Would You Accept Cryptocurrency for the Sale of Your Home?

The rise in value of Bitcoin and other cryptocurrencies has been a hot topic lately. Some real estate brokers are even offering “Accepting Bitcoin” as a sales and marketing gimmick to move listings. Call me old fashioned, but I do not think doing so, or doing so without strong caveats, is working in your seller’s fiduciary interests.

Bitcoin itself has no intrinsic value and only has value inasmuch as people are willing to exchange it for dollars. I have had deals almost fall apart over exchange rate fluctuations between assets coming from stable foreign countries such as France or Canada and the US Dollar. As of today, in the past month, Bitcoin has fallen almost 50% (before a slight rebound today). This volatility far exceeds any reasonable expectation of fluctuation between currencies during the average length of an escrow. With no government backing and with the use of this currency by people attempting to hide the origin of the funds as well as to avoid paying taxes, regulators are looking at ways to control or shut down trading altogether and I wouldn’t bet against this happening soon. This makes the risk of not being able to exchange Bitcoin or Ripple for dollars at all very real.

While this is not a ponzi scheme, the advanced technology behind cryptocurrencies likely does have value, and the premise of avoiding bank and other middleman fees is enticing, the act of investors speculatively trading these as if they are a stable currency is extremely risky. This trading has recently created bubble-like conditions for a pseudo-asset with no intrinsic value, no guaranteed method of exchange, and world governments rabid to crack down on its use to skirt taxes or detection. I am no cryptocurrency expert, but at the risk of offending some Bitcoin fans, I can see a very bad ending here. If it is necessary to consider a Bitcoin transaction for myself or one of my clients, I will have to insist that they are exchanged to dollars first.