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Bitcoin payments for real estate gain traction as crypto holders seek monetization

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Crypto investors are betting big on real estate this year as the cryptocurrency market continues to grow. New York Digital Investment Group (NYDIG) recently conducted a survey that found that 46 million Americans own Bitcoin, equating to 22% of all adults. While optimistic, some cryptocurrency investors have expressed concerns regarding the security, custody and volatility of digital assets.

For example, Nickel Digital Asset Management, a regulated European investment manager dedicated to the crypto market, surveyed institutional investors and wealth managers from the United States and Europe who collectively have $275 billion in assets under management. Findings show that 76% of these individuals are concerned about the security of their digital assets. The same percentage said this about the size of the market and liquidity, followed by 71% who see the regulatory environment for the crypto market as a major issue.

This in mind, many crypto holders have started investing Bitcoin (BTC) and other cryptocurrencies into less risky assets such as real estate. Ben Shaoul, managing partner of Magnum Real Estate Group, told Cointelegraph that the company has recently been receiving more requests to sell real estate to cryptocurrency holders. According to Shaoul, Magnum began conducting crypto for real estate transactions about three years ago:

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“We hadn’t tackled this before since most real estate developers didn’t understand crypto paymements. But we understood what it meant and how we could structure a sale for cryptocurrency. With the help of our legal team, we figured out how to conduct crypto transactions with the consent of regulators. We first sold a few residential units and then we sold a retail condominium in New York about three years ago for cryptocurrency.”

Eric Hedvat, chief operating officer of Jet Real Estate and a special consultant for Magnum, further told Cointelegraph that given the fast-paced growth of today’s crypto market, BTC payments for real estate is more important than ever before since it offers crypto investors an opportunity to grow with cash flow: “The cryptocurrency market has created a vast network of new wealth that wants to find traditional assets to invest in like real estate. There also aren’t many commercial properties for sale to buy with Bitcoin.”

Specifically speaking, Shaoul noted that the income generated from the retail condominium building that Magnum sold for $15.3 million in BTC during 2019 is all credit. “M&T bank has been a tenant in this building since it was built. They are a multi-billion-dollar bank.” This is an important detail, as Shaoul further commented that individuals who have created new wealth with cryptocurrency don’t have a way to monetize it or create a steady income stream:

“This property has over a million dollars a year of free cash flow. This is a very attractive offering for someone sitting on wealth they’ve created in cryptocurrency. This gives them an opportunity to monetize and effectively collect a bond moving forward.”

This has especially become the case due to interest rates in the United States. To put this in perspective, a recent survey conducted by the Financial Times and the University of Chicago’s Booth School of Business found that elevated inflation may make the Federal Reserve raise U.S. interest rates at least twice by the end of 2023. “In an environment where interest rates are where they are now, you can’t monetize into cash and leave your money in the bank and convert,” Shaoul said, adding that as a result, Magnum has been seeing a lot of cash move out of both the crypto and equities markets into hard assets such as real estate.

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Piper Moretti, CEO and founder of The Crypto Realty Group, told Cointelegraph that crypto for real estate transactions is indeed becoming more common. Moretti shared that her firm currently has real estate listings available for Bitcoin in Tulum, Uruguay, Puerto Rico and Costa Rica.

Although this is the case, Moretti mentioned that many buyers purchasing real estate with crypto are taking loans out against their cryptocurrency. “Because of capital gain issues and the belief that Bitcoin’s price will reach $100,000 by the end of this year, people are taking loans out against their crypto. This way, they can keep their crypto and still monetize,” she remarked.

Joseph Kelly, CEO of Unchained Capital — a Bitcoin financial services company — confirmed this, noting that the firm has seen about 30%–40% of its loan originations go toward real estate.

