Bitcoin futures contracts starting to be offered by the Chicago Mercantile Exchange (CME) last week propelled the cryptocurrency to new highs, a trend that has continued this week with a close north of $7000 yesterday. Over the past few years, cryptocurrency mania has burst to life from time to time before dropping off the news radar again for periods. However, despite heightened wider public interest coming in fits and starts, cryptocurrency markets, investment and infrastructure have been gradually maturing.
Many believe Bitcoin is a bubble of tulip proportions while others are convinced that we are seeing the beginning of a new, better global monetary system. What is certain is that anyone who bought Bitcoin five years ago will have seen its value rise from around £7.50 per Bitcoin to over £5000 today. With the future of Bitcoin still hanging in the balance, no-one would blame early investors for deciding to cash in at least some of their chips and lock in profits for what on any assessment would have to be considered a spectacularly successful speculative investment.
And now Bitcoin holders are being given the opportunity to swap their cryptocurrency investment for investment properties, or a home to live in. Not only are some sellers of properties offering buyers the opportunity to pay in Bitcoin but doing so at a discount to the cash price, meaning a straight cryptocurrency transaction offers the chance for further profit.
In September, Wonderbra tycoon Baroness Mone and businessman boyfriend Doug Barrowman, an cryptocurrencies investor, put a £192 million Dubai property portfolio on the market, with investors to be charged in Bitcoin. As Barrowman said at the time, “we’re offering the opportunity for people who’ve made significant gains to invest it in land.”
Possibly influenced by Michelle Mone and Doug Barrowman’s novel approach, a 3-bedroom terraced house in Grimsby, valued at £80,000, has now been put on the market for £100 plus 18 Bitcoin. At the time the offer was made by owner Sean Atkinson, a 49-year old film-maker and yoga teacher, the market value of the 18 Bitcoin would have meant a discount of around £3000 for a Bitcoin buyer. However, with the price of Bitcoin having rocketed in the past week, the 18 Bitcoin would now be worth £85,000.
Bitcoin’s volatility means that within a few days the value of 18 units could quite easily change by several thousand pounds. As well as potentially making a quick profit, the home’s current owner could quite easily take a huge loss if Bitcoin’s price drops back again after the sale has been agreed. Atkinson, however, is unfazed and cites his belief that Bitcoin has the potential to “change society” as his main motivation. He’ll honour any agreement struck regardless of the danger that Bitcoin’s value could fall through the floor by the time the transaction is completed.
One major criticism of Bitcoin and other cryptocurrencies has been that until they become more widely accepted as a means of payment they cannot truly be considered currency. Being able to pay for investment properties with Bitcoin, even if current offers are the exception rather than the rule, is another step towards that goal.