DeutschCryptocurrencies such as Bitcoin, Ethereum and Ripple are future technologies with enormous growth potential. They attract a number of enthusiastic followers who are convinced of their long-term viability. Anyone who belongs to this group wants to pay for everything with cryptos, including real estate. Unlike in Germany, which has banned the acquisition of houses with cash, raw materials and cryptocurrencies to curb money laundering, it is possible in Switzerland to pay for your property in cryptocurrency.
The prerequisite for this is, of course, the consent of the contractual partner. A pioneer in this regard was Blockimmo, a real estate tokenization company that acquired a property worth CHF 3 million in Baar. We will explain the procedure and outline the advantages and disadvantages of buying land with cryptocurrency so that you can decide whether this process provides you with the necessary added value.
The Advantages of Buying Real Estate with a Cryptocurrency
If you do not have the necessary capital, you can find a cheap mortgage on hypo.ch. The provider specializes in e-mortgages for home ownership, which is fitting for the topic. However, if you are one of the exclusive group of people who own a small or large crypto asset, you can benefit primarily in the following points:
Peer-to-peer Processing
The banking crisis of 2008 led to a loss of confidence in traditional financial institutions. Cryptocurrencies emerged in this year from the desire for peer-to-peer transaction processing. Technological progress made the realization of this ambitious project possible. This allows customers to keep the banks out of the business, save the corresponding fees and maintain the desired anonymity. Only buyers and sellers are then involved in the real estate purchase.
Security and Speed
While banks sometimes take days for transfers, and there can be annoying delays due to verification mechanisms, especially for larger amounts and transactions abroad, the transaction via the blockchain is completed quickly, and across borders. At the same time, cryptocurrencies are extremely secure due to the sophisticated encryption based on cryptography, which also applies to the smart contracts stored as a result. Thanks to the wallet and public key, authentication is no longer a problem and cryptocurrencies are considered to be forgery-proof.
Possibility of Tokenization
Real estate traders are expanding their scope of action with cryptocurrencies, as digital money enables them to tokenize the properties. In this way, the property can be divided into smaller shares, which are referred to as tokens. The Blockimmo dealer proceeded according to this scheme when it acquired real estate in Baar in 2019 by reselling parts of the property to four investors. Another option for real estate traders is the tokenization of their rental income.
The Disadvantages of Buying Real Estate with a Cryptocurrency
The advantages are great, but the disadvantages are (still) significant:
High Volatility
Cryptocurrencies are known for their extreme price fluctuations, which even exceed the average dispersion on the stock market. The German consumer organization Stiftung Warentest therefore considers investments in and with cryptocurrencies to be “highly risky”. Although the trend for cryptocurrencies is still upwards, it is not yet certain whether cryptocurrencies will actually prevail in the long term.
Low Acceptance
Real estate purchases with cryptocurrencies can still be counted on one hand in Switzerland. This makes it difficult to find a trading partner who is willing to engage in real estate purchases with cryptocurrencies.
Incomplete Legal Certainty
The practice of acquiring real estate with cryptocurrencies is still in its infancy and not all countries take transactions with cryptocurrency into account in their legal practice. Anyone involved in international real estate trading should thoroughly familiarize themselves with the respective legal system in order to avoid difficulties. For real estate transactions in Switzerland, both federal and cantonal law should be studied.
The Key is Fundamental Analysis
All in all, cryptocurrencies are far from established in Switzerland for real estate trading, and the German example of the ban on paying for houses with cryptocurrencies shows that the development does not necessarily have to move towards general distribution. The advantages of fast and secure processing independently of banks and other intermediaries are certainly convincing, as is the additional option of tokenization.
However, denying the risk in a rapidly changing market environment would be dishonest given the high volatility in crypto trading. The payment process is highly speculative, and it is up to the investor whether they see the risks or opportunities in this business. Ultimately, in addition to your own risk affinity, the result of a thorough fundamental analysis of the cryptocurrency industry and the individual providers determines whether you get involved in this innovative business.
Read more now on CoinPro.ch