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But cash is still king for sellers

While Bitcoin and other cryptocurrencies are being used to purchase real estate, it’s important to note that, oftentimes, sellers prefer cash to crypto when dealing with these transactions. Moretti explained, “If a seller receives multiple offers, 99% of the time they’re going to push the cash offers to the top of the pile, even if it’s a crypto conversion because more likely than not they will be receiving the cash at closing.”

To put this into perspective, Sonny Singh, chief commercial officer of BitPay — a Bitcoin payments processor — told Cointelegraph that BitPay has facilitated $100 million in real estate transactions in the past five years. Singh mentioned that crypto transactions can easily be converted to U.S. dollars:

“The first thing that needs to happen is for the title or escrow company to be on board with this process. Sellers can also use the companies BitPay already works with. Buyers can then pay in Bitcoin, and we exchange that to cash. The escrow company now gets the Bitcoin at a cash-pay spot rate immediately. The entire process takes one day, and there is a 1% fee to initiate the transaction.”

Although this is typically the case, Shaoul shared that Magnum keeps a percentage of cryptocurrency obtained through real estate transactions in the company’s treasury. “We keep a portion of this to maintain the same percentage of crypto we’ve been balancing for the last six to seven months.” In order to do this, Shaoul shared that the firm is working with the crypto investment company Galaxy Digital to help manage cryptocurrency gained from real estate transactions.

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Are Bitcoin payments for real estate just hype?

While it’s certainly notable that crypto holders have been seeing more opportunities to purchase real estate with digital assets, some industry experts believe that this recent trend has become overhyped.

For instance, Natalia Karayaneva, CEO of Propy — a real estate transaction platform powered by blockchain technology — told Cointelegraph that many of the stories in the media today focus on crypto payments for real estate as if this is a new development. But to Karayaneva’s point, accepting crypto payments dates back to 2014, when BitPay helped facilitate the sale of a Lake Tahoe property that sold for $1.6 million in BTC. In 2014 ​, a tech entrepreneur also listed his Tiburon, California home for sale for $3.6 million, which was payable in Bitcoin.

Karayaneva believes that blockchain technology being leveraged to facilitate crypto-to-crypto transactions will be the real game-changer for the real estate industry. It is possible to close a real estate transaction entirely in Bitcoin, without any cash conversion involved. Karayaneva explained that conducting transactions this way saves time for both the buyer and seller:

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“This saves up to 1% of exchange fees, and blockchain crypto transactions are 100% transparent and immutable. They also allow for smart contracts that let a user create, audit and authenticate documents from any point of the world, in real-time. This eliminates the need for middlemen and minimizes the risk of any payment disputes, as the transaction is completed only if all requirements are met.”

Karayaneva further mentioned that many escrow companies today still don’t want to be involved with crypto transactions, which is why a smart-contract framework is a more attractive option.

Moretti, however, begs to differ, noting that using a blockchain to conduct real estate transactions can be difficult since it doesn’t go through the normal escrow process. “I know this can be done, but it’s clunky. There are also good funds laws we adhere to in California, and it may be hard to get regulators on board with such a solution.”

While it’s too soon to tell whether blockchain technology will be the missing link for real estate transactions, it’s clear that more crypto holders are using Bitcoin to purchase properties today. “People are looking to move unstable assets to a stable asset. And what’s more stable than real estate?” Singh remarked.

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Bitcoin Drops as China Declares Crypto-Businesses Illegal

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  • China declared that cryptocurrency-related businesses are illegal
  • Bitcoin, Ether, and stablecoin Tether do not qualify as legal tender in China
  • BTC drops in price as the announcement went out

Once again, China reiterated its antagonistic stance on Bitcoin and the cryptocurrency industry as a whole.

In an announcement, the People’s Bank of China (PBOC) mentioned that BTC, ETH, and USDT are not legal tenders in China. They added that these cannot be used in the currency market.

Additionally, the central bank deemed all crypto-related businesses as illegal. This includes overseas exchanges serving residents within China and derivative transactions.

