Buying a home with BitCoin

Can I Buy a House Using Cryptocurrency Like Bitcoin?

Cryptocurrency has a volatile history from an investing standpoint, but it is quickly becoming a legitimate form of currency. You can now pay for everyday items with cryptocurrencies the same way you might use a digital wallet to buy your morning latte.

Bitcoin, one of many cryptocurrencies available on the market, is now accepted by hundreds of thousands of merchants around the world. Many major companies, including fast-food restaurants and grocery stores, now accept bitcoin as payment.

But can you use cryptocurrency for major purchases like buying a house? 

The short answer is, yes, you can. But there are a few things you need to know before you do.

A Crash Course in Cryptocurrency

Before you trade in all your hard-earned money for cryptocurrency, you need to know what you’re paying for.

Cryptocurrency is a digital asset that acts as a medium of exchange. It functions much like regular currency, but it only exists in digital form.

The big difference between cryptocurrencies and traditional currencies is that cryptocurrencies aren’t verified by a financial institution or central bank. Instead, they’re verified by a blockchain—a decentralized digital ledger spread across thousands of computer systems that manage and verify transactions in the cryptocurrency.

If you’ve ever heard of someone “mining” bitcoin, it means they are using a computer or computers to do this managing and verifying. Transactions can only occur if enough “nodes” in the blockchain network validate the transaction. In most cases, any computer connected to the network is a node.

Like traditional currency, cryptocurrency can gain and lose value on the market. Just as economists discuss “the strength of the dollar,” they could also discuss the strength of bitcoin or Ethereum similarly.

But the values of cryptocurrencies aren’t as stable as regular currency because they are still very new to the marketplace. Put plainly, not everyone trusts them.

Cryptocurrencies have risen dramatically in value at some points. But that value has also plummeted due to fluctuations of demand and value perception in the market.

That means the cryptocurrency you pay for today could be worth a lot less tomorrow. However, it could also be worth lot more when it comes time for you to buy a home. 

Either way, investing in cryptocurrency is inherently risky compared to holding regular U.S. dollars in a savings account.

How to Buy a House with Cryptocurrency

If you’ve already invested in cryptocurrency, you can still use it to buy a house—or anything, for that matter. People are already using bitcoin to buy homes and conduct other big transactions. 

The catch is that whoever is selling you the property must be willing to accept payment in cryptocurrency.

This is the most challenging part of engaging in this type of transaction. Because of its market volatility, not everyone will be willing to accept it as payment. Even if you buy a house for $500,000 worth of cryptocurrency today, it could be worth a fraction of that several months from now, resulting in a loss for the seller.

In some transactions, the seller may only be willing to accept cryptocurrency if it is converted into cash immediately to satisfy the transaction. In other words, you must sell your shares in crypto first, then use the cash proceeds to buy the home.

You also need to consider how financial institutions feel about crypto, especially if you intend to take out a loan to buy a house. Most, if not all, lenders are unlikely to offer you a mortgage in cryptocurrency, and they might be skeptical about a down payment being made in cryptocurrency.

If you have an abundance of cryptocurrency and you’re ready to buy a home, you can use it to make the purchase. Just be ready to find a buyer willing to accept it or be willing to sell your shares for cash in a pinch.