Bitcoin use in local real estate must first jump some hurdles

A Texas company this week claimed it is the first real estate brokerage in the Lone Star State to close a home purchase entirely with bitcoin.

Sheryl Lowe, the agent who represented the bitcoin buyer, said, “In all my 33 years of closing transactions, I couldn’t have expected something so unique to go so smoothly.”

While far from mainstream acceptance, the digital currency has been increasing worldwide to buy everything from a cup of coffee to a luxury villa. Sellers in Florida, Nevada, New York and California have offered their properties for bitcoin.

Could Hawaii be next?

Because of the high home prices here and strong interest from international buyers, especially from Asia, Hawaii has the potential to become a hub of bitcoin real estate activity in the years to come.

“If a real estate agent, seller or financial institution is willing to take bitcoin, there’s really no stopping it. Real estate agents, brokerages, appraisers, title companies and more are stepping up to the bitcoin plate, hoping they’ll score more business by accepting this currency,” according to an article last year in Realtor magazine.

This month a developer in Dubai announced it would accept bitcoin as payment at its Aston Plaza and Residences, which features two towers. The developer says it will be the first major real estate development to do so. On its website, Phase 1 sales offered studios for as low as 36 BTC ($130,000) to two-bedroom units for 98 BTC ($353,000).

“Bitcoin’s meteoric rise in a few short years means it’s now the world’s leading cryptocurrency. This is exactly why we are the first property development ever to be priced in bitcoin,” Douglas Barrowman, chairman of the Knox group, said in a statement. “I believe, as it gains mainstream adoption, many will follow our lead on this.”

However, real estate transactions using the wildly volatile cryptocurrency likely would face resistance, restrictions and regulations in Hawaii. The state already has policies in place designed to protect consumers, which has made it difficult for locals to invest in and trade bitcoin. Coinbase, an online cryptocurrency trading platform, indefinitely suspended operations for Hawaii accounts this year because of some of those policies.

Bitcoin is created and exchanged without the involvement of banks or government. Proponents of bitcoin and the blockchain technology say the real estate industry and homebuyers/sellers could benefit by speeding up the lengthy sales process and lower fees.

Critics, such as J.P. Morgan CEO Jamie Dimon, have called cryptocurrencies a “fraud.”

“Right now these crypto things are kind of a novelty. People think they’re kind of neat. But the bigger they get, the more governments are going to close them down,” Dimon said in a recent interview on CNBC. “It’s creating something out of nothing that to me is worth nothing.”

One bitcoin is currently valued at about $3,600, down from an all-time high of nearly $5,000 on Sept. 2. It sold off recently after Chinese officials ordered bitcoin exchanges to close in their country. Bitcoin is still up about 260 percent this year and about 500 percent in the past 12 months.

Jaymes Song is a top-producing agent with Better Homes and Gardens Real Estate Advantage Realty in Kahala. He can be reached at 228-3332 or JaymesS@BetterHawaii.com.