Following the news, Bitcoin’s price fell by almost $2,000 as the news circulated. This has been a common pattern whenever China FUD comes out.

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Earlier, China also reiterated its stance on crypto trading and mining while testing the Digital Yuan. According to the PBOC, it will continue releasing regulatory pressure over the crypto trading industry.

Despite the negative news, many analysts remain bullish on Bitcoin and the cryptocurrency industry as a whole. According to analyst Lark Davis, this is not new and will happen again in the future.

In a tweet, Davis mentioned that “The year is 2025, #bitcoin has just corrected from 400k to 250k on China banning BTC fears.”

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Can Bitcoin Surpass $6,000,000? Ethereum and Polkadot Creator Details Possible Future of Crypto

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Early Bitcoin developer and co-founder of Ethereum and Polkadot, Gavin Andresen, is outlining a future where BTC rises to a staggering $6,000,000 per coin.

Gavin Andresen, who took over as Bitcoin’s lead maintainer from founder Satoshi Nakamoto in 2011, just published a new blog post detailing how BTC’s theoretical evolution could look.

Andresen describes a “possible” scenario where Bitcoin hits a price tag of $6,000,000 by 2061, transaction fees 326x higher than they are now, and the blockchain is used chiefly by whales.

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“Imagine: it is the year 2061. The BTC price is six million US dollars – equal to about a million 2021 dollars because of inflation.

Miners are being rewarded 0.006103515625 BTC per block, plus transaction fees of about 5 BTC for 4,000 or so transactions ($7,500 per transaction).

But most BTC transactions don’t happen on the BTC network. Most BTC is locked up in multi-signature outputs secured using multiparty computation and mirrored on another chain as ‘wrapped’ tokens.”

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In his scifi scenario, Andresen says those who do remain on Bitcoin’s network will be incentivized to keep it alive.

“The transactions that do occur on the main BTC network are high-value, mostly between super-whale-size holders…

These whales maintain the BTC network forever. They are the miners and the transaction creators; they don’t care how high transaction fees go, because they receive as many fees as they pay.”

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However, Andresen says that by 2100, even those users would likely leave the blockchain.

“In the year 2100 the whales notice that the mining reward is basically zero… Eventually, there are zero new BTC being produced on the BTC network, and zero BTC circulating on the BTC network. There is nothing left to secure, and the chain stops.”

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Top Analyst Maps Bitcoin and Cardano Price Trajectories, Warns Best Entry Point for ADA May Be Gone

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Top Analyst Maps Bitcoin and Cardano Price Trajectories, Warns Best Entry Point for ADA May Be Gone

Crypto trader Michaël van de Poppe is looking at what’s ahead for Bitcoin (BTC) and the smart contract platform Cardano (ADA).

The analyst tells his 420,000 Twitter followers that the best entry point for Cardano may be gone after the asset bounced off a key support level at $1.86.

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“If you want to get into Cardano, this was the region where you would want to get into it, and the higher low that might be created.

So based on the daily timeframe, the best entry might be gone, but you’re still getting a better entry than the ones who have been buying around $2.80.”

Van de Poppe is now looking to see if ADA can turn resistance at the $2.37 level into support.

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If the markets correct further, he is keeping an eye on the $2.15 level as a potential buy zone.

“When you’re looking at the four-hour time frame, I think you’re getting the exact same view as what you have right now on Bitcoin and [Ethereum], actually. So you’re going to look for an entry point which is around the fact of $2.15, so anything in this region might be a good entry point if we get a corrective move.”

Looking at the Bitcoin pair, van de Poppe thinks that ADA will most likely consolidate briefly after retesting support at its previous all-time high.

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“We can see that we’ve had a beautiful retest of the previous high here too, and therefore some consolidation is most likely going to take place before we’re going to have new impulse waves.

So both the USDT and BTC pair are looking for continuation, and I think that’s just great, and I think that’s just what we want to see with the markets right now.”

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