The world is changing at a fast pace, and payment methods too. People are calling crypto currency the future of the economic world, and real estate is no exception. Some real estate agents are accepting crypto, while others are still hesitant.
Crypto is a digital currency payment system that is used around the world. It can also be used to buy and sell properties. However, people are not confident about using cryptocurrencies. There can be various reasons for that. Here we are discussing the basics of crypto currency, how it works, and the pros and cons of accepting cryptocurrencies.
What is Cryptocurrency
Cryptocurrency is the digital currency or virtual currency, which is a means of payment. It does not depend on any third-party system to complete transactions. Anyone and everyone can use this system to send and receive money. The basis of this system is blockchain technology, and that ensures that governing agencies cannot interfere with crypto transactions.
Crypto payments exist online, and there are no paper bills like in the real world. These currencies can be stored in digital wallets. Advanced encryption is used to verify transactions, so these currencies are called crypto. To transfer crypto data between wallets and ledgers, a coding system is used, which offers a safe and secure transaction experience to the user.
How does crypto work
As mentioned earlier, blockchain is the basis of cryptocurrencies. They are created, tracked, and managed through this system. Computer systems are used for the processing and transfer of crypto. Blockchain can also be used to boost online privacy and simplify the supply chain as well. This is an incredible technology that cannot be hacked and tempered. No one can steal cryptocurrencies. A person can own cryptocurrency by using one of the two available methods. The first method is to mine the currency. Computers can be used to solve problems and earn and produce crypto units. The second unit is to transact the crypto with other users.
pros and cons of accepting crypto payment for real estate deals
Now we will discuss the pros and cons of crypto payments for real estate transactions. It will help real estate agents to decide if they should accept crypto or not.
Pros of accepting crypto payments
If you want to use crypto for your real estate business, you can enjoy some benefits, which are mentioned here.
Safe transactions: Credit card theft was a great issue that we faced during the pandemic. Crypto is considered safe as compared to card payments. All the information is kept secure in the wallet. Transactions are validated with a blockchain ledger so identity theft will be difficult.
Low transaction fees: All kinds of Transactions are associated with fees. No matter whether you use PayPal or credit cards, you have to pay a transaction fee. But if you use crypto, you have to pay a low transaction fee or no fee at all. This feature is more useful for international buyers and sellers. You can avoid large transaction fees. Crypto is an international currency and not limited to any country or region. So, no clearance from a foreign bank will be required.
Quick transactions: if you use crypto for real estate deals, it can save your time as crypto payments are processed very quickly. Crypto doesn't work through a centralized system, and no banks or third parties are involved in the completion of transactions. So, you can send and receive payments within minutes, no matter in which part of the world you are. Moreover, crypto can be used to buy and rent properties, and no paperwork is required for that.
Better customer experience: If you accept crypto as the payment method, your buyers and tenants will have better services. You will be able to attract good tenants and sellers. Crypto payments offer flexibility, and if a customer has a safe transaction method, they will choose your place.
Cons of accepting crypto payments
Like everything else, some disadvantages are also associated with crypto payments. Here these are discussed briefly.
Crypto is not stable: Crypto is considered a volatile currency because the amount of coins is restricted and is highly speculative. You can trade crypto, but buying and selling these currencies can be risky. Crypto is valuable if investors can maintain their purchasing power.
Regulations: Initially, there were no laws for crypto; however, now, these currencies are also subject to government laws. If there are restrictions, it can be damaging for the businesses which deal with crypto. Regulations like official bans can harm the validity of crypto. Different countries have different rules, and according to the local rules, dealing in crypto can be a criminal act. For instance, cryptocurrencies are completely banned in Nigeria, and all the accounts involved in crypto trading have been closed.
Tax restrictions: when it comes to tax, crypto is considered property. If you use crypto as a payment method, you have to record the transaction as gross revenue. As a result, you will be subject to capital gains. You need to keep a record of all crypto coins, when you brought them and when you sold them. It will be tiring if you have a lot of coins or you do many crypto transactions.
Setting up an account takes time: setting up crypto payments is time taking as compared to regular transactions. First, you need to create a wallet to send and receive payments. The verification process is also very tiring and long. If you use third-party services, you need to pay an extra fee to them.
Lacks appeal: Crypto mode of payment is still in the initial stages. Most investors prefer traditional transaction methods even if they have a crypto wallet. Moreover, your customers will not have a crypto account, and for a fraction of clients, it’s not worth taking the risk, particularly if your country restricts crypto transactions.
Having a crypto wallet is an advantage for property agents, but if there are restrictions in your country, you should avoid cryptocurrencies.