest News

I was very interested to read a few weeks ago that a new-build home in Essex had become the first property in the UK to officially be purchased using cryptocurrency Bitcoin. More importantly I was very surprised to find the Land Registry had also agreed to register the purchase in Bitcoin, despite perceived concerns around money laundering.

I had previously been aware of cryptocurrency but I was surprised to find on doing some further research just how mainstream digital currencies has become in such a relatively short period of time.

A recent look on a cryptocurrency app shows over 2,300 different types of digital currency, a mind boggling choice for investors.  However, it seems to me the digital currencies that are receiving the most attention are for example Bitcoin, Litecoin, Zcash and Ripple to name just a few. 

In its simplistic form, cryptocurrency is a type of digital currency which is based on blockchain technology, which is essentially a lender or list. These encrypted lists are held by many computers around the world and are regularly compared meaning that there is a definitive list of who owns them.  To hold any digital currency one needs an e-wallet.  Any purchases would then need to be verified through the specific currency network.

The sharp upward rise in values of digital currency over the last couple of years has raised the profile and their popularity.  Bitcoin for example soared in value through 2017.  The risk however is that it can fall in equal measure too.  A £10,000 Bitcoin investment made on 20 December 2017 would have been worth around £7,000 two days later. This does prove the point the bubble may burst, or can recalibrate very quickly.  So would I make property purchase with Bitcoin? Probably not at the moment.

Putting that view to one side, I have also looked at why cyrpocurrency has become so popular recently.  Some of the highlight reasons include growth and speed of use of the currency, as a transaction can be concluded in a few hours. It certainly appears to be more widely accepted.  You now see ‘Bitcoin Accepted Here’ signs in more places and it appears to be taken more seriously by financial institutions. The security of the Blockchain technology is also a key factor.  Research suggests it is virtually impossible to steal from as a transaction takes place over a network involving thousands of computers, all in different places with different owners. When a transaction is made, every single computer on the network records it. For someone to cheat and change the details, they would need to break into every single computer on the network, almost impossible to achieve.

Is buying property by digital currency going to become a growing trend?   It is probably too early to tell at this stage, although evidence would suggest there have been a couple of headline grabbing listings. Earlier this year for example a mansion in Notting Hill, London was put on the market as a Bitcoin-only listing for the equivalent of £17m. So it is certainly catching on.

I think one of the main difficulties that will hold this back for property transactions, particularly away from key financial centres, is finding suitably experienced conveyancers or solicitors with the expertise to deal with these purchases.  Hopefully this will change over time, as it becomes a more accepted method of transacting.

However, for now I believe if the technology and expertise can be put in place, certainly for Land Registry purposes, then I can see several obvious benefits. The automatic processing of contracts would mean that costs are reduced. There would also be increased security, as identity records are tamper-proof and deal times could be reduced, as a deal can be an entirely digital experience. 

Paul Palmer is the TDA Estates Manager and can be contacted on paul.palmer@tda.uk.net

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