​The Effects that Bitcoin Will Have on Homeowner Costs

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Buying a home is one of the biggest investments most Americans will make in their lifetimes. However, despite major advancements in technology, there haven't been any notable attempts to reduce the cost and expedite the process of buying a home, or make it more secure for that matter. Experts suggest that several niche industries — international trade for high-value commodities, pharmaceuticals, art, etc. — will be largely affected by the emergence of crypto-currency such as Bitcoin. To date, there hasn't been any mention of the potential impact the Blockchain technology will have on the real-estate market.

Data from HomeInsight shows that on average, an individual moves homes 11.7 times in their lifetime. A typical homeowner will sell his or her home every 5-7 years, and even though typical American homeowners aren't concerned with changes in the international art trade, any price changes in the real estate market will certainly have an impact on their lives.

What Is A Bitcoin?

Bitcoin is a new form of digital currency developed by Satoshi Nakumoto (an unknown individual going by the alias). With Bitcoin, banks and other types of middlemen are removed from the equation to achieve complete anonymity. Bitcoins use a string of letters and numbers linked via an encryption code and with private and public 'keys.'

The private key is the equivalent of an ATM pin in traditional banking, while the public key is like an account number. Instead of handing over tangible currency, Bitcoin uses these keys to make transactions. Bitcoins are not subject to any regulations or tied up to any country or state. As a result, the technology has made it easier and cheaper to purchase merchandise internationally.

Can Bitcoins Be Used To Purchase A Home In The US?

Yes. Bitcoins can — and have been — used to purchase homes in the United States. When used in the real estate market, Bitcoin makes the transactions safer for all parties involved, provides a high level of transparency, and expedites the process. Real estate transactions aren't known to be smooth, or fast. The use of Bitcoin can reduce the friction and speed up the process for buyers who don't have a lot of time on their hands.

How Does the Use of Bitcoin Affect Costs?

The use of Bitcoin in transactions saves time. It reduces delays in exchange and finalization, creates tamper proof transaction records, and in the process, cuts some of the associated costs. This goes for any type of transaction including real estate and related transactions. This means auto insurance and homeowner's insurance rates will be available for Bitcoin users.

How Bitcoins Can Be Used In the Mortgage Process

There is a number of ways Bitcoins can be used in the process of buying a home. For instance, you can use Bitcoins to document your account transactions. Lenders need these transactions to confirm the amount of money that enters your account. Home buyers can also use Bitcoin as an asset.

You may have to look around for a while before you can find a lender that accepts Bitcoin. Most of them have problems valuing Bitcoins. Last but not least, you can use Bitcoins to pay for the real estate fees and closing costs. While it's widely accepted that Bitcoin will grow to become a widespread form of currency, it may have problems catching up with some mortgage providers.

The use of Bitcoin can greatly mitigate the current pain points in the process of buying property. When it's completely integrated into the process of buying and selling homes, it will increase data availability and accuracy, reduce chances of the submission of falsified documents, and streamline the release of funds and exchange of contracts. The overall effect will be a reduction in the cost of buying property